In fact, gas prices would have to increase fivefold, to an average $10 per million Btu over the life of a power plant, for coal to become competitive again, the report notes.
Segal said he disagrees that new coal-fired generation will become obsolete due to market forces alone, citing utilities' interest in maintaining a diverse fuel mix to hedge against price fluctuations. "Many power providers are still interested in maintaining a balanced portfolio," Segal said.
But, he added, EPA's rule will disrupt utility hedging by eliminating coal from the fuel mix and "depriving the market of its flexibility."
Other mitigating factors for coal-fired electricity would be if thermal coal prices dropped off steeply or the cost of building a coal-fired power plant came down. But Barnett said such conditions would hinge on a number of factors, including a reduction in coal demand overseas.
He noted that U.S. coal companies are already positioning themselves to boost exports, especially to energy-consumptive countries like China, as domestic demand for coal continues to drop off.
"It's really a tale of two markets," he said, noting that as U.S. thermal coal prices soften, demand for high-grade metallurgical coal and some thermal coal has helped prop up U.S. coal mining activity in traditional high-volume regions like Appalachia and the Powder River Basin.
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Reprinted from Climatewire with permission from Environment & Energy Publishing, LLC. www.eenews.net, 202-628-6500