By Shelley DuBois for CNNMoney.com

FORTUNE — Coal has always been cheap and dirty. And the dirty part was justifiable because it was so cheap. Now, gas prices are dropping, threatening coal’s dominance in the North American energy market. Which means gas could take over before coal gets a chance to clean up its act.

Natural gas dropped in price last week, trading at under $4 per million British thermal units-the unit used to measure energy output. The price is competitive with coal on a Btu basis, David L. Goldwyn of the U.S. Department of State announced last week.

Coal is still cheaper at $2.25 per million Btu in 2010, according to the U.S. Energy Information Administration. Even so, the coal market is starting to feel the burn from gas on its heels.

Coal stocks are down, across the board. Bloomberg recently reportedthat the largest U.S. coal producer, Peabody Energy Corp., fell 5.2 %, to $40.96. The second biggest producer, Arch Coal Inc., fell 5.9 % to $21.08. Massey Energy Co., the largest Central Appalachia coal producer, plunged $1.40, or 4.6 percent, to $28.75.

So if natural gas is accessible, cheap, clean, and getting cleaner, should the government keep spending billions on clean coal?

So far, the government has tried to spearhead projects to demonstrate that coal plants capturing carbon can compete with traditional plants. But the flagship federal clean coal project, FutureGen, has mutated since it started in 2003, and had to be completely resuscitated after being scrapped in 2008.

The latest holdup with FutureGen 2.0 is that the project will retrofit a current coal plant as opposed to building a new one, and it will be in a different location than previously planned. The project was going to cost $1.1 billion under the latest plan, but could change depending on a recent quirk in finding a location to store the captured carbon.

The government established the Clean Coal Power Initiative in 2002 to try to partner with industry and push clean coal technology. So far, the intiative has completed 3 of the 18 total projects, 7 of which have been terminated. The choppy, drawn-out start to FutureGen hasn’t helped the U.S. clean coal industry either.

These projects need to kick into gear fast, if coal is going to compete with gas. Gas is especially threatening to coal because it’s a local fuel — it’s not economical to transport it over vast distances in large pipelines like oil. But natural gas could provide energy relatively close to power plants, just like coal does now.

TVA replacing coal with gas

In both new projects and business expansions, power producers have also already started choosing gas over coal. A company called American Municipal Power Inc. planned to build a coal-fired plant on the Ohio River last year. In early August, the company announced that it would build a 600-megawatt gas-fired plant in that location instead. NRG Energy (NRG,Fortune 500) signed a $1.9 billion deal to buy five power plants in California from the Blackstone Group. Four out of the five plants will burn gas.

Also, the Tennessee Valley Authority announced last week that it was going to idle nine coal-fired generating units at three plants, starting in 2011. The TVA plans to build natural gas generators to replace several of the coal-fired units.

As dirty as coal is, people do have reservations about the environmental impacts of producing more gas, especially from shale sources. Namely, there’s concern that extracting gas from shale could contaminate groundwater with drilling fluids.

But if regulators snap into place to oversee the United State’s copious shale gas reserves, then coal will really be in trouble. Coal won’t just be able to rely on being cheap anymore, it will have to be clean too. And yet, if natural gas stays cheap, it will still become increasingly difficult to make the economic or political case to keep throwing clean money after dirty coal.

From the Lawrence Livermore National Laboratory

LIVERMORE, Calif. — Americans are using less energy overall and making more use of renewable energy resources.

The United States used significantly less coal and petroleum in 2009 than in 2008, and significantly more wind power. There also was a decline in natural gas use and increases in solar, hydro and geothermal power according to the most recent energy flow charts released by the Lawrence Livermore National Laboratory.

“Energy use tends to follow the level of economic activity, and that level declined last year. At the same time, higher efficiency appliances and vehicles reduced energy use even further,” said A.J. Simon, an LLNL energy systems analyst who develops the energy flow charts using data provided by the Department of Energy’s Energy Information Administration. “As a result, people and businesses are using less energy in general.”

