Friday, August 28, 2009

Coal may not rebound even after recession ends

The abundance of cheaper natural gas and a declining industrial demand for coal may signal an end to coal's dominance in the U. S. energy market. Bruce Nichols and Eileen O'Grady of Reuters report that industry analysts predict that even after the recession ends, demand for coal from its industrial and power-generation base may not recover. (Photo by Lucas Jackson)

Nichols and O'Grady report that "power companies are reducing use of coal plants because of declining demand from heavy industry, the economic sector hit hardest by the recession." Due to the increased availability of natural gas and other alternative energy sources the loss of this industrial "baseload" appears long term.

Some electric companies are already trimming their plans to expand coal-fired generation and at least one has begun replacing some of its coal plants with gas units, Nichols and O'Grady note. Coal's hope for a rebound might be a quick improvement of the economy and industry before natural gas and "cleaner" forms of energy have the ability to cope with the demand, they write.

Even if it scores a quick rebound, coal appears to have lost its stranglehold on the U. S. energy market for good, with increased government action to slow global warming, Nichols and O'Grady report, noting that that the Electric Power Research Institute predicts coal's share of the power market will shrink to 38 percent bay 2030. (Read more)

No comments: