King Coal's reign challenged in courts, D.C.

updated 7:57 p.m. ET March 7, 2009

BILLINGS, Mont. - Beneath the frozen plains of eastern Montana and Wyoming lie the largest coal deposits in the world — enough to last the United States more than a century at the nation's current burn rate.

The fuel literally spills from the ground where streambanks cut into the earth, hinting at reserves estimated at 180 billion tons. But even here lawsuits over global warming and the changing political landscape in Washington are pummeling an industry that has long been the backbone of America's power supply.

In recent weeks, a group of rural Montana electric co-ops abandoned a partially built 250-megawatt coal plant, ending a four-year legal campaign by environmentalists to stop the project. The co-ops plan to instead get their electricity from a natural gas plant — more expensive for customers but also more likely to get built.

A few miles away, the U.S. Air Force dropped plans for a major coal-to-jet fuel plant once touted as the harbinger of a new market for coal. There are no signs it will be revived.

Other plants are moving forward in Montana and at least a dozen other states, but the exodus from coal has hit every corner of the country. On Thursday, two more were shelved — plants in Iowa and Nevada that would have generated enough power for 1.6 million homes.

In Nevada, LS Power said it was postponing a 1,600 megawatt coal plant and will instead focus on tapping the state's geothermal, wind and solar potential. Iowa's Interstate Power and Light dropped a 630 megawatt plant as it pursues a 200 megawatt wind farm.

"In the last year the world has changed 180 degrees," said Bruce Nilles, director of the Sierra Club's "Beyond Coal" campaign.

Sharp drop in construction plans
In 2007, the Department of Energy forecast 151 plants would be built in coming years. The agency's latest forecast put the figure at 95.

Soon after the Energy Department released its forecast two years ago, the Kansas Department of Health and Environment became the first agency in the country to reject a permit for a coal-fired power plant, citing carbon dioxide emissions.

Kansas acted six months after the U.S. Supreme Court ruled that carbon dioxide and other greenhouse gasses were pollutants that should fall under the purview of the Clean Air Act.

Driven by the change at the White House, the political landscape for coal is fast shifting. President Barack Obama — once a reliable supporter of the industry — on Feb. 17 signed an economic stimulus package with $16.8 billion for renewable energy and efficiency programs.

The coal industry was left with just $3.4 billion. Congress had earlier removed $50 billion in loan guarantees for coal-to-liquids plants and the nuclear industry.

Last year, only five new coal plants totaling about 1,400 megawatts came on line. Meanwhile, the wind energy sector added a record 8,300 megawatts.

Coal fights back
Yet any proclamation of coal's demise would be premature.

Coal companies are scrambling after federal subsidies for cleaner-coal technologies — hoping to at least soften the beating they have taken over climate change.

And after spending an estimated $40 million during the 2008 election on a pro-coal public relations campaign that includes videos like the one shown below, a consortium of companies that dig, ship and burn the fossil fuel may match that spending this year.

"We see this as an ongoing effort," said Joe Lucas, who has led the industry's public relations campaign as vice president for the American Coalition for Clean Coal Electricity. "When we talk about plugging in (electric) cars, we're going to create new demand in this country and that demand is going to be met in large part like it is today, by fuels like coal."

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