Cheap coal bad news for green energy

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


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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Cheap Coal. It should be cheap! Lets forget about the price of coal. It is not clean and that is the big problem. Coal is used to burn and create heat to boil water to turn a steam turbine. This steam turbine turns a induction motor or generator. This is the process that we use today. All that mechanical work to make electricity. This type of technology requires a lot of support and service. Now I am going to talk about Solar (PV). First of all Solar Electric has no smoke stacks or pollutes. Second of all there is no fuel to burn. Third; there are no parts to break or wear out. Now for the best part. Solar Electric is cheaper than using fuel. The only reason why I say it is cheaper than coal is with coal there is a on going cost for electricity. Solar Electric's on going cost is less than 1% of the cost of solar electric. There is no use for smoke stacks with solar electric systems. Independence is what our country is based on. We need independence from coal, and oil. As far as I know "No one ever died mining solar cells". There is one thing that I know "No one in the solar electric industry ever got "black Lung" from working with solar cell technology." Think about it. What is better cheap coal that kills people, or solar electric that does the same job and no one dies. The last part is a joke to me. Since when is coal clean? It is carbon and when you burn carbon it becomes a carbon gas! Carbon gas has been renamed! It is called "Green House Gas". Thomas Edison was right, I quote: "I'd put my money on the sun and solar energy. What a source of power! I hope we don't have to wait till [sic] oil and coal run out before we tackle that."

The Future of Alternative Energies and the future of America

I was driving home from work last week and noticed the latest gas price of $ 1.66, seems like we were just recently at over $ 4 per gallon. Oil is now $ 45 per barrel, commodities like steel are down, our national debt is skyrocketing, and all the once high flying Solar energy stocks and green eco funds have plummeted along with the global markets. They say we are in a severe recession, that demand will fall for energy and that gas could fall to $ 1 per gallon as unemployment hits multi-decade highs. Seems like we were just being shocked by $ 145 per barrel oil and record profits by oil companies, it makes me as an American citizen really feel manipulated and that our government hasn't had a plan for securing our country's future. How did we get into this financial crisis? Who caused this collapse? Seems to me terrorists couldn't have implemented a plan this exacting, yet we hear that this was triggered by only four percent of the outstanding US home loans being in question. Now all conversation turns to how many billions of US tax payer dollars will be reactively given to faltering industries to mitigate loss of jobs in America. These are global corporations asking for US bailouts. Will unsecured pension plans, hurt by the recent stock market collapse, be next to default? Where will jobs come from as we rise out of this global recession? Green technology jobs and projects may be now questionable due to falling energy prices. Will America be the country and we be the innovators of this Intellectual property? Can the hundreds of alternative energy startups get the financing they will need to stay alive through this recession and to successfully commercialize their products?

Barack Obama will take office soon and has stated his administration will invest $ 150B over ten years to catalyze private efforts to build a clean energy future. Let's hope he isn't an advocate of 'clean coal', which many doubt exists or today's Ethanol as his green alternatives. Will Q Microbes hold promise for Ethanol production which is in it's early stages of research at UMASS Amherst? My hope is that he backs strong Solar, Wind, and Natural Gas based 'distributed hydrogen generation' projects, the building of Hydrogen distribution fueling stations, and Fuel Cell use in his ten year plan. Just to think, we could have used $ 25B to setup 20,000 hydrogen fueling stations in the US, instead, hundreds of billions will be wasted on reactive spending rather than implementing long-term energy solutions. Will our new president have the discipline and vision to invest in these energies and infrastructures, to create and capture these jobs, or will he drop these pre-presidential energy plan headlines until another day when prices start rising again? Where will all these billions come from, between the Iraq spending, financial crisis bailouts, and proposed alternative energy initiative investments? The more we print new money, the more we risk the value of the US dollar falling to all time lows and the American family's wealth further disappearing. As we recover from this financial crisis and recession, will India and China's thirst for oil reinitiate the high demand and prices as new cities continue to be developed in these and other emerging countries? Will inflation drive energy prices back up?

As a citizen and investor interested in the advancement of alternative energies, in America's future, and in managing these global wealth shifting trends, I sincerely hope we aggressively drive energy science, provide research and development dollars to these early startups, and reduce our dependency on dirty foreign oil and fossil fuels. We need a 'Hydrogen Manhattan Project' that integrates Solar, Wind and Natural Gas as a source of power to generate distributed onsite hydrogen coupled with fuel cell use. Focused research and development dollars solve problems through science advancements. Innovation and diversification into green energy is the answer for America and the world. For more information visit and bookmark my website; www.go-h2.net

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Listeners should also know that coal prices in the US are highly volatile, so a short-term drop in prices does not make a new coal plant any less risky. It takes years to get a new coal plant from blueprints to production of electricity. While new wind and solar facilities are also affected by rising steel prices and increases in other construction materials, solar and wind energy is free of charge so there are no risks associated with commodity prices. Planned coal plants in the US must take into account not just rising construction costs and the costs of highly likely carbon regulation but also rising transportation costs to get the coal to the plant and unpredictable price fluctuations in the coal market.

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