coal industryyp update ~ markets & public...
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Coal Industry Update ~ y pMarkets & Public Policy
Society for Mining, Metallurgy & E l ti (SME DC S ti )Exploration (SME-DC Section)
September 8, 2009 ~ Washington, DCDC
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ACC ObjectivesBusiness-to-BusinessSupport the business, marketing and management Suppo t t e bus ess, a et g a d a age e tcapabilities of American coal suppliers, coal consumers, coal transporters, coal traders and coal support service companiescompanies.AdvocacyAdvocate for coal as an economic, abundant/secure andAdvocate for coal as an economic, abundant/secure and environmentally sound fuel source.LiaisonS t th ti iti d bj ti f i tiSupport the activities and objectives of associations involved in advancing coal industry interests
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ACC Membership
The ACC represents the collective interests of 160 companies spanningof 160 companies spanning
the entire coal chain.From the hole in the ground to the plug in the wall.
• Coal Suppliers C l C ( ili & i d i l)• Coal Consumers (utility & industrial)
• Transportation (rail/barge/truck/ports)• Energy Traders• Energy Traders• Coal Support Services• Contributing Supporters (universities & associations)Contributing Supporters (universities & associations)
www.americancoalcouncil.org
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Energy Challenges
Economic Do nt rn• Economic Downturn• Global Energy Demand• Security of Supply ~ Fuel Risk• Energy & Environmental Policy ~ RegulatoryEnergy & Environmental Policy Regulatory
Risk• Data ~ Information Risk• Data Information Risk• Technology & Infrastructure• Education
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Economic DownturnDow ~ US Markets ~ August 27, 2009
Dow ~ Utility Markets ~ August 24 2009Dow ~ Utility Markets ~ August 24, 2009
Utility Sector-18.49%
8/27/08 8/27/098/27/08-8/27/09
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Environmental Economics
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Decline in Electricity Consumption
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Decline in Industrial Demand
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Decline in Coal Consumption
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Global Energy Demand
Power Generation Capacity Under Construction Worldwide
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Emerging Economies Still Emerging
• China’s economy will expand faster than previously forecast this year and next as the government’s 4 trillion-yuan ($586 billion) stimulus package spurs domesticyuan ($586 billion) stimulus package spurs domestic demand and boosts investment.
• The world’s third-largest economy will expand 8.3 percent in 2009, from an earlier estimate of 6 percent.
• China’s fiscal stimulus has already driven investment back to pre-crisis levels and lending surged more than p g gsix times in March.
• Growth will quicken to 10.9 percent next year, compared with a previous prediction for a 9 percent expansionwith a previous prediction for a 9 percent expansion, they said.
G S 22 2009 ( )Goldman Sachs ~ April 22, 2009 (Bloomberg)
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Emerging Economies Still Emerging
• While most of the world grapples with a crippling financial crisis and a recession, optimism reigns in much of India as its economy continues to growof India as its economy continues to grow.
• “India is not as vulnerable” as other countries, said Rajeev Malik, head of Indian and Southeast Asian economics at Macquarie Capital.
• India reported that its economy grew 5.3 percent in the quarter ended in December when compared with the q pprevious year. While that was down from the 7.6 percent growth in the earlier quarter, it was in sharp contrast to the retrenchment in other countries.
New York Times ~ March 1, 2009
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Global Coal Build
243
151200
250
w C
oal
city
8962 53 65
50
100
150
Gig
a w
atts
of N
eBa
sed
Cap
ac
0China India Other
AsiaEurope USA ROW
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Security of Supply ~ Fuel Risk
6,000
4,000
5,000
U
2 000
3,000
Qua
drill
ion
BTU
1,000
2,000
0USACoal
Russia Iran Saudi Arabia Venezuela
Natural Gas Crude Oil Coal
Source: EIA, 2008
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US Coal Trumps Saudi Oil
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If Power Plants Were Draft Animals
Mule
Natural Gas- 21%Sled Dog
Hydro- 6%
Workhorse
Coal- 49%Burro
Carrier Pigeon
Wi d 1%Burro
Nuclear—19%Wind- 1%
Scale sets the context.
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U.S. Coal Generation36 States Obtain at Least 30% of Electricity from Coal
Source: Penn State University
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Alternative Fuels
The Scale Needed to Replace Coal in the U.S.
• NUCLEAR: 250 more reactors• NATURAL GAS: 17 more Trillion Cubic Feet• HYDRO: 500 facilities size of Hoover Dam.
