The New Mexican: Old Coal or Clean Energy?

July 2011

These are perilous times to rely on old and inefficient coal-fired power plants. Major changes are afoot, with big price tags to match. Should New Mexico continue throwing money at preserving the old ways, or proactively embrace the future?

New Mexico has long been a major generator and net exporter of electric power, mostly coming from coal-fired plants. But this coal fleet is aging, as most of the units came on-line in the 1960s and 1970s.

Our heavy reliance on coal has historically helped New Mexico with lower electric bills, but with other costs. New Mexico’s emission rates for both carbon dioxide and nitrogen oxide rank among the 10 worst in the country. And with coal usually comprising over three-fourths of New Mexico’s power generation mix, source diversity is low and vulnerable to market and regulatory changes.

Is it risky to continue reliance on coal, especially when power plants are already in their fourth or fifth decade? Almost certainly, yes. Recent and upcoming EPA environmental regulations, enforcing long-existing laws and many years in the making, will be costly though the health benefits will be far greater.

For coal plants, major retrofits for mercury emissions, hazardous air pollutants, cross-state air pollution, coal combustion wastes, regional haze, cooling water intake, and more could run into hundreds of millions of dollars for New Mexico. Add into that possible greenhouse-gas limits, clean-energy strategies, and more, and it’s clear that we’re not simply looking at a single act of compliance, but a long series of future requirements and adaptations.

It’s not enough to look at each action one at a time, making a go or no-go decision as if that would be the only decision remaining. Rather, it’s appropriate to look at the collective set of actions that must or might be taken, and consider their aggregate cost implications. Narrow decisionmaking, without foresight of the longer-term picture, can result in good money being thrown after bad.

Across the U.S., power companies will be making similar decisions on whether to keep old plants going or invest in newer and cleaner power sources. Studies show that the economics of retrofitting don’t work for many antiquated coal plants facing serious and mounting environmental and health regulations. There will be some thinning of the herd, as many utilities conclude that all these retrofits simply aren’t worth the cost.

But retiring antiquated plants offers opportunities as well. Rather than hitching our future to patching up old coal plants, we can begin revamping our power systems to be competitive in the 21st century. Nationally, there’s a lot of generating capacity using natural gas, a legacy of earlier overbuilding and dampened demand from the recession. And natural gas supplies are abundant, affordable, and home grown. New Mexico is a leading producer of natural gas, accounting for close to one-tenth of the U.S. total.

New Mexico is also blessed with a large endowment of renewable energy resources, ranking second in the nation for solar power potential and 12th for wind power potential. Hybrid wind and gas systems can offer plug-compatible replacements for aging coal supplies. Relative to most other states, the development of these sustainable power sources can be achieved locally, at lower cost, and/or in greater quantity. Yet despite this abundance of local resources, New Mexico lags behind nearly all other Western states in renewable-power production.

Daniel E. Klein, president of Twenty-First Strategies, is a longtime consultant on energy, energy security and climate change. He lives in the Washington D.C. area.

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