The estimated U.S. energy use in 2009 equaled 94.6 quadrillion BTUs (“quads”), down from 99.2 quadrillion BTUs in 2008. (A BTU or British Thermal Unit is a unit of measurement for energy, and is equivalent to about 1.055 kilojoules). The average American household uses about 95 million BTU per year.

Energy use in the residential, commercial, industrial and transportation arenas all declined by .22, .09, 2.16 and .88 quads, respectively.

Wind power increased dramatically in 2009 to.70 quads of primary energy compared to .51 in 2008. Most of that energy is tied directly to electricity generation and thus helps decrease the use of coal for electricity production.

“The increase in renewables is a really good story, especially in the wind arena,” Simon said. “It’s a result of very good incentives and technological advancements. In 2009, the technology got better and the incentives remained relatively stable. The investments put in place for wind in previous years came online in 2009. Even better, there are more projects in the pipeline for 2010 and beyond.”

The significant decrease in coal used to produce electricity can be attributed to three factors: overall lower electricity demand, a fuel shift to natural gas, and an offset created by more wind power production, according to Simon.

Nuclear energy use remained relatively flat in 2009. No new plants were added or taken offline in this interval, and the existing fleet operated slightly less than in 2008.

Of the 94.6 quads consumed, only 39.97 ended up as energy services. Energy services, such as lighting and machinery output, are harder to estimate than fuel consumption, Simon said.

The ratio of energy services to the total amount of energy used is a measure of the country’s energy efficiency.

Carbon emissions data are expected to be released later this year, but Simon suspects they will tell a similar story.

“The reduction in the use of natural gas, coal and petroleum is commensurate with a reduction in carbon emissions,” he said. “Simply said, people are doing less stuff. Therefore, they’re burning less fuel.”

Lawrence Livermore National Laboratory has helped to visualize the Energy Information Administration’s U.S. energy data since the early 1970s.

Founded in 1952, Lawrence Livermore National Laboratory is a national security laboratory, with a mission to ensure national security and apply science and technology to the important issues of our time. Lawrence Livermore National Laboratory is managed by Lawrence Livermore National Security, LLC for the U.S. Department of Energy’s National Nuclear Security Administration.

Company that gave up on coal-fired power plant for southern Ohio now plans natural gas plant

From Canadian Business Online

COLUMBUS, Ohio (AP) – A power company plans to build a natural gas-fired plant in southern Ohio on a site where it scrapped plans for a plant using coal.

Columbus-based American Municipal Power Inc. on Monday said its new project would build a 600-megawatt gas plant on the Ohio River in Meigs County. The coal-fired plant would have been larger, generating 1,000 megawatts.

AMP needs approval from more than 80 cities it supplies with power in six states.

The company gave up on the coal-fired plant last fall.

An environmental group that opposed the coal plant says it won’t object to the gas plant. Another critic of the earlier plan says it’s still studying the new project.

Gov. Ted Strickland says it will create more than 500 construction jobs and 28 permanent ones.

From the Western Farmer-Stockman

A new study funded in part by the Colorado Department of Agriculture’s Advancing Colorado’s Renewable Energy grant, finds that wind turbines can be cost-effective even at sites with moderate wind speeds.

“This study is encouraging for Colorado agricultural producers who want to harness wind energy but are not located in areas with strong wind resources,” says CDA Market’s Division Director Tom Lipetzky.

A site with a marginal wind source is classified by the National Renewable Energy Lab as having an average wind speed of between 13.2 and 15 miles per hour at fifty meters above the ground.

A 30% federal tax credit, available for wind turbines up to 100 kilowatts in size, typically lowers payback times by four to six years, the study reveals. Utilizing the tax credit can make wind turbines economical at sites with marginal wind sources, says Lipetzky.

