Getting Rid of Coal Isn’t As Wise As You Think

Liberals never seem to think about consequences.
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Utilities are increasingly looking to shut coal power plants. However, that comes at a price — an increasing reliance on natural gas. Some industry participants are starting to think the trend is going too far.

A big problem
Coal miner Alpha Natural Resources (NYSE: ANR ) highlights the problem coal faces: Nearly 300 coal-fired electric plants are on the chopping block in the country. That’s around 43.5 gigawatts of power set to disappear. The biggest impact is expected to be felt in the eastern part of the country.

That’s a notable problem for Alpha since around 45% of its business in 2012 came from its Eastern steam-coal operations. As coal plants in the region shut down, it will see demand weaken. However, not everyone appears to be on board with the plans to keep shutting coal power plants. In the Northeast that’s because natural gas is accounting for an increasingly large percentage of the market.

According to ISO New England, the regional transmission organization serving Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont, natural gas accounted for more than half of the region’s energy in 2012. And that seems set to keep going higher.

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