Coal Economics Could Change Things And Its Ripple Effect


Coal Economics Could Change Things And Its Ripple Effect

Most people following energy topics know that oil and natural gas prices have soared over the past year. But let’s not forget about the other very popular source of energy that is coal.

The graphic at left shows coal prices are up about 100% since the beginning of 2008. And although coal is still very inexpensive when compared with oil and natural gas it is very likely that these price increases will have a ripple effect in the marketplace for energy.

The allure of cleaner sources of energy will surely increase as the cost of coal increases. Google has stated goal of making renewable energy cheaper than coal via their RE<C initiative. Google probably didn’t count on coal prices rising sharply when they kicked off RE<C, but the effects of the coal price increase will be what Google intended just the same.

For the moment coal is still quite a bit cheaper than all other sources of energy except nuclear. Several other factors besides price close the economic gap between coal and clean energy sources. The future cost of emissions is an important cost and a big unknown in the U.S. at this time.

Producing power with coal also yields costs with respect to goodwill and public relations. Energy companies whose portfolio contains significant amounts of coal fired generation must spend extra money to convince the public that they being as responsible as they can be. That is a cost that needs to be factored into the economics of coal too.

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