According to the US Energy Information Administration (EIA), no new coal-fired plants came to service in the first 6 months of 2014, and only two small units are projected to come on line by the end of the year. The prospects for more coal-fired plants in the future look dismal for several reasons:
- First, there is little demand growth in the mature US electricity market to begin with – and what little growth there is, is taken up mostly by renewables in states with mandatory renewable portfolio standards (RPS);
- Second, ample supplies of natural gas at reasonable prices has reduced the attractiveness of coal; and
- Third, existing and projected environmental restrictions coming from the Environmental Protection Agency (EPA) plus concerns about future carbon regulations makes coal even less of an option.
Currently 29 states have mandatory RPS targets (map below), and they account for two thirds of the country’s total demand. Together, they will require roughly 165 million MWh of non-hydro renewable energy production by 2020. That would amount to around 7% of US retail electricity sales to be supplied by 2015; 10% by 2020.
The Bernstein report points out that fighting for its survival, the fossil fuel lobby – particularly coal – has launched “intense campaigns in state legislatures to try and have the renewable energy targets rescinded”.
With the sole exception of Ohio, where a temporary moratorium on RPS has been introduced, all such efforts have failed thus far. The states where RPS targets are in effect tend to be environmentally leaning and/or vote Democratic, where green policies are popular.
According to the report, US coal consumption for electricity generation will fall by about 25 million tonnes a year by 2020 as a result of these renewable targets. Not everyone is happy to see coal’s gradual demise – but that is where it appears to be heading, at least in the US.