Is Coal Golden?

Mike McCall knew at age 14 he wanted to work in the mines. Chalk it up to a fascination with those "big Tonka toys" used to haul away coal, he says. He wasn't afraid to be underground, either. One of his first engineering jobs was in Peabody's famous Mine No. 10, a massive seam running beneath Illinois. Today, old enough to have a teenage son of his own, he still mines coal, but for a different boss. He is spearheading the largest expansion of coal-fired electric plants in Texas history for energy giant TXU. "With 6 million people pouring into Texas over the next decade, this state needs about two of these big power plants a year just to keep up with demand," reckons McCall, as he lays out plans to spend about $10 billion by 2011 for 11 of them--every single one using coal to stoke the fires.

Over the next 25 years, the Department of Energy predicts the use of coal will provide an increasing portion of our power--up to nearly 60%, from 52%. Convened by the Secretary of Energy, the National Coal Council (McCall is a member) has laid out an aggressive energy plan using coal over the next two decades. Coal production is expected to soar from 1.1 billion tons a year to 1.8 billion--mostly from the West, especially Wyoming's Powder River Basin. New transmission lines, like the $6 billion Frontier Line, will carry electricity from the coalfields of Wyoming to consumers in California. Peabody Energy, the nation's largest coal company, with 2005 sales of $4.6 billion, up 28%, and earnings of $423 million, up 140%, is in acquisition mode worldwide. The Bush Administration has put down its own $2 billion bet, largely by pursuing FutureGen, a next-generation coal- fired plant promising near zero pollution emissions--all in the hope of making the nation less oil dependent.

The U.S. is, after all, the Saudi Arabia of coal. We have more than 200 years of coal reserves at our current burn rate. There are 440 coal-fired plants across the nation, with proposals to build 153 more in 42 states over the next decade, at a cost of $137 billion, to provide electricity to 93 million homes and support our energy-guzzling lifestyles.

King Coal's new popularity, however, is like a runaway mine train heading for a collision with states and cities struggling to meet pollution standards. Environmental controls on electric plants have cut emissions of six principal air pollutants by half since 1970, despite a 42% increase in energy consumption. But even with mandated controls, old-fashioned pulverized- coal plants still spew nitrogen oxide and sulfur dioxide (think acid rain) as well as toxic mercury. Carbon dioxide emissions, blamed for global warming, would soar. Shareholder activists are increasingly aggressive about demanding an accounting when companies like TXU, which had 2005 earnings of $1.7 billion, stick to old coal methods. "TXU," says Leslie Lowe, program director of the Interfaith Center on Corporate Responsibility, "is looking through the rearview mirror."