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January 07, 2013
Brattle Study Examining the Outlook for Coal Plants in the U.S. Cited in Economist Article
A recent article published in The Economist discussing how the use of coal as a provider of electricity is declining in the U.S., yet on the rise elsewhere throughout the world, cites a recent study by Brattle economists that examined the impact of emerging Environmental Protection Agency (EPA) air quality regulations on coal-fired power plants. The article, “The Mixed Fortunes of a Fuel,” attributes the rise of coal as one of the world’s largest sources of primary energy to its attractiveness among developing economies. This is due to its advantages of being cheap and widely available, which are deemed to outweigh its detrimental effects to the environment. America’s coal business, in contrast, has been upended by the rise of shale gas, which is widely available at unforeseen prices. This has made gas an increasingly appealing option to power companies, many of which have been switching away from coal in growing numbers. The article suggests two reasons why the shift from coal to shale gas may be long-lasting. One reason is that gas is continuing to come on stream and becoming cheaper to produce. It will also be fairly easy to use more gas without having to build new power stations. Another reason given for coal’s continued decline is that gas plants are more compliant with the EPA’s environmental regulations. Despite the reasons given for the shift from coal to gas, the decline of coal will be protracted, according to the article. Brattle’s study is cited to support this idea, which found that coal use will stabilize again as gas demand finally makes gas prices more costly than coal. The Brattle study, “Potential Coal Plant Retirements: 2012 Update,” was co-authored by Brattle principals Metin Celebi and Frank Graves, and research analyst Charles Russell. It is available for download below. To read the article in its entirety, please visit The Economist website.