TOPICS > Economy

Coal-Powered Colorado Undergoing a Natural Gas ‘Revolution’

August 8, 2012 at 12:00 AM EDT
In Colorado, coal and natural gas producers are fighting for energy dominance. Ray Suarez reports on the battle in a state that's also weighing what will be the most sustainable energy solution for the future.
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JEFFREY BROWN: And next, Ray Suarez continues his series about the changing energy picture in this country.

Tonight, he visits Colorado, where natural gas is taking center stage, prompting questions about the future of both coal and alternative energy resources.

RAY SUAREZ: For a long time, it was simple and straightforward here in Colorado. The coal sits in big fat seams close to the surface. Strip off a layer of soil, pull out the coal, burn it right next door to make electricity, and sell what you don’t burn right here. It’s not so simple anymore.

Increased federal regulations of electric power plants have made it tougher to meet EPA guidelines burning only coal. At the same time, the price of natural gas has been dropping, and we have been finding it in more and more places.

And that has set up a tough battle between the coal companies and the natural gas industry.

When the new regulations are fully phased in, Colorado utilities are going to burn a lot less coal, converting some plants to burning natural gas, shutting others down altogether.

BILL RITTER, former Colo. governor: We went in and we reformed all the rules.

RAY SUAREZ: During his time as Colorado’s governor, Bill Ritter brokered the deal with the state’s largest electricity producer.

BILL RITTER: Over time, the use of coal will depend a lot upon what kind of research and development can lead to cleaner coal alternatives. If they’re not there and they’re not economical and they can’t compete with gas or renewables, then they will go away.

RAY SUAREZ: The United States is in the midst of a gas revolution. More deposits are found with every passing year that can be drilled economically. Right now, gas is really cheap to burn and cleaner than coal.

TISHA CONOLY SCHULLER, Colorado Oil and Gas Association: By transitioning from coal to natural gas, you can reduce carbon monoxide and particulates by 90 percent. You can reduce nitrogen oxides by 80 percent, carbon dioxide by more than 40 percent. And you can essentially reduce and eliminate sulfur dioxide and mercury altogether. These are significant benefits for Coloradans’ health and for overall air quality here.

RAY SUAREZ: Cheap, abundant gas, less pollution, less coal getting burned.

To the secretary of the interior, natural gas is transforming the economics of making power in America.

INTERIOR SECRETARY KEN SALAZAR: I think it will become a centerpiece of our energy portfolio for the next century for a lot of reasons. It’s one of the greatest opportunities we see for both our economic security, our national security and our environmental security.

RAY SUAREZ: Sounds so simple, you might ask, why make all that investment in wind, solar and other forms of renewables, when there’s so much gas?

KEN SALAZAR: In my view and the president’s view, this does not at all displace what we want to do with solar and with wind energy.

RAY SUAREZ: Salazar says both gas and renewables reduce the country’s energy imports and make economic sense. Some environmentalists worry that the gas boom, instead of leading to a clean energy future, just gets us hooked on a new fossil fuel.

DAN ARVIZU, National Renewable Energy Laboratory: The bar just got a bit higher for the entrance of some of these new and alternative technologies into the energy mix.

RAY SUAREZ: Dan Arvizu directs the National Renewable Energy Lab in Colorado. He concedes the new supplies of cheap gas have challenged the cost-effectiveness of renewables. Natural gas is a bridge to the new technologies his scientists are inventing, he says, not a replacement for them. Cheap gas buys some time.

DAN ARVIZU: If we didn’t have natural gas as this potential opportunity, then I think we would be in a much more urgent set of conditions than we are today. So it gives us a little bit of time to really solve the problem much more deliberately, and hopefully that has long-lasting sort of impacts to it.

RAY SUAREZ: Arvizu notes every energy source has benefits and costs. Gas offers flexibility. After all, the sun doesn’t always shine and the wind doesn’t always blow. A power plant can throw a switch and start burning gas for power immediately. That’s something you can’t do with coal.

BILL RITTER: So, backing off of this is a really bad idea.

RAY SUAREZ: The former governor told me you can’t stop investing in renewables, even while taking full advantage of new gas supplies.

BILL RITTER: We have to view this as a global competition where we actually can capture the innovation part of it. Our scientists are still the best in the world. We own the innovation space, and then we have to decide how much of the manufacturing space we want to own.

RAY SUAREZ: That’s the vision, but, right now, there are looming deadlines to meet for Colorado’s energy producers. Xcel Energy has a portfolio of old coal-burning plants, like this one just north of Denver, that will stop burning coal soon to meet the new targets. Demolition to make way for the new generator is under way.

DAVID EVES, Public Service Company of Colorado: We have already shut unit one down now.

RAY SUAREZ: David Eves, CEO of Denver’s main electric utility, says the new gas-burning capacity and the closure of aging coal-only plants protects his customers against the costs of future regulation and price swings, even while his customers pay to build the new plants.

DAVID EVES: The other thing our customers get out of this plan is a good balance of energy. At the end of the decade, 48 percent of our energy will still come from coal-fired plants, and about a third of our energy will come from natural gas-fired plants, including what will be here, and the other 25 percent or so will come from wind and solar and other renewable sources.

RAY SUAREZ: Catch that? Even with all the new gas supply, new plant investment and regulation, coal will still account for almost half Colorado’s electricity. That’s still way down from earlier levels, and that has the coal industry pushing back.

STUART SANDERSON, Colorado Mining Association: I think it’s a shame if we move away from coal production and from the use of coal for electricity in this country. Number one, it’s our most abundant energy fuel.

RAY SUAREZ: Not only is much of the world’s coal in the U.S., Sanderson says; the natural gas industry has done a great public relations job, exaggerating the environmental advantages of gas, for one, without mentioning frequent spikes and drops in price.

STUART SANDERSON: Coal also is associated with much lower electricity rates for energy consumers. And, in fact, our data shows that the price of natural gas is over time double that of coal, and with much more volatility.

RAY SUAREZ: The coal industry still has its supporters.

Tri-State, the energy cooperative that serves rural Colorado, is suing the federal government to stop the regulatory pressure to burn less coal.

LEE BOUGHEY, Tri-State Generation and Transmission: The EPA has grossly exceeded their authority when it comes to new regulations that effect coal plants. We need to make sure that we don’t arbitrarily take options off the table. We can’t take a coal option off the table. We can’t only rely on gas.

RAY SUAREZ: So much American electricity comes from coal, the country won’t have a way of doing without it any time soon. But energy analysts across the country are likely keep a close watch on how the changes in Colorado unfold.

JEFFREY BROWN: Tomorrow, Ray reports from Utah, where a new approach to managing resources and public land has led to a remarkable partnership.

And there’s much more online tonight, where you can find just about everything you wanted to know about hydraulic fracturing, commonly called fracking. It’s the controversial practice largely responsible for the boom in natural gas production.