From: Steve James, Reuters
Published September 6, 2007 02:24 PM

Coal Use To Grow Despite Green Concern

NEW YORK (Reuters) - Coal use grew by 30 percent in the last five years and future demand will likely fuel more power plant construction despite environmentalists' opposition, the head of U.S. coal mining company Peabody Energy said on Thursday.


"Our view is that you will continue to have opposition, but plants are being built today," President and Chief Executive Officer Gregory Boyce told an energy conference.


Asked about congressional action to combat carbon emissions blamed for global warming, Boyce said Peabody is working to develop cleaner-burning coal, but global demand, especially from China and India, is driving demand for the fossil fuel for electricity generation and steel production.


"Whether it is a windmill farm in Cape Cod or Long Island or a nuclear plant, you see a long line of people who want to be in opposition.


"Two years ago when they said 150 coal-fired power plants were planned, we never held the view that all 150 would be built. You will always have some opposition," said Boyce.


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The United States is the world's top emitter of carbon dioxide, the main gas scientists link to global warming. Utilities are coming under pressure from green organizations to capture C02 with expensive equipment and bury it underground.


But the technology, not yet commercially available, could boost power bills by 20 percent, according to scientists.


Boyce said nine coal-fired units began construction this year in the United States. In all, some 15,850 megawatts of new capacity is under construction or recently came on line.


Another 6,100 MW of potential power plants should begin construction in the next two years, he said, with the majority of the plants burning coal from the Powder River Basin of Montana and Wyoming or the Illinois Basin, where Peabody has big operations, Boyce said.


In his presentation to the Lehman Brothers conference, Boyce said global coal use between 2001 and 2006 rose by 30 percent, or 1.4 billion tons. In contrast, natural gas use rose 16 percent, hydro by 15 percent, oil by 9 percent and nuclear by 4 percent.


U.S. Department of Energy figures show long-term coal demand is expected to grow by 456 million tons in India by 2030 and by 3.1 billion tons in China. Coal generation is projected to outpace other forms by 3-to-1 through 2030, he said.


Boyce said per-capita electricity use in China is just one-tenth the U.S. level and India's is one-thirtieth, so the potential for growth is significant.


Peabody, which last year acquired Australian coal miner Excel, is now well-positioned to benefit from Asian demand growth and higher prices, he said.


While China and India continue to import huge amounts of coal, Russia is predicting a decline in exports to serve its domestic needs and Australian exports grew just 5.4 percent this year, well below expectations.


He said global coal prices are showing increases across the board -- Australian thermal coal recently set a record of over $70 per ton, compared with just over $40 in January 2006.


To meet the demand, Excel's production has risen from 6.1 million tons in 2004 to an estimated 20-22 million this year.


(Additional reporting by Timothy Gardner)


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