Turbulent politics and market trends cloud prospects for coal-fired power.
For a century, coal-fired power plants have generated most of the United States’ base-load electricity. At times along the way, alternatives emerged and flourished briefly—first oil-fired generation, then nuclear, and most recently natural gas. But these waves ended badly, often bringing financial ruin to the companies that had championed them too enthusiastically. Meanwhile, the more-cautious companies that kept on building coal-fired plants have survived and prospered.
Now, 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 natural gas (LNG) and greenhouse-gas (GHG) restrictions. Taken together, they point to a bleak future for coal unless its technology advances dramatically … or a political consensus fails to emerge.
A decade ago, global warming was fodder for stand-up comics on late-night television. This year, both of the front runners in the Democratic campaign for president have endorsed draconian long-term restrictions on GHG emissions (reductions of 80 percent from 1990 levels by 2050). And the presumed Republican nominee, John McCain, has endorsed restrictions nearly as severe. Significant legislation seems more likely than not in the 2009 to 2010 time period, even if its exact shape is now unclear.