The Future of Coal in Utah
KEY UNCERTAINTIES The future of coal in Utah seems to hinge on five key uncertainties. It is nearly impossible to specifically and accurately project the future of an industry, but understanding these uncertainties will help local leaders prepare and plan for potential outcomes. These five uncertainties are key to coal’s future because an event or shift in any one of them could diminish or increase Utah’s use of coal for electric power generation. The five uncertainties analyzed here are: 1. Public opinion 2. Governmental regulation 3. Technological advancements 4. Market forces 5. Catastrophic events Understanding these uncertainties enables local leaders to successfully position themselves, their constituents, and their communities for the future.
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KEY UNCERTAINTY - 1 Public Opinion Public opinion affects, and is affected by, other uncertainties. The “national mood” towards CO2 and other airborne pollutants is a driver in the recent shift away from coal-fired power generation in the United States. Public opinion has played a pivotal role in driving companies, states, and the federal government to institute, change, and eliminate policies and strategies that directly affect the coal industry. Today, roughly two thirds of Americans favor development of alternatives to coal, with many supporting regulations to reduce emissions. Public opinion, however, is not a foregone conclusion. It shifts in connection with global, national, and regional events. For instance, during the 2008 economic crisis, a majority of Americans shifted to preferring policies favoring the economy over policies favoring the environment. While public opinion has since reverted to pre-2008 levels, with over half of Americans again favoring protection of the environment, future events may significantly alter public opinion on coal, thereby shaping the future of the industry. - signposts -
KEY UNCERTAINTY - 2 Regulation The political landscape surrounding coal is rife with contention. The ongoing debate has blazed across the country and is highly contested, with participants siding for or against increased emissions regulation, and some even questioning the continued use of coal as an energy source at all. As a result, the frequency of coal-related regulation has increased dramatically. The EPA alone has seven separate regulations passed or currently in consideration that will specifically affect coal-fired plants, in addition to currently implemented regulations and other agencies' regulations. Governmental regulation changes how coal mines and power plants operate, in some cases jeopardizing their economic feasibility. - signposts -


KEY UNCERTAINTY - 3 Technology Historically, advancements in the energy sector have proven positive and consistent, but few are regarded as industry-changing events that significantly alter the nation’s energy portfolio. A number of industries have experienced minor breakthroughs, but most are still far from supplanting coal-burning facilities in terms of the amount and consistency of power they generate. The development of fracking however, is the type of revolutionary advancement that could fundamentally affect coal utilization. Before fracking technology was developed, the supply-side limits of natural gas limited its feasible extraction. However, with the widespread implementation of fracking, natural gas is expected to surpass coal as the leading electricity producing material in the country by 2035. - signposts -
KEY UNCERTAINTY - 4 Markets Demand is the single most important driver for Utah’s coal mines and power plants. Regardless of increased regulation and other barriers to operation, power plants and mines will remain open so long as they are profitable. With demand for coal-fired power diminishing in California, the Los Angeles Division of Water and Power (LADWP)—IPP’s primary customer—will not be renewing its power purchase agreement, which is set to expire in 2027. Instead, the LADWP is working with IPP and intends to build a new natural gas plant and begin purchasing natural gas-fired electricity from IPP by 2025. - signposts -
KEY UNCERTAINTY - 5 Calamities A global war, enormous tidal waves, earthquakes, economic collapse, extremely severe weather, etc. can affect the coal market in a multitude of ways. It is important to recognize that a variety of calamities could mean the damnation or salvation of the coal industry in Utah. Given Utah’s location, the impact of disasters geographically specific to Utah (like a devastating earthquake that damages mines beyond repair) are unlikely, and would likely be less severe than large scale disasters occurring elsewhere. Nevertheless, disasters that occur in other states, countries, or even other industries can directly affect the coal industry in Utah. In Germany, for instance, there was a significant shift back to coal from nuclear power after the 2011 tsunami in Japan, and its subsequent impact on the Fukushima Daichi nuclear power plant. Germany decided that the threats of nuclear power generation were less attractive than the emissions problems that had caused the German government to phase out coal use in the first place. Consequently, coal consumption in Germany has been increasing consistently since the 2011 disaster. - more - fracking & earthquakes - signposts -