Long-Term Growth for Coal Demand Expected

By Davis, KirLee | THE JOURNAL RECORD, March 12, 2008 | Go to article overview

Long-Term Growth for Coal Demand Expected


Davis, KirLee, THE JOURNAL RECORD


Alliance Resource Partners will invest $600 million over the next three to four years to bring three new coal mines online, bringing its inventory to 11.

That move reflects anticipated long-term growth for both U.S. and world demand for coal, driven by increased electrical generation needs, President and Chief Executive Joseph W. Craft III told a sold- out University of Tulsa Friends of Finance audience Tuesday.

But investments such as Alliance plans come with increasing risk, as scientists and politicians debate potential carbon emission regulations, said Craft.

The head of the nation's fourth largest coal production operation warned that those environmental steps, if taken without regard for existing technological capabilities and increased research, could have drastic impact on U.S. and world economic growth by reducing usage of the key component to cheap power.

"The cost of electricity is driven by a large part on the percent of coal used to generate it," said Craft, defending his industry's performance and interests while linking future gross domestic product growth to a continued abundance of inexpensive electricity. "Coal remains the low-cost alternative."

Craft said electrical power generation by coal-fueled plants rose 50 percent last year to 3.9 billion kilowatts per hour.

Federal government projections estimate that will grow to 4.9 billion kilowatts by 2030, with improved sulfur removal technologies allowing the coal-fired market share to hit 57 percent.

Coal usage is projected to rise 48 percent over that period, he said, comprising the majority of power generation. Renewable sources would increase 60 percent, he said, while nuclear power generation would climb 19 percent and petroleum sources 9 percent.

Natural gas projections call for a 24-percent drop due to insufficient production and forced imports of liquid natural gas.

But Craft warned carbon emission regulations could skew those projections.

Craft did not urge regulators to turn away from alternative power sources. He said he embraced increase usage of renewable, nuclear, natural gas and other electrical power generators.

"The question's going to be, 'How are we going to generate that electricity?'" he said, with the answer helping determine not just future U.S. economic performance but its place in a competitive world environment.

Renewable sources, he said, can not be developed in a scale necessary to replace the electricity generated by coal-fired plants. The sources also remain plagued by intermittent availability and continued storage problems.

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