The study by Brink, Inc. – an Erie, Colo.-based environmental consulting company, included on-site wind speed monitoring at three agricultural operations located in Elbert, Morgan and Yuma counties.  On-site wind speed data is compared with NREL’s Colorado 50 meter wind resource map.

The cost and output of several different wind turbines, along with the availability of the tax credits, loans and USDA grants were reviewed to determine their effects on wind turbine payback time frames.

The report, Wind Resource Evaluation at Colorado Agricultural Operations, finds that:

The 30% federal tax credit can largely offset loan interest cost or reduce simple payback times by about five years.

Limits on cost-share funding and federal tax credit eligibility tend to make smaller turbines more economically feasible than larger, more efficient turbines.

Turbine payback times ranged from 4-23 years.

All wind turbines are not equally efficient at producing electricity. Buyers should examine the ratio of turbine and tower cost versus electricity output to determine the best turbine fit.

Besides electricity, wind turbines also produce Renewable Energy Credits which have value to companies and individuals seeking to purchase greenhouse gas offsets.

Some Cooperative Electric Associations pay for customer-generated RECs while others claim the rights to consumer-generated RECs.

A wind turbine with a 15-year payback time frame will produce a return on investment of about 3% annually, assuming a turbine life span of 30 years.

NREL’s Colorado 50 meter wind resource map is generally adequate to use when estimating small wind turbine outputs, as long as adjustments are made for tower height differences.

The evaluative methods used in this study may be utilized to determine the wind resource value for any type of agricultural operation.

OPINION: Pennsylvania’s energy future needs a better source than coal

By Don Goldstein for the York Dispatch

The Senate leadership recently announced it didn’t have enough votes to bring a climate and energy bill to the floor for a vote before Congress’ August recess. Whether the Senate takes up the legislation later is anybody’s guess.

The House of Representatives passed comprehensive legislation more than a year ago. The Senate is gridlocked, due in part to pressure from the oil and coal industries. Big Coal in particular is loath to see a cap on carbon emissions, given that coal-fired power plants are responsible for a third of those releases.

Coal industry-paid lobbyists and ads have targeted Pennsylvanians, with our critical votes in Congress and deep roots in the coal economy, using two arguments for the energy status quo.

First is the claim that un-capped coal is cheap. But ads claiming coal power plants provide the lowest-cost electricity conveniently leave out the huge costs that are not reflected in the price of that power. The public health costs alone are staggering – over $60 billion per year, according to a study commissioned by the National Research Council.

Coal-fired electricity is responsible for 70 percent of the nation’s sulfur dioxide, 33 percent of nitrogen oxide and 23 percent of particulate matter (soot) emissions, according to the Environmental Protection Agency. Substantially reducing these emissions would prevent millions of missed work and school days, tens of thousands of heart attacks and hospital visits, and 14,000 to 36,000 premature deaths from causes like heart and lung disease annually.

A recent National Academy of Sciences study of coal plant emissions in 2005 found that four of the nation’s 10 deadliest plants are in Pennsylvania and four others are just upwind, in Ohio. After decades of delay, some of the state’s coal plants have since installed or are installing air pollution controls to reduce pollutants, but others continue to operate without modern controls. While newer and modified coal plants emit fewer conventional pollutants, new and old plants alike emit enormous amounts of carbon dioxide, the primary heat-trapping gas that causes global warming – another “cost” Big Coal would rather not discuss.

The industry’s second claim is that capping carbon and moving toward cleaner energy sources would cripple Pennsylvania’s economy. It is true that from the mid-1800s until now, coal powered our factories, warmed our homes and kept our trains running. But today there are only 8,000 direct coal-mining jobs in Pennsylvania, amounting to 0.14 percent of our state workforce. While coal still provides the bulk of our economy’s power needs, entrepreneurship and innovation across the state and nation are rapidly making cleaner alternatives more available and cost-effective. Should we tie those jobs to a dirty, 19th century technology, or help affected workers and communities play a positive role in our 21st century energy transition?

