Coal Plants to Close After Emissions Lawsuit

American Electric Power (NYSE: AEP) Explores Renewables


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Utility company American Electric Power (NYSE: AEP) has agreed to close three coal plants in Kentucky, Ohio and Indiana.

This is part of a revised agreement from a 2007 settlement involving the EPA, eight states, and a number of environmental organizations such as Sierra Club. Portions of another AEP power plant in southern Indiana may be shutdown in 2025 if pollutants are not under control.

An article from The Hill stated that the EPA originally sued AEP in 1999 for violating the Clean Air Act and ignoring recommendations to install technological upgrades that would have reduced air contaminants.

Under the lawsuit terms, the company will also be forced to invest in renewable energy.

$4.6 billion will be spent on upgrading the company's plants for the purpose of reducing mercury and sulfur dioxide emissions. The closing of the three power plants will be balanced with the installation of solar and wind technology throughout Indiana and Michigan. Indiana would receive “200 megawatts of wind power in Indiana,” according to the Columbus Dispatch.

Another $8.5 million will be divided among eight other states for officials to deal with coal emissions. These states include Maryland, New Hampshire, New Jersey, Rhode Island, Vermont, Connecticut, New York and Massachusetts.

The coalition of states was led by Attorney General of Massachusetts Martha Coakley. $1 million of that 8.5 will go to her state.

This is a major blow to the coal industry and a sign that more lawsuits and payouts could follow.

Climate advocates have reason to celebrate, but there is a long road ahead of them. The coal lobby has a firm presence in Congress, and many political leaders and townspeople are fighting to keep coal alive.

There are numerous coal mining towns throughout the country, and many locals fear a massive loss in jobs that have been around for generations.

But the lawsuit can also be a win for consumers.

Utility monopolies could be busted up in the future, which could lead to wider market selection for residents. All too often, customers have had little say in choosing the type of energy source for their homes.

AEP’s exploration into renewable energy could force other utility companies to offer greener alternatives— giving consumers the energy options they have been denied for so long.

But why is coal being scrutinized on such a massive scale?

Coal plants are hazardous for workers and residents who live near these facilities.

The Scientific American wrote an interesting piece about how coal plants are often found in poor and minority areas. These communities have less influence and political clout, and these dirty plants are rarely seen in affluent areas of the country. To make matters worse, many of these coal plants near low-income communities emit some of the worse pollution.

There is a shift in consciousness among the public and government officials surrounding coal.

According to Polling Report, 54% of Americans favor the exploration of wind, solar, and hydrogen as opposed to 34% who favored an exploration of coal, oil, and natural gas. This shows that renewable energy is gaining traction among many Americans, and investment in these future technologies is a potential gold mine.

What does government regulation mean for energy investors?

President Obama has made it quite clear that he will use executive action to control carbon emissions and other pollutants.

The political climate in Congress is so tense and adversarial that both sides would not even find bipartisan agreement on the cuteness of baby ducks. The constant bickering on Capitol Hill will cause the President to use executive action, and there is no doubt that executive orders will be more stringent than legislation coming from Congress.

If you are a coal investor, it may be worthwhile to diversify your portfolio. This would not be a bad idea since many energy companies are following this route as well.

I cite AEP’s willingness to install solar and wind components as an example. Having a foot in renewable investments would be a good way to place a stake in future energy sources while still keeping hold of current assets.

Despite controversy surrounding coal, there are still lucrative investments to be made through mining and factories, according to an article by Investing Daily.

With that being said, those on the side of coal may be fighting a losing battle. Coal plants are slowly becoming a relic of the Industrial Revolution, and there are more efficient alternatives emerging in the energy market.

The pressure on coal is so hard that future construction of coal plants in the United States could cease forever.

From USA News:

“President Barack Obama is tired of waiting for Congress to move on legislation to reduce carbon emissions, and his administration is poised to move forward on actions to do just that—including a move that will effectively eliminate the possibility of any new coal plant opening in the United States.”

Since this may the beginning of coal’s demise in the states, it may be an opportunity for renewable energy to compete in the marketplace. This is also a chance for the U.S. to renew the economy and foster job growth within a new energy field. With enough investment, manufacturing jobs could return to America through the energy sector.

If the coal industry is to survive in the future, there must be a shift in the way coal is perceived. Reducing harmful emissions and finding ways to convert coal to clean, burning energy are challenges within the industry, but necessary if coal is to become a competing force against the renewable market.

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Is there such thing as clean burning coal?

Surprisingly, the answer is yes.

According to a Fox News article, researchers from Ohio State University discovered a way to heat coal without burning it. The process involves “using iron-oxide pellets for an oxygen source and containing the reaction in a small, heated chamber from which pollutants cannot escape.”  

There would be 99% extraction of pollutants while retaining the heat that generates energy. As big as the breakthrough may be, the new discovery will be an expensive feat to accomplish, and many climate advocates are skeptical of the new method.

However, this could be the answer that coal companies have been looking for. Many coal experts may use the cost factor as an excuse to avoid clean burning coal, but it is a viable solution if the coal market is to stay relevant in the future.

Should coal be faded away from the energy market?

This is a tough question to answer given how vital coal is to the current energy market. What we are seeing, however, is a fading away of the coal market in America. No matter where you may fall on the coal issue, there is no denying that coal facilities are hazardous to human beings.

The issue of man-made climate change and carbon dioxide contributing to a warming of the earth is open for debate, but the harmful effects of mercury and sulfur dioxide on the human body are all too real. Both of these pollutants have been linked with respiratory and heart problems, according to a Washington Post article.

Coal may be on the run, but this is an exciting opportunity for innovation, investment, and exploration into new sources of energy output. And before coal is done away with entirely, there needs to be a stable alternative to take its place. The type of energy that may take coal’s place is open for speculation.

Until then,

Jon Carter 


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