1. Coal: Has the Reign of King Coal Ended? Part A
Peter Schwarz Professor of Economics, Belk College of Business and Associate, Energy Production and Infrastructure Center (EPIC) UNC Charlotte
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2. Outline Introduction A Brief Economic History Supply Chain Cost
Market Structure
Environmental Considerations
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3. Introduction (1) Primary applications Metallurgical/ coking coal
Industrial applications
Especially heating steel
Thermal/ steam coal
Electricity generation
Major use and our focus
Large but declining share of electricity generation
Benefits
Available
Reliable
Low cost
250 year supply.
Static analysis.
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4. Introduction (2) Why declining share of electricity generation?
Scars the landscape and pollutes neighboring water
Strip mining
Mountaintop removal
Debris may be relocated near water
SO2 emissions
Acid rain
Health impacts
Lung functions
E.g. asthma
NOx
Smog Hg
Brain and nervous system development
Heavy metals
E.g. Arsenic
Toxic (poison)
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5. Introduction (3) Major reason for decline CO2 emissions
Electricity accounts for 1/3
Coal emits most on a per-unit of electricity basis.
Utilities converting some coal plants to NG
Closing down many coal plants.
No new coal plants being built in U.S.
Clean Power Plan in limbo
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6. Introduction (4) Coal holding its own: In India In China Germany
Starting to scale back
Pollution
GHG concerns
Germany
Phasing out nuclear
Withdrawing subsidies for renewables
Lignite, a highly polluting form of coal
Low heat rate (low amount of electricity per unit of coal combusted)
Consequently, high CO2 emissions per unit of electricity produced
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7. Brief Economic History (1)
Geology
300 million years ago
Swamps covered earth
Buried vegetation formed peat
Under heat and pressure formed coal
Lignite
Soft, brown
High water content
Low heat rate
Sub-bituminous
2nd most common, used for electricity generation
Bituminous
Most abundant
cost common for electricity generation
Anthracite
Hard, highest heat content, lowest moisture, lowest ash
Takes longest to form.
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8. Brief Economic History (2)
China used for heating 3,500 years ago
May have been because they had limited wood remaining.
By 200 AD, burned in furnaces.
Around 1000 AD, used to produce iron and steel
In place of wood charcoal
Romans used in England around 200 AD
1200 AD: British shipped coal from Newcastle.
Soon after, began underground mining
Early 1700s
Made coke from coal
Coke burned hotter
Could melt iron ore and extract pure metal
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9. Brief Economic History (3)
1700s: Industrial Revolution
Great Britain
Steam engine, factory system
Profitable to dig deeper for coal
Coal mine explosions, air pollution
By 1885, passed wood as major energy source.
More compact.
Didn’t require large amounts of land for cultivation.
Falling transportation costs
Coal-fired trains, ships
Depletion of wood
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10. Brief Economic History (4)
20th Century: Age of Oil
New use for coal
Generating fuel
Often cheaper than oil
Large scale
Dominated urban areas
Spread costs over many customers
Mid-20th century on
Demand grew, despite environmental concerns
Especially in developing world
Major baseload technology for generating electricity
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11. Brief Economic History (5)
Prospects
Clean coal technologies
Plants that operate at higher temperatures
Current (sub-critical) technology
Increasingly common super-critical technology
China is using ultra-super-critical technology
High pressure can change coal into gaseous state
Syngas
Can be used in place of NG in combined-cycle plants
Syngas plants have required large subsidies in U.S.
Duke Energy operates plant in Edwardsport, Indiana
FutureGen in IL
Funding for FutureGen was suspended by U.S. DOE
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12. Supply Chain (1) From Rio Tinto
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13. Supply Chain (2): Extraction
Mining: Surface
Predominant in U.S. and developed countries
Strip
Coal close to surface
Mountaintop removal
Access deposits several hundred feet below
Restoration
1977: Surface Mining Control and Reclamation Act (SMCRA)
Company posts performance bond
May affect some regions disproportionately
WV: Thin coal seams
Costs spread over fewer tons of coal per acre and narrower profit margin.
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14. Supply Chain (3): Extraction
Mining: Underground
Predominant where coal seams deep
Room-and-pillar
Retreat mining
Dangerous
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15. Supply Chain (4) Location of Supply
Almost all countries contain coal reserves
U.S., Russia, China dominate
Over 50% of total reserves
China largest producer, followed by U.S.
China produces, consumes as much coal as other countries combined.
Imports about 5% of consumption.
EU imports more than half.
Japan close to 100%
U.S., South Africa, Australia self-sufficient
Big debate in U.S. about whether to allow coal exports.
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16. Supply Chain (5): Processing
Coal cleaning
Remove impurities, ash
Increases heat rate
Less coal needed
Lower carbon emissions.
Lower transportation costs
Crushing
Sorting
Pulverization
More surface area
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17. Supply Chain (6): Transportation
Rail dominates
Life-cycle perspective
Additional emissions
Diesel emissions
Coal dust
Barges near waterway
Pittsburgh
Pipelines
Coal slurry
Ships
Exported coal
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18. Supply Chain (7) Should Duke Energy own its own coal mines?
Economics- lower transactions costs by controlling coal supply
Harlan County USA
Award-winning documentary
Violent protests between United Mine Workers Union and Duke Energy
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