In addition, doing nothing could impose serious long-term costs on many aspects of our state economy. According to a Union of Concerned Scientists report, “Climate Change in Pennsylvania,” if emissions continue unabated, by mid-century temperatures will likely exceed 90 degrees for 50 to 60 days in the summer in much of southwest Pennsylvania. Prized hardwoods, including black cherry, sugar maple and American beech, likely would decline or even vanish. Snowmobiling and skiing would become pastimes of the past. Yields of native Concord grapes, sweet corn and a number of apple varieties likely would decrease considerably as temperatures rose and pests became more virulent.

A strong climate bill – that would cut air pollution, make polluters pay for their emissions and provide incentives for businesses to develop cleaner ways to produce energy – would stimulate renewable power and the ancillary businesses already springing up across our state.

Pennsylvania has the manufacturing know-how to become a world leader in clean energy production. From Erie to Philadelphia, innovative companies are moving to supply the clean-energy economy with wind power, castings and gears for wind turbines themselves, “smart grid” power system controls, clean diesel locomotives and much more.

Foreign capital is being drawn in. The Spanish wind-energy company Gamesa has invested $84 million in Philadelphia, siting two manufacturing facilities and two offices in the state and creating nearly 1,000 jobs. More recently, the German company Flabeg chose Allegheny County for its first U.S. solar-mirror production facility, expected to provide 300 new jobs.

In arguing against climate legislation, the coal companies create a false choice – between a do-nothing path and abandoning coal. Coal will unavoidably be a big piece of our energy portfolio to start. But our goal must be ultimately to leave as much of it in the ground as possible. That may not be good for the coal companies. But it will be good for the American environment and economy, which is to say the American family and worker. We owe our children nothing less.

- Don Goldstein is a professor of economics at Allegheny College in Meadville.

By Scott Rothschild of The Lawrence Journal World

Is coal-fired production of electricity on the rise or is it flaming out?

A recent report by The Associated Press described a nationwide wave of coal-burning power plant construction.

And that fits in with the plan by Hays-based Sunflower Electric Power Corp. to build an 895-megawatt unit in southwestern Kansas.

“Coal isn’t on the wane,” Earl Watkins, president and chief executive officer of Sunflower Electric, said this month after a public hearing in Garden City on the proposed plant.

Environmentalists, however, say the premise of the AP report is inaccurate.

“The coal plants that are being built today were permitted years ago when the outlook for coal was much more favorable than current conditions,” said Stephanie Cole, a spokeswoman for the Kansas chapter of the Sierra Club.

“Building a new coal plant today could be equated to making an investment in rotary dial landline telephones. Coal is yesterday’s fuel source,” Cole said.

Sunflower Electric is seeking a permit from the Kansas Department of Health and Environment for the project. Most of the electricity will be owned by Colorado-based Tri-State Generation and Transmission Association for sale to out-of-state customers.

“There are some 16 coal plants in various stages of construction right now,” Watkins said. “There are another eight to 10 that have just recently been permitted by other utilities across the country.

“Coal projects that are built for speculation are dropping off the table because no one wants to make that type of an investment without knowing they have a need,” Watkins said. “But all of the participants of this project are going to be displacing lost resources, like us, or displacing higher cost market prices, so they have got a revenue stream there.”

Coal-burning has been under fire for producing climate-changing carbon dioxide emissions. President Barack Obama’s administration has proposed regulating CO2. But the AP recently reported that the nation is seeing the largest increase in coal-fired plants in two decades.

More than 30 coal plants have been built since 2008 or are under construction at a cost of $35 billion, AP reported. Once on line, the plants will produce enough electricity to power 15.6 million homes, the equivalent to all the homes in California and Arizona, the report said.

In addition, the plants will generate 125 million tons of greenhouse gases each year, the equivalent of putting 22 million more automobiles on the road.

