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Financial Risks of Coal

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Definition:

The financial risks make investments in new coal plants – or the upgrade of existing plants – of particular concern to regulatory agencies, rate-payers and investors.  Potential risks for increased coal pricing include:

  • Coal Supply Constraints
  • Worldwide competition for Coal Resources
  • Competitive Alternatives
  • Operating Costs
  • Increase in Construction Costs of Coal Plants
  • Federal Greenhouse Gas Regulation as the threat of global warming increases
  • State Regulation
  • Regulation of other non-greenhouse gas emissions

For more information:

White Paper:  Financial Risks of Investments in Coal. 2011 report that focuses on the unprecedented risks facing electric utilities that depend on coal-fired generation and the attendant risk to domestic demand for coal. Also, here is the 2012 update of the White Paper.

Don’t Get Burned:  The Risks of Investing In New Coal-Fired Generating Facilities.  This 2008 report was prepared for the Interfaith Center on Corporate Responsibility by Synapse Energy Economics, Inc.  The report highlights the uncertainties surrounding investment in new coal in the current policy, technology, and market circumstances.  The report pays special attention to the likely state and federal regulations on greenhouse gas emissions – and other pollutants – that will likely drive up coal costs.

Climate Risk Disclosure in SEC Filings: An Analysis of 10K Reporting by Oil and Gas,Insurance, Coal, Transportation and Electric Power Companies
“This Ceres/Environmental Defense Fund report evaluates the current state of climate risk disclosure by 100 global companies in five sectors that have a strong stake in preparing for a low carbon future: electric utilities, coal, oil and gas, transportation and insurance. It assesses climate risk disclosure in the SEC filings made by these companies in Q1 2008, and finds very limited disclosure,” although financial risks related to climate change are of considerable concern.

Specific Case Studies:

CO$T OF POWER for Jamestown Board of Public Utilities Electricity Supply Options: Proposed Coal-Fired Power Plant Is Most Expensive Option even with Federal Subsidies

Prepared in 2009, for Clean Energy for Jamestown under a grant from the Sierra Club Beyond Coal Campaign with Research by Lake Effect Energy, “this report examines electricity supply options available to the Jamestown Board of Public Utilities (JBPU) for meeting its ratepayers’1 electric needs as it takes steps to close down its existing, aged coal-fired Samuel J. Carlson plant. Our analysis demonstrates that energy efficiency, wind energy, and buying off the regional electric grid are much less expensive options than constructing a new $400 – 500 million 50 megawatt (MW) coal-fired power plant with carbon capture and storage (CCS) capability.”

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