Global warmers keep expressing their desire to "dial
coal out of the equation." And the Kyoto protocol has only encouraged them. But at
the same time, Congress wants to lower energy prices by increasing competition in the
electric industry. It’s an equation that’s hard to balance.
Like Mother Nature, market forces are hard to harness, and the market strongly favors
increased use of coal—a cheap source of electricity.
Consider: Over the past 20 years, the U.S. gross national product grew about 70 percent
in inflation-adjusted terms, as did our use of electricity. Coal-fired power plants
provided 60 percent of the new supply. (Nuclear power comprised more than 30 percent in
that time period; it won’t in the future.)
On average, electricity is the cheapest where coal power is dominant (Figure 1).
It’s no shock, then, that recent analyses from the Gas Research Institute, the Energy
Information Administration, and the Environmental Protection Agency all find electric
competition yields more coal use.
Figure 1. Average electric rates vs. share of
electricity from coal for each state (excludes four states with greater than 50 percent
hydropower).
The growth could be as much as 400 million tons of coal per
year. The reason_ Tweaking an existing coal plant to make more power is vastly cheaper
than building anything new. We have lots of coal plants, and lots of coal.
And now we’ve embarked on a grand experiment to "deregulate" the
electric utility industry. The implications of this trend are enormous—electricity
purchases exceed all spending on local, long distance, cable, and cellular communications
combined. Regardless of the myriad of critical issues, one thing is clear: The markets
will chase cheap if they’re allowed.
This fact, of course, is the source of much environmentalist angst. Their solution_
Push legislators to require the use of their cherished alternatives. One especially inane
scheme calls for labeling electrons, such as "bad" ones from coal plants!
But these schemes run contrary to the goal of freeing up the industry by promoting
competition and lower prices and raising a red flag in utility circles. If
environmentalists do manage to dial out the primary source of cheap
electricity—coal—we can hang up the phone on lower prices.
Physicist Mark P. Mills is a technology strategist and
energy consultant and president of the research-consulting firm Mills•McCarthy &
Associates Inc. He also serves as a science advisor to Greening Earth Society