The reality of physics is that electricity cannotThe reality of physics is that electricity cannot be stored in large quantities – an inevitable constraint on solar and wind generation.
1818
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Energy & Environmental Policy
Legislative & RegulatoryInitiatives Currently UnderwayInitiatives Currently Underway
~ GHG Legislation & EPA Endangerment Finding~ SO2 NOx Hg ~ CAIR/CAMR SO2, NOx, Hg CAIR/CAMR~ Mountaintop Mining~ Ash Management/Disposal~ Roadless Rule
NSR~ NSR~ CWA~ RES/RPS~ MINER Act MINER Act~ CCS~ CO2 Registry
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ACES Implications & Concerns • What’s Not Included
– Safety Valvey– Legal & Regulatory Framework
• Allowances• Performance Standards• Targets & Timelinesg• Offsets• Federal vis-à-vis StateFederal vis à vis State• Global Competitiveness• CostsCosts
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Data ~ Information Risk
“I have become increasingly concerned that EPA itself has paid too little attention to the science of global warming. EPA and others have tended to accept the findingsEPA and others have tended to accept the findings reached by outside groups … as being correct without a careful and critical examination.” That examination sho s that “a ailable obser able data in alidate theshows that “available observable data … invalidate the hypothesis” that humans cause serious global warming.”
~ Dr. Alan Carlin, EPA,National Center for Environmental Economics
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THERE ARE NO NATURAL GAS EXPERTSBouncing Ball of EIA Forecasts of new NG in 2015
In 2001 it was C ti l
In 2005 it was I t d LNG
In 2009 it is Shale GConventional
DrillingImported LNG Gas
Conventional Drilling
Other30%
Other45%
Other50%
Shale Gas56% LNG70%
Shale Gas50%
2001 2005 2009
EIA forecast of what the major source of incremental NG will be by 2015
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Technology & Infrastructure
The Dramatic Success of Clean Coal Technology
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Clean Coal…Green Coal…Coal use triples as regulated emissions decline 80%+; Coal use triples as regulated emissions decline 80%+;
Green coal now provides a path to nearGreen coal now provides a path to near--zero emissions.zero emissions.
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Why CCS?• “CCS is the single most important
new technology for CO2 savings.” IEA
“CCS / f COInternational
• “CCS provides 1/5 of needed CO2 reductions in 2050.” IEA
• “Without CCS the cost of stabilisation
EnergyAgency
rises by 70%.” IEA
• “CSS is the only low-carbon solution for gas/coal cement and iron andfor gas/coal, cement and iron and steel sectors.” IEA
• “Coal with CCS is the low-cost, low-carbon solution capable of poweringcarbon solution, capable of powering a green economy at 15 to 50 percent less cost than wind, nuclear or natural gas with CCS ” C i M llnatural gas with CCS. CarnegieMellon
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Coal with CCS ~ The Low Cost, Low Carbon Option
2020
Coal with CCS: 15% Coal with CCS: 15% -- 50% Less Expensive than Alternatives50% Less Expensive than Alternatives
16
18
20 The cost of delivered wind power to the populous Northeast or Southeast
would be 12 to 20 cents/kWh*
1012 12
10
12
14
s pe
r kW
h
4
6
8
Cen
ts
0
2
Coal Gasification with Nuclear Low Case Wind High Case Wind
* Apt. et al., “A National Renewable Portfolio Standard? Not Practical.” Carnegie Mellon University, 2008.
CCS
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Education
“The electric power industry has come to be defined by its discharge, rather than y gits product (electricity) and the benefits of electricity.”
~ Jason MakansiPearl StreetPearl Street
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Access to Electricity and the Quality of Life
Energy is GoodAccess to Electricity and the Quality of LifeP l i S i ti ith G t A t El t i itAccess to Electricity and the Quality of Life
Survive Childhood
LiveLonger
DrinkCleaner Water
EatBetter
Are BetterEducated
People in Societies with Greater Access to Electricity:People in Societies with Great Access to Electricity:
2929Under Five
Death Rate/1000Life Expectancy
(years)Access to
Improved Sources (%)
Under Nourished(%)
Literacy Rate (%)
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Coal: America’s Energy Future
Source: National Coal Council, Urgency of Sustainable Coal, May 2008.
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American Coal CouncilAmerican Coal Council
Janet Gellici, [email protected]
i l ilwww.americancoalcouncil.org202-756-4540