Don’t Believe the Coal Industry’s Warnings

The coal industry is warning that proposed federal regulations on new coal-fired power plants will effectively ban their construction. To which there are at least three rational responses: First, what new plants? Second, probably not forever. Third, that might not be a bad thing.

On Sept. 20, the Environmental Protection Agency is scheduled to release a proposed rule that would cap the amount of carbon dioxide new power plants can emit. To meet that limit -- said to be lower than what existing generators emit -- new coal plants would probably need to be outfitted with equipment to capture and store a portion of the carbon they produce

Some coal and power companies claim such technology “is not commercially available at this time,” as the Electric Reliability Coordinating Council, an industry group, put it. That may come as a surprise to the companies that are using it, including Southern Co., whose new coal plant in Mississippi will capture carbon. Engineers have been able to catch, transfer and hold carbon for decades.

Industry claims about the state of technology seem to translate to a more mundane complaint: It costs too much. That’s somewhat beside the point, seeing as how coal is already about twice as expensive as natural gas -- $100 per megawatt hour, according to the Clean Air Task Force, compared with $56 for gas. It’s market economics that make utilities unlikely to build new coal plants in the near term, not the EPA.

The market will eventually change. So rather than criticize the government for these new rules, the coal industry should thank it. Natural gas won’t be this cheap forever; by setting rules on carbon levels, the EPA is giving coal producers a chance to compete over the long run, but in a way that reflects our increasingly carbon-sensitive world.

The coal industry needs a strong incentive to start getting ready for that future landscape now. These rules provide a level of certainty they’ve been lacking, and that can help drive investment in technology, bringing down the cost to the point that new and cleaner plants eventually make economic sense.

That’s not as far-fetched as the industry suggests. Today’s technology adds about 20 percent to the price of coal-fired electricity, the American Coal Council estimates. The task force puts the figure at as little as 13 percent. If improved technology can reduce those costs further, the coal industry may have a future in the U.S., which after all has vast reserves of coal and a growing demand for power.

But won’t raising the cost of new coal plants in the near term put a chill on the refinement of carbon-capture technology for those plants? That’s unlikely. The EPA is set to announce rules next year capping emissions on existing power plants, which will push further advances. Natural-gas plants will continue to get built, creating advances in carbon capture of their own that are applicable to coal plants. And China and other countries will continue their research. If American companies can’t beat that research, they’ll have to copy it.

And what if, despite all that, the coal industry’s warnings come true? There’s a small chance those predictions are accurate, and that new caps on carbon emissions will indeed mean an effective and indefinite ban on new American coal plants. To which our answer is, ruining the atmosphere is too high a price for protecting one type of power when others are available.

We can’t keep insisting that climate change is a concern while taking no meaningful steps to stop it. For the American coal industry, there are two choices: adapt, or die.

To contact the senior editor responsible for Bloomberg View’s editorials: David Shipley at