Rural Blog: Cheap natural gas, not air pollution regulation, is main reason for coal’s decline

From the Rural Blog

Cheaper natural gas, not regulation of air pollution by President Obama’s Environmental Protection Agency, is the main reason for coal’s decline, says a study by Case Western Reserve University published in The Electricity Journal.

The study, which used data from the U.S. Energy Information Administration, academia, specialized energy consultants, Wall Street analysts and publicly available information of the electric utilities and gas industry, found that natural-gas prices were cheaper than coal for electric generation in nearly every month from January 2012 to January 2016.

While consumption of coal has dropped since Obama took office—declining 23 percent from 2008 to 2015—researchers found “the drop in those years to be correlated with the shale-gas revolution, as gas production increased by a factor of more than 10 and its price dropped in half.

And, due to the continuing—and in some cases accelerating—technological and economic advantages of gas over coal, the decline in coal is expected to continue at least decades into the future.” (Case graphic: benchmark natural-gas price in past four years)

Also, researchers note that new air-pollution regulations were not implemented until June of this year, meaning that “power plants, which use 93 percent of the coal produced nationally, have been operating under the same EPA regulations signed into law by President George H.W. Bush in 1990.”

However, utilities have made choices about closing power plants or retrofitting them for gas based in part on the scheduled implementation of the new rules. Also, the study did not calculate the effect of earlier EPA water-pollution rules that increased costs for surface coal mines.

Mingguo Hong, associate professor of electrical engineering and computer science at Case and co-author of the study, said: “Some people attribute the decline in coal-generated electricity to the EPA’s air-quality rules, even calling it ‘Obama’s war on coal.’ While we can’t say that the EPA rules have no impact — as, for example, discouraging the building of new coal power plants because of the expectation that tougher air-quality rules will clear the courts — the data say the EPA rules have not been the driving force.”

The Rural Blog is a digest of events, trends, issues, ideas and journalism from and about rural America, from the IRJCI, based at the University of Kentucky. The Institute for Rural Journalism and Community Issues is an extension program for rural journalists and news outlets. It takes no positions on issues and advocates only for strong news coverage, responsible commentary and things that make them possible, such as open-government laws. For more information see www.RuralJournalism.org.