Coal faces more uncertainty than any other base-load generating source. Two new factors, hitherto irrelevant to the U.S. industry, will shape future generation investment—imports of liquefied...
Mercury: Much Ado About Nothing?
How the Clean Air Mercury Rule will affect coal prices.
from all power plants greater than 25 MW. Figure 1 shows total mercury emissions from U.S. power plants in 1999.
Currently, about two-thirds of the 75 tons of mercury entering coal-fired generators is emitted to the atmosphere. The 27 ton reduction is the co-beneficial result of existing air pollution control devices such as scrubbers, selective catalytic reduction (SCR) systems and particulate matter capture devices. Obviously, the implementation of CAMR will have an impact on coal-fired electric generation. The key question, however, is to what extent will the new rule reduce coal’s dominance in the electric generation market.
Before one can assess how coal-fired generators will be impacted by the new rule, one must first understand the factors that have lead to coal’s dominance in the electric generation market. Coal’s appeal is largely due to low and stable prices resulting from its abundance in the United States. As shown in Figure 2, coal prices are stable compared to competing fuels. Since August 2002, a period of relative calm in the fuels markets, coal prices have increased by less than 50 percent, compared to natural gas’ price increase of 150 percent and oil’s price rise of 140 percent during the same period.
Coal prices are also low compared to competing fuels. For much of 2005, natural gas prices at the Henry Hub have hovered around $6.60/MMBtu. NYMEX-quality coal with a $10.00/ton transportation cost has a delivered price of roughly $2.90/MMBtu and coal from the Powder River Basin with a $12.00/ton transportation rate is only about $1.10/MMBtu. Even with an average $0.60/MMBtu environmental compliance cost added to the base price of coal, coal has an enormous price advantage.
Finally, coal’s abundance also lends to its appeal. Energy security is important to any nation and over-reliance on foreign countries for fuel has lead to problems for the United States in the past. In the United States alone, the estimated amount of coal available (at current coal consumption rates) is:
• 17 years of recoverable reserves at active mines;
• 230 years of recoverable reserves at new mines;
• 1,100 years of coal reserves that are identified and inferred of any quality; and
• 2000 years of undiscovered coal. (Sources: Adapted by Global Energy from the Energy Information Agency, U.S. Coal Reserve, 1997 Update and the Global Energy Intelligence Fuels database.)
Mercury Control Technology
The disadvantages of coal are primarily due to environmental issues. However, the sizeable cost advantage that coal enjoys allows for significant capital investment to address environmental concerns. Mercury emissions are currently controlled as a co-benefit through existing devices used to remove SO 2, NO x, and particulate matter from flue gases. The species of mercury greatly influences the optimal removal method from the stack gases. Oxidized mercury (HG++, ionic mercury, mercury chloride, HgCl 2), for example, can be removed using wet SO 2 scrubbers. Particulate mercury can be collected by particulate matter control devices. Gaseous elemental mercury usually is more difficult to remove.
In general, the amount of mercury captured through existing control technology is greater for bituminous coal than for either