Should the U.S. Build More Coal-Fired Power Plants?

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As with any commodity, the abundance and availability of an energy source determines its price in the free market. With over 264 billion tons of recoverable reserves (a 234 year supply at current use levels) and over 1,400 operating mines, coal in the United States is clearly both abundant and readily available. As a result, its price remains low in relation to other fuel and energy sources.

In fact, the fuel cost for coal-based generation was less than one quarter of the fuel costs for gas-based generation in January 2008. The average price of coal to electricity generators was $1.92 per MMBtu, whereas the average price paid for natural gas by electricity generators was $8.18 per MMBtu.

When compared to renewable energy sources, coal is again far more affordable. Renewable energy cannot compete with coal on a level economic playing field. In fact, a just released Rand Corporation report on increasing renewable energy use found that market penetration for renewable energy has been inhibited “principally by their higher cost relative to fossil energy.” The study further noted that without substantial expansion of inexpensive, easily convertible biomass supplies and the success of an “ambitious” development program for wind, renewable energy sources “could become quite costly.” The study notes that a better option for meeting CO 2 reduction goals, while maintaining reasonable pricing, would be to keep a “diverse portfolio of energy measures that improve energy efficiency, reduce CO 2 emissions, and increase the availability of energy sources other than conventional petroleum.” That prescription, it would seem, was tailor made to fit the new technologies associated with coal use, such as IGCC, super and ultra super-critical combustion, and coal-to-liquids.

The stability of historic demand, a 234 year supply, along with rapidly improving efficiencies and environmental performance ensure that when compared to other energy options, coal remains an obvious choice. There’s no getting around the fact that coal is one of our most affordable energy options.