Persian Gulf States Increasing The Use of Coal For Electricity Generation

There is an article at Spiegel Online that discusses an interesting turn of events in the Persian Gulf, and another consequence of high crude oil prices. Oil rich countries are turning to coal to fuel existing and new coal-fired electricity power plants. Why would oil rich countries do this? Simple economics. Coal is currently cheaper per BTU, making it more cost effective for oil producing countries to export their crude oil, rather than use it for domestic electricity generation. As mentioned in the article, the cost of producing a megawatt hour of electricity using coal is only about 42% of the cost of producing electricity using natural gas, and only about 22% of the cost of using crude oil, based on current prices. Of course, coal is also currently more polluting than natural gas, and even crude oil. Even when using a modern anthracite-fired power plant, emission from coal are 750 grams of CO2 per kilowatt hour of electricity produced. This CO2 level is 100% more than a gas-fired power plant, and nearly 50% more than an oil-fired power plant. Yet, while affecting air quality, many of the Gulf States are classified as developing countries, meaning that they have no obligation to reduce their CO2 emissions under the Kyoto Protocol. Coal stocks took a beating yesterday, but if crude oil and natural gas prices continue to rise, more countries, especially those outside the Kyoto Protocol, will no doubt continue to increase their use of coal.