But Scott Allegrucci, director of the Great Plains Alliance for Clean Energy in Kansas, has a different view of the coal landscape, both nationally and in Kansas.

The number of plants recently built and being built now represent just a fraction of the 151 total plants that the federal government had forecast several years ago. Allegrucci says that shows “coal as an electricity fuel is on the wane.”

And while most of the coal plants have been canceled or put on hold, renewable energy sources have been developed at a record pace.

“So, since November 2008, not a single new coal plant has broken ground for construction, but record amounts of wind, solar, and other renewables are coming online,” Allegrucci said.

And he notes that in the Kansas proposal, Tri-State Generation and Transmission, which will buy most of the power from the proposed Kansas plant, hasn’t made a concrete commitment to the project, describing the plant as an option in Tri-State’s long range plans.

Another factor not mentioned in reports of coal’s rise is that some coal plants are being mothballed, said the Sierra Club’s Cole.

“Today we’re seeing more utilities announce retirement plans for existing coal plants than we are seeing utilities announcing plans to build new coal plants,” Cole said.

From PowerGenWorldwide.com

11 May 2010– Exelon Power will retire Unit 2 at both the Cromby and Eddystone cosl-fired power plants in Pennsylvania sooner than previously announced because of a revised analysis from the PJM Interconnection.

PJM’s analysis showed that transmission system upgrades can be completed sooner than the original analysis indicated, which will allow the coal-fired units to retire earlier.

PJM determined that Cromby must remain in operation until Dec. 31, 2011, almost a year earlier than planned. The Eddystone unit can remain in operation until Dec. 31, 2012, a full year earlier, to support transmission system reliability.

Exelon announced in 2009 would retire the two units for economic reasons, but agreed to extend operations for system reliability reasons.

From PowerGenWorldwide.com

26 May 2010– American Electric Power Co. (AEP) plans to idle an estimated 1,925 MW at two coal-fired power plants as part of cost-cutting measures amid a slow recovery in electricity demand starting in June, according to an article in The Wall Street Journal.

AEP said in April it would cut 5 to 10 percent of its workforce and idle the Picway 5 in Ohio and Glen Lyn Units 5 and 6 in Virginia to help cut costs. Other units in Virginia, Ohio, Indiana and West Virginia will also be idled.

The utility is not permanently shutting down the plants, instead only using the power plants in January, July and August when electricity demand is higher.

Barclays Capital analysts estimated that 27,000 MW of coal-fired units, or more than 2 percent of U.S. generating capacity, could close in four to five years.

From PowerGenWorldwide.com

16 August 2010– Xcel Energy filed a plan with the Colorado Public Utility Commission to retire or retrofit several coal-fired units to comply with the state’s Clean Air Clean Jobs Act.

The plan includes retiring 900 MW of coal-fired generation at the Valmont and Cherokee power plants by the end of 2017 and 2022, respectively. It also includes repowering the 717 MW Cherokee power plant with natural gas, bringing the generating capacity to 883 MW, and will also convert the 111 MW Unit 4 at the Arapahoe power plant. Lastly, Xcel also plans to retrofit the 505 MW Pawnee and the 446 MW Hayden power plants with emission control technology.

Xcel said it plans to spend $1.3 billion for new construction over the next 12 years, but also predicts a savings of $225 million.

The new law is designed to encourage cuts in carbon dioxide emissions from coal-fired power plants — and to effectively block the construction of any new ones.

From Kansas Public Radio

The Kansas Department of Health and Environment is once again on the hot seat as Sunflower Electric Power Corporation seeks a permit for construction of a coal-fired power plant near the southwest Kansas town of Holcomb. The proposal, in one form or another, has been stirring up debate since 2006. Despite a radical scale-back of plans, the issue still seems to pit environmental concerns against economic growth. Health Reporter Bryan Thompson has more as part of our series, “Kansas Health: A Prescription for Change”.

Click here to listen to the full report.