In less than one week, eight U.S. coal-fired powr plants, representing 4,099 megawatts of capacity, have been earmarked for closure or have been stopped by the courts due to environmental concerns.
First Energy has announced that it will close six plants with a total capacity of 2,689 megawatts. Dominion Resources is to close a 515 megawatt plant. All of the plants to be closed are old and upgrading them to comply with new environmental protection standards would be too expensive. Meanwhile, a U.S. district judge in Kansas has ruled that an 895 megawatt coal plant planned for the state should not go forward for environmental and health reasons
In the United States, the combination of rising fuel costs, less expensive alternatives and increasing legal challenges from environmental groups is making it almost impossible to build new coal-fired power plants.
In Australia, inabilty to raise funds could be the cause of closures.
In 2010, it was reported that the Latrobe Valley generators had a combined $9 billion in debt to be rolled over by 2015. Some power companies may already be close to insolvency, facing massive asset write downs on power stations such as Morwell, Hazelwood, Yallourn W and Loy Yang A and B.
The World Bank’s lead economist, Andrew Burns, has warned that 2012 could see a world-wide banking credit crisis worse than the Global Financial Crisis of 2008.
If funds are scarce, will the banks choose to lend them to businesses which, like their American counterparts, will be subject to rising fuel costs, greater competition and legal challenges at the same time as they face the introduction of the carbon tax?