The Energy Information Administration (EIA) said today the EPA’s Mercury and Air Toxics Standards (MATS) rule would result in the retirement of 60 gigawatts of coal-fired power generation in the U.S. by 2020 — much more than what has been reportedly scheduled thus far. Highlighting data published in its recent Annual Energy Outlook, EIA projects that a full 90% of the projected retired capacity through 2020 will be gone by 2016, EIA said.
The MATS rule, which takes effect in April 2015, will force coal-fired power plants to install costly equipment in order to achieve the necessary reductions in mercury, acid gas and toxic metal emissions. Factors such as the availability of cheap natural gas, high coal prices and decreased utilization could make it economically unfeasible for coal-fired power plants to invest in upgrades.
Many observers, however, question how much longer natural gas prices will remain as low as they have been in recent years. The Department of Energy (DOE) has approved five LNG export licenses since the beginning of last year, and many chemical manufacturers fear widespread natural gas exports will lead to a price spike. Nevertheless, the shift from coal-fired power to natural gas-fired power seems inevitable. Additionally, some analysts believe the DOE will slow the pace of approvals once a certain capacity threshold is reached.
