Freedom to Use U.S. Energy Resources Thwarted by U.S. Policy

Freedom to Use U.S. Energy Resources Thwarted by U.S. Policy

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Since technology development in oil and natural gas production has unleashed new domestic energy supplies and dramatically increased known domestic energy reserves, the U.S. has claimed the title as the most energy rich country in the world. However, the key to this title is counting all energy reserves, including coal. In addition to having more nuclear power plants than any other country, the U.S. has the most combined oil, natural gas, and coal reserves.

The question is, “Will U.S. policy allow the freedom to use all energy resources, namely coal?”

Coal-fired power plants have historically generated the largest share of electric power in the United States, and although natural gas has gained a much larger share, coal continues to be the top source of generation, as you will see in the graph below.

Coal
(Click to enlarge.)

So what is the problem? There are 1,400 coal-fired power plants operating in the U.S. today. Of these 1,400, only 90 have been built in the last 20 years. 82% of these plants are greater than 30 years old, and 64% of these plants are greater than 40 years old. Therefore, if U.S. ratepayers are to continue benefitting from its abundance of coal, new plants will be required.

But in a not-so-obscure way, the federal government is doing its best to price coal out of the marketplace, through onerous regulation, thus eroding American wealth of energy resources. With the EPA’s persistently debilitating regulations, coal plants look as though to have a bleak future. Rules like Utility MACT and Boiler MACT place unreasonable and unachieveable emissions limits on current coal plants. Companies are required to use Maximum Achievable Control Technology (MACT), as determined by regulators, to curb the emissions coming from coal plants.

While this may sound good, this requires companies to go far beyond a rational approach for emissions reductions. The cost to install this new technology is so high that instead of installing the technology, companies will be forced to close plants, which will likely cost ratepayers more in some other form and diminish the American energy portfolio. The likely result of these policies will be little, if any, building of new coal plants.

Because of the very long-term operating life of power plants, diversity in power production remains the right policy. Natural gas is a very good and versatile fuel, useful for many purposes in our economy – power, manufacturing, transportation, heating, and now exporting. However, relying too heavily on natural gas brings much exposure. Policy should support the construction of nuclear and coal as a way to provide stability to U.S. power production for the next generation.

Other countries, such as China, are building coal-fired and nuclear power plants at a staggering rate. With unreasonable rules in place, the US will begin to lose one of its greatest advantages in power generation, which is its diversity. Emissions reductions can be achieved without giving up on an abundant American source of energy.

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