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Coal’s Worst Fear Affirmed

A new government analysis of President Barack Obama’s signature effort to fight climate change affirms what critics suspected: the proposal could further weaken an already battered coal industry.

Electricity generation from the carbon-intensive fossil fuel would fall by 90 gigawatts, more than twice the decline government analysts had predicted as recently as April, according to a report released Friday by the Energy Information Administration. There were about 292 gigawatts of coal-fired generation capacity in 2014, according to EIA.

Most of the coal-plant closures would occur by 2020, when the Environmental Protection Agency’s proposal to cut carbon dioxide emissions would kick in. Consumers may also take a hit as electricity prices would increase as much as 7 percent on average by 2025, partly because of the costs of building new power plants.

“In short, EIA confirms EPA’s rule is all pain, no gain — a symbolic gesture that continues the administration’s policy path for destroying high wage jobs for generations,” said Hal Quinn, chief executive officer of the National Mining Association, a lobbying group that represents companies including Peabody Energy Corp.

Coal, which has served as the backbone of U.S. electricity generation for decades, is in a steep downturn amid competition from lower-cost natural gas and pressure to meet tougher emissions standards.

Economic Benefit

The Obama administration’s proposal, released in June, is not final. Supporters, including Senator Maria Cantwell, a Washington Democrat, said the EIA projected the plan would cut carbon emissions from all U.S. power plants 25 percent below 2005 levels by 2020.

“As proposed, the Clean Power Plan will significantly reduce carbon pollution that will deliver climate and health benefits of up to $93 billion,” said Liz Purchia, a spokeswoman for the EPA.

The EIA analysis doesn’t consider possible health and environmental benefits. It predicts a minor impact on the U.S. economy overall. Gross domestic production could fall as much as 0.25 percent by 2040, assuming emissions are further restricted after 2030, the EIA said.

Purchia said the EPA is reviewing more than 4 million public comments and working to ensure the plan is affordable.

Coal’s Decline

The EIA analysis found that coal production will decline 20 percent by 2020 and 32 percent by 2035, from a business-as-usual case.

Coal use has already been dropping, generating 37 percent of the country’s electricity in February -– down from over 50 percent in 2007, according to the EIA.

The market capitalization of the publicly traded U.S. coal companies has shrunk to about $19.4 billion from $78 billion in 2011, according to data compiled by Bloomberg.

Patriot Coal Corp. filed for bankruptcy last week for the second time in three years, joining at least a half dozen other coal producers that have sought protection amid the downturn.

Murray Energy Corp., the closely held miner that’s rapidly expanded amid the downturn, is now planning to lay off a quarter of its staff — about 1,800 people — at nine locations, according to a person familiar with the situation, who asked not to be identified Thursday because the information isn’t public.

Peabody spokesman Chris Curran said the U.S. should rely on technology “not closures” to reduce carbon dioxide emissions from fossil fuels.

Natural Gas

Natural-gas use initially would replace lost coal, with wind power and other renewable energy sources taking a greater share of U.S. electricity production in later years, the EIA said.

Natural gas generation in April and May is predicted to have almost reached the level of coal use for the first time since April 2012, the EIA said in a short-term energy outlook on May 12.

While retail electricity prices are projected to increase as much as 7 percent on average from 2020 to 2025, in some regions the costs begin to recede to the EIA’s baseline levels by 2030. Electricity costs in the Southwest and Southeast may remain higher than without the EPA rule, according to the report.

Steve Clemmer, director of energy research at the Union of Concerned Scientists, a Cambridge, Massachusetts-based environmental group, said the analysis shows the cost impacts from the rule to be modest.

“The increase in natural gas use in early years followed by a big shift to less polluting renewable energy enables the country to continue the transition away from coal,” Clemmer said in a statement.

Representative Lamar Smith, a Texas Republican and critic of the EPA, requested the analysis from EIA.

China: Extending Coal Banned

Beijing. China will extend the ban on burning the coal to the suburb area to overcome the air polution. China will forbid the sell and burn on coal with the high ash and sulphur.

National Energy Administration (NEA) will support the use of central heater and the supply of power of natural gas and renewable fuel to substitute the heater and power of low rank coal.

This ban is the continuous ban of using coal in six central district last year. This ban will happen on 2020. NEA said that the plant using coal will be replaced with natural gas or cleaner coal.

Recently, China has around 600.000 industrial plant using coal as its fuel. Mainly at the habitation area in north of China. The yearly level use of coal in China is at 3,7 million ton. The fuel of coal support the 66% of energy in China.

China Cuts Subsidies for Shale Gas Developers Through to 2020

China will cut special government subsidies for shale gas developers in the next five years even as the country encourages explorers to produce more clean energy such as natural gas to replace coal.

The subsidies will be cut to 0.3 yuan per square meters from 2016 to 2018, and to 0.2 yuan from 2019 to 2020, China’s finance ministry said in a statement today, citing industrial development polices, technology advancement and cost changes as reasons, without elaborating.

Energy executives including PetroChina Co. Chairman Zhou Jiping have urged the government to extend the current 0.4 yuan per square meter subsidy to 2020 or 2030 to spur growth in the usage of shale gas.

The subsidy reduction will ’’certainly make it more challenging’’ for shale gas developers to keep already high production costs in check, said Neil Beveridge, a Hong Kong-based analyst at Sanford C. Bernstein.

The country needs to “open the exploration licensing wider to more private players” in order to copy the success of the shale boom in the U.S., Beveridge said.

China has reduced its shale gas production target for the end of the decade to around 30 billion cubic meters, or about a third of its original goal as difficult geology, lack of infrastructure and limited exploration rights conspire against shale-gas ambitions.

China, which has the world’s largest shale gas reserves, awarded 18 companies exploration rights in two auctions in 2011 and 2012, in an attempt to replicate the U.S. shale boom and cut its reliance on imports. Only one of these, state-owned energy giant China Petroleum & Chemical Corp., has started to commercially produce the fuel. It’s bigger rival, PetroChina Co., is also producing shale gas from its own reserves in Southwest China.

While China’s 1,115 trillion cubic feet of reserves are almost double that of the U.S., it plans to produce just 6.5 billion cubic meters of shale gas this year. That compares with the 266 billion cubic meters produced by the U.S. in 2012, according to latest government data.