Tag - Coal

Japan's nuclear disaster probably set back the world's push toward nuclear-powered electric generation by years. Instead of huge nuclear energy expansion, which had been planned, we're likely going to see more nations stick with tried-and-true coal-fired electric plants, along with further expansion into natural gas.

Coal is one commodity that people love to hate.

Admittedly, the coal industry has had some issues, ranging from mine safety to potential links to global warming. Still, when it comes to generating the power that lights our homes and businesses (and often heats them too) coal continues to lead the way. Annual production is growing, according to the U.S. Department of Energy, and the country's exports also continue to rise.

"The air in China is so polluted in the country’s largest cities that I don’ t even bother to book hotel rooms above the 10th floor anymore because you can’t see anything," says global investing expert Tony Sagami, editor of The Asia Stock Alert.

According to the European Space Agency’s indisputable satellite images, China has the planet’s worst levels of air pollution. The World Bank, Sagami says, has said China is home to 16 of the planet’s 20 most air-polluted cities.

"One culprit is coal-powered plants, which provide around 80% of China’s electricity," Sagami says. And one company that can help with this pollution, the advisor says, is Fuel Tech Inc. (Nasdaq: FTEK), a small-cap company with a market capitalization of $439 million.

"Coal-powered plants translate into some very dirty air — and a very big opportunity for someone who can help clean up China’s extremely polluted air,” he says. “Further, governments around the world are focusing on reducing greenhouse gases.” That, he suggests, is where Fuel Tech comes in.

Fuel Tech provides boiler optimization, air pollution reduction and cleaning solutions. In simple terms, he says, Fuel Tech helps coal-powered utilities reduce the amount of pollution they throw into the air and operate more efficiently.

The Clean Skies Act of 2003, he says, requires that power utilities reduce their carbon dioxide emissions by 67%, mercury by 37% and nitrogen oxide by 25% by 2018. And, he says, there are 1,500 coal-fired power plants in the United States and the Edison Electric Institute estimates that the government will spend $40 billion during the next decade to clean up the air.

Shares of James River Coal Company (Nasdaq: JRCC) are treading higher today after the miner and seller of bituminous, steam and industrial-grade coal said it will ship coal in 2008 at a higher-than-anticipated price.

Specifically, the small cap said it will ship CAPP coal in 2008 at an average price of $54.76, above its previously agreed upon price of $47.14 in the third quarter. James River Coal said roughly 22% of expected 2008 CAPP shipments remain open to new pricing.

The company said in a press release that its 2008 guidance “reflects the recent strength in the coal markets.”

Neither company officials, nor analysts could be reached for comment.

Shares of James River Coal (JRCC) jumped 15.11%, or $0.81, to $6.17 at 12:52 p.m. ET. Shares of James River Coal have been trading in the range of $3.56 to $15.45 for the past 52 weeks.

Producing electricity is a dirty business; smokestack emissions from coal-fired plants are recognized as a major pollutant and source of global warming. Despite these issues, coal remains the primary fuel for global electricity production, mainly because of its low cost and abundant supply.

Coal produces about half of America’s electricity and is expected to produce 57% of electricity by 2030. Most of the coal burned in U.S. power plants contains substances that cause slag to form within boilers. Slag deposits, formed when ash produced during combustion melts and hardens, reduces the boiler’s efficiency and increases pollutants.

Most of the coal burned in India and China also forms slag, contributing to serious air pollution problems in those countries. The Chinese government is making pollution control a top priority of its new 5-year economic plan, a massive challenge given that China is opening the equivalent of two new coal-fired plants each week to meet its growing power needs.

U.S. environmental regulations are becoming more stringent and utilities are under pressure to curb emissions from their coal-burning plants. The Clean Air Act Amendment of 1999 required gradual reductions in noxious plant emissions on varying timetables. Over 1,000 utility and large industrial boilers in 19 states were affected by the 1999 mandate. This was followed in 2005 by the Clean Air Interstate Rule (CAIR), which extends emissions reduction requirements to 28 states beginning in 2009. CAIR affected an additional 300 utility and industrial broilers. In 2013, the Clean Air Visibility Rule takes effect. This nationwide initiative impacts an additional 50 utility boilers as well as hundreds of industrial boilers across multiple industries. 

New environmental regulations are also addressing groundwater pollution and increasing industry demand for leak detection and secondary containment piping systems. The Federal Resource Conservation and Recovery Act requires that oil and other potential contaminants be stored, handled and  transported via underground pipelines that have leak detection systems and secondary containment tanks. These regulations are causing oil and gas exploration and production companies, gas transportation and marketing companies and oil refineries to change how they transport their products.

Companies benefiting from new pollution controls and environmental regulations include MFRI, Inc. (Nasdaq: MFRI) and Fuel Tech, Inc. (Nasdaq: FTEK), both based in Illinois.

A recent U.S. Supreme Court ruling giving the Environmental Protection Agency authority to regulate green house gases will likely spur further advances in so-called “clean coal” technologies – that is, technologies that remove harmful greenhouse gases created during coal combustion. Two of the most popular clean coal technologies are 1) coal gasification, which involves converting coal to gas using a combination of heat, steam and pressure and stripping carbon from the gas before it is burned, and 2) supercritical technology, which uses extremely high temperatures to burn coal more efficiently and create more power using less coal.

The U.S. Department of Energy hopes to spur large-scale implementation of clean coal technologies by offering companies tax credits to help drive down development and implementation costs. The Bush Administration has authorized more than $1.65 billion in tax credits to support clean coal projects.

Despite the fact that coal-fired power plants are a major source of air pollution in the United States, coal would be a difficult energy source to replace. About 50% of this nation’s electricity is generated by burning coal. Electricity demand, according to the US Department of Energy, is forecast to rise 39% by 2030; coal expected to provide 57% of this electricity.

Coal is a favored energy source because it is both cheap and plentiful. The United States has more than 267 billion tons of coal reserves, about 27% of the world’s total reserves, and produces approximately 1.0 billion tons of coal each year which is used to generate electricity. Without coal to meet its energy needs, the United States would be required to import the equivalent of an additional ten million barrels of oil per day.

Most of the companies working on clean coal technologies are large utilities and integrated energy producers. These include Duke Energy, ConocoPhillips and Royal Dutch Shell. However, there are a handful of smaller energy companies developing clean coal technologies that are poised to reap the benefits of growing demand.