Cheap coal bad news for green energy

Stacks emit steam at the Jim Bridger Power Plant near Point of Rocks, Wyoming.

TEXT OF STORY

Steve Chiotakis: We're set to get some numbers this morning -- the Producer Price Index. And the recession is driving prices for commodities like coal way underground. It's plummeted more than 60 percent since the summer. Analysts predict even cheaper coal prices next year. As Sarah Gardner reports from the Marketplace Sustainability Desk, it's not good news for green energy.


Sarah Gardner: Coal is a main ingredient in steel. And right now, nobody's buying much steel to make cars and buildings. So the price of "metallurgical" coal to make steel has melted. And that affects prices for so-called "thermal coal," the cheaper stuff power plants use.

Jim Thompson edits the Coal and Energy Price Report:

Jim Thompson: Metallurgical coal not going to steel makers then is available for electric utilities to purchase, which obviously causes the price of thermal coal to go down as well.

But cheap coal gives utilities less incentive to invest in cleaner energy like wind. Even in Europe, where emissions from power plants are capped, coal now looks appealing.

Analyst Geoff Allen is at ICF International:

Geoff Allen: The cheapness of it even makes up for the penalty that companies have to buy these allowances.

That means some European utilities might just buy more carbon emission permits rather than switch to something greener.

I'm Sarah Gardner for Marketplace.

About the author

Sarah Gardner is a reporter on the Marketplace sustainability desk covering sustainability news spots and features.

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