Martin Rosenberg | Dec 03, 2010

The news is grim on the coal front.
Ten utilities in the past 18 months have declared they will close more than 36 of their most rundown coal-burning electric power units, according to a tally in the New York Times earlier this week.
Clearly coal, which provides have of the electricity generation in the United States, is embattled. Yet coal companies, while realistic about the challenges ahead, have a story to tell about the path toward a brighter future in their industry.
To learn that story, EnergyBiz recently sat down with Steve F. Leer, the chairman and chief executive of Arch Coal in St. Louis, the second largest coal producer in the country.
EnergyBiz: What is the future of coal?
Leer: In the last decade, coal has been the fastest-growing energy source in the world in terms of total British thermal units delivered. Solar, perhaps, has grown at a higher percentage rate, but from a small base of a few tenths of one percent. The magnitude of the growth in coal capacity was larger than all other fuels, and it's led by demand from China and India.
EnergyBiz: What do you tell investors about the outlook for coal when utilities are delaying construction of new coal-fired generation?
Leer: Planned plants that were projected three or four years ago have ratcheted back. But we are still seeing the second-largest coal plant building boom that I've seen in my career in 30 years. They've been planned and in permitting processes for the last 10 years. That goes out to about 2012, 2013. The question is what goes on beyond that? We have approximately 1,050 coal-fired power plants in the United States. Perhaps the only positive thing that came out of this traumatic recession is that the capacity needs of most of the U.S. utilities got moved back three, four years. It doesn't mean that we don't go back on our upward electric demand curve. The utilities are wrestling with the question of what are they going to build as the next generation of power plants?
EnergyBiz: When you talk to utility executives, do they say there is too much uncertainty surrounding coal?
Leer: They do want some certainty moving forward, and there's a huge amount of uncertainty out there. But we're going to be burning coal for a long, long time.
EnergyBiz: Will it remain half of our generation?
Leer: You know it may go to 44 percent. It may go to 52 percent. It's going to be bouncing around for the next decade.
EnergyBiz: Congress doesn't seem likely to address the carbon issue in the near future. Would you like to see that issue addressed by Congress, setting a price on carbon?
Leer: We need to try to resolve the uncertainty. We've always had the position that if you look at CO2, it is a global question. How do we stabilize CO2 in the atmosphere? The only technology that might be achievable on a global basis in the next 40 years looks like it's carbon capture and sequestration. Keep in mind that the developing world's emissions are far exceeding the developed world's.
EnergyBiz: What is the answer to the political paralysis we have in this country that we can't really just nail our coal and energy policies?
Leer: If you take the next 10, 12 years and focus on the technology, we'll have the answer as to whether we can achieve carbon capture and storage. We've proven that we can do a lot of this. An MIT study said we need 10 world-scale projects, and we need to get on with it.

A massive federal research effort to secure a future role for coal-powered generation, FutureGen, will be a topic of discussion at the upcoming EnergyBiz Leadership Forum in Washington, Feb. 28 - March 1. The conference will fully explore game-changing developments in the energy sector.

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