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Clean Power Plan: How the First Building Block Affects Coal

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CPP building blocks

Natural gas was widely expected to play a major role in replacing coal until August 3, 2015, when the final draft of the CPP (Clean Power Plan) was published. The plan suggests three building blocks, or approaches, to reduce carbon dioxide emissions from the existing fossil fuel-based power plants.

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CPP’s first building block

The first building block suggests improving the heat rate of existing coal-fired power plants. In simple terms, the heat rate tells us how much heat energy is required to generate a unit of electricity.

Heat rate is often confused with the heat content of the fuel being used. Heat content is the amount of heat energy trapped inside each unit of coal. Appalachian thermal coal has a high heat content—around 12,000 thermal units per pound. Low-cost PRB (Powder River Basin) coal has a heat content of around 8,500 thermal units per pound. So heat content refers to heat energy per unit of coal while heat rate refers to the amount of heat energy required to produce a unit of electricity. The heat content is for fuel while the heat rate is for a plant.

The impact

The CPP’s first building block specifically deals with coal-fired power plants. Because the approach suggests moving away from a higher heat rate to lower-heat-rate plants, coal producers reliant on higher-heat-rate plants would be the first ones affected.

Plus, according to the US Information Administration, sub-bituminous coal (primarily produced in the Powder River Basin) emits a higher amount of carbon dioxide per unit of energy than bituminous coal in Appalachia. Since the focus of CPP is on lowering carbon dioxide emissions, Powder River Basin coal may eventually face some pressure.

Cloud Peal Energy (CLD), Arch Coal (ACI), Westmoreland Coal (WLB), and Peabody Energy (BTU) are some of the coal producers operating in the Powder River Basin.

Correction: This article originally misrepresented heat content and heat rate as the same thing. We have since revised to explain the difference between the two. We regret this error.

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