Tuesday, August 31, 2010

Drop in price of natural gas threatens coal as cheap energy

Last week the price of natural gas dropped under $4 per million British thermal units, making it competitive with coal, said the U.S. Department of State. "Coal has always been cheap and dirty. And the dirty part was justifiable because it was so cheap," Shelley DuBois of CNN reports. "Now, gas prices are dropping, threatening coal's dominance in the North American energy market. Which means gas could take over before coal gets a chance to clean up its act." As natural gas becomes cheaper some are questioning government investment in clean coal technology.

"Coal is still cheaper at $2.25 per million Btu in 2010, according to the U.S. Energy Information Administration," DuBois writes. "Even so, the coal market is starting to feel the burn from gas on its heels." In 2002 the federal government founded the Clean Coal Power Initiative to partner with industry and push clean coal technology. The initiative has so far completed 3 of the 18 total projects, 7 of which have been terminated. Gas is particularly threatening to coal, because it is also an local fuel that could provide energy relatively close to power pants, DuBois writes.

Gas isn't without its own environmental concerns, particularly water pollution from shale drilling plaguing the industry. "If regulators snap into place to oversee the United State's copious shale gas reserves, then coal will really be in trouble," DuBois writes. "Coal won't just be able to rely on being cheap anymore, it will have to be clean too. And yet, if natural gas stays cheap, it will still become increasingly difficult to make the economic or political case to keep throwing clean money after dirty coal." (Read more)

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