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Why Renewable Energy Will Not Have to Meet Coal Energy's Costs



March 07, 2010 – Comments (0)

Because coal's costs will rise to meet renewables half way. Whether the environmental damages are recognized or not.

At current rates of roughly 450 million tons per year, Powder River Basin reserves would support over 400 years of continuous coal production,” University of Wyoming economics professor Tim Considine wrote in his recent study, “Powder River Basin Coal: Powering America.”

Yet, some believe such statements obscure the down-to-earth logistics of such a feat, and leave a false impression that relying on Powder River Basin coal for the next 400 years is a simple a matter of choice.

“Hoping that (Powder River Basin) coal will continue to power our country as it has increasingly from 1980 to the present, without doing a rigorous analysis of the geologic, economic, legal and transportation constraints, is not doing the industry or our country a favor,” said Leslie Glustrom of the Clean Energy Action group in Boulder, Colo.

Rather, Glustrom argues, it leaves the U.S. vulnerable to being blind-sided by coal supply constraints much like China is now experiencing, forcing that country to idle plants and ramp up coal imports.

She said production in all of the top 15 coal states has peaked, except for Wyoming and Montana. Beyond 10 years in Wyoming, the big-producer mines in the southern Powder River Basin face significant geologic and economic constraints, not the least of which is the need to remove more overburden to chase downward-sloping coal seams.

The Black Thunder mine, now mining 282 feet of overburden, according to the Bureau of Land Management, will move to a lease sometime around 2020 where the top of coal is 428 feet down. The North Antelope Rochelle mine, in roughly the same period, will move from about 211 feet of overburden to about 347 feet.

“This means that future supplies of coal from the (Powder River Basin) are not likely to be as cheap as those that have been accessed over the last three decades,” Glustrom said.

Passing on costs

Considine’s own study confirms that labor productivity is on the decline in the Powder River Basin. In fact, Powder River Basin coal mines actually added miners in 2009 while production declined, according to figures from the Mine Safety and Health Administration.

Aside from taxes, royalties and payroll, the largest mining expense reported by Powder River Basin mines in 2008 was “fuel supplies and services” to the tune of $538.5 million, according to Considine.

The same is true of all the nation’s coal resources. The cheap and easy stuff has already been had, Glustrom said. And the expenses are passed on to the customer.

In South Dakota, Black Hills Power is asking for a 26.6 percent rate increase. A big portion of that would go to pay for about half of the cost — $128.5 million — of the new WyGen coal-fired power plant in Gillette.

Increased fuel prices were listed as a significant factor in Rocky Mountain Power’s 2010 filing for a 13.7 percent rate hike for its Wyoming customers.

“The largest increase in fuel cost is for coal,” said Rocky Mountain Power spokesman Jeff Hymas.

"Civilization exists by geological consent, subject to change without notice." - Will Durant

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