As Plant Retirements Stake Up, Federal Efforts to Help Coal Industry Grow More Urgent

 

 

By Robert Walton

 

January 2, 2019 - There is slim chance a large baseload coal plant will ever be built again in the United States, experts say. But Republican lawmakers and the federal government are continuing efforts to support the industry, evidenced by an increase in research funding opportunities and proposed legislation meant to benefit the fuel production and the possibility of future plants.

Along with a significant research initiative at the Department of Energy (DOE), there has been legislation introduced in the House and Senate that is indicative of where coal supporters may be looking.

Reviving the coal industry was a major campaign promise of President Donald Trump's, but so far the tide of closing power plants has been unstoppable. The Institute for Energy Economics and Financial Analysis (IEEFA) says the United States will retire 15.4 GW of coal capacity this year, and an additional 21.4 GW of coal capacity will go offline by 2024. 

Facing long odds, the coal industry is looking to minimize financial risks by considering smaller plants. Earlier this month, DOE issued a request for proposals seeking conceptual designs for "coal plants of the future." The solicitation is part of the agency's wider Coal FIRST initiative (Flexible, Innovative, Resilient, Small, Transformative), which supports development of flexible and efficient power plants.

And last month, DOE issued a notice of intent for a Funding Opportunity Announcement for cost-shared research and development "to enhance the performance and economics of the existing and future coal fleet." There are also multiple legislative proposals being floated with an eye towards next session.

Elgie Holstein, senior director for strategic planning at Environmental Defense Fund, told Utility Dive that he doubts these efforts will have the impact Trump and his supporters are looking for — though they could result in more coal resources. 

"There's not much chance coal will return to its early days of glory," Holstein said. "I doubt we'll build any more large baseload. It's possible there could be smaller additions to the coal fleet."

The DOE wants to "make the financial risks of a coal plant less threatening," hence the focus on small-scale plants, said Holstein. "I don't think it's going to work because the market is so overwhelmingly in favor of natural gas and renewable energy, and of course the cheapest of all, energy efficiency."

But there are efforts on multiple fronts to support the fuel.

Pushing for Coal in Congress

 

In November, Sen, Todd Young, R-Ind, unveiled legislation to revitalize the DOE's loan guarantee program and incentivize the development of cleaner and more efficient coal-fired units. The Reinvigorating American Energy Infrastructure Act, S.3653, would expand eligibility for the agency's loan guarantee program to high efficiency, low emission generating coal plants.

Young, in a statement, said the bill is necessary to ensure coal "is competing on a level playing field while also keeping up with advances in technology."

And earlier in the year multiple bills were floated to offer existing coal plants a tax credit to help pay for operation and maintenance (O&M) costs, including a version introduced by Sen. Shelley Moore Capito, R-W.Va.

"This administration sees the need for a future coal fleet," Michelle Bloodworth, president and CEO of the American Coalition for Clean Coal Electricity (ACCCE), told Utility Dive. She said her group supports Young's bill, as well as versions of the O&M credit for existing coal plants.

"A lot of policy makers understand there is a need for a certain amount of coal. People accept that. And now we're seeing legislation introduced to allow for the coal plants of the future," Bloodworth said.

Also in November, Rep. Tom Reed, R-N.Y.,  introduced the Energy Sector Innovation Credit Act, which he says will encourage the U.S. energy market to be "technology-diverse" and stop "picking winners and losers." The bill includes an Emerging Energy Technology Electricity Production Credit and an Emerging Energy Technology Investment Credit.

Reed's bill is a bit broader and could benefit a variety of technologies — it specifically includes storage, for instance, though perhaps not lithium ion, and it would not be available to technologies claiming existing incentives like the Investment Tax Credit or Production Tax Credit.

Will Reinert, a spokesperson for Reed, told Utility Dive that the credit would be aimed at "new and small technologies with little market penetration."

That could be offshore wind, Reinert said, so long as it "was U.S. based and used new or emerging technology to produce power."

As for how it could benefit coal. Reinert said in an email that "significant improvements to existing electricity generation facilities may qualify for the investment tax credit. Retrofits qualifying for the credit include investments to decrease pollutants or water usage of the facility and improvements to efficiency."

Reed's bill wasn't introduced with an eye towards passing it, however. And likewise, Bloodworth said she is looking ahead to the next Congressional session for the legislation ACCCE supports.

A driving force behind Reed's innovation credit proposal is the conservative energy think tank ClearPath. Policy Director Jeremy Harrell told Utility Dive the group provided "technical assistance" in developing the legislation and that right now the intent is mostly to gauge reaction.

Reed's office "wanted to get the language out there, get more interest and feedback," Harrell said. "Last we spoke to them, they hoped to reintroduce it in the next Congress, in a bipartisan way."

Harrell said the bill could apply to technologies like thin film solar or batteries beyond lithium ion technologies, as well as small modular nuclear reactors and carbon capture retrofits for coal plants.

Sierra Club's John Coequyt was cautious when asked about the bill.

"We definitely support the innovation that needs to happen," Coequyt said. "There's a lot [in the legislation] that we support. But where we differ: We don't believe in the end that coal and natural gas are central to solving climate change, and question whether it's a great investment to push a lot of money in that direction."

The proposed emerging energy technology production credit would scale down as generation grew: The production credit could be worth 60% for a technology representing less than 0.5% of national generation, but that would ramp down to 15% as the percent of generation rose to 2%, according to a summary of the bill.

"Some of these technologies are never going to get there," said Coequyt, meaning the technology will never become so widely used they would lose the credit. "That's a very rich credit for technologies that may or may not show potential. ... This is a pretty big, blanket tax credit for a long time, for technologies that might have environmental impacts for a long time.”

The federal government has been supporting research into clean coal for years, including during the Obama administration, so in some ways these efforts are not new. And as a resource, coal will remain a part of the United States' generation fleet for years to come.

But the number of efforts being considered by the federal government may represent a growing sense of urgency. IEEFA says the U.S. has 246 GW of coal capacity online, and announced retirements through 2024 represent about 15% of that fleet. 

 

"DOE has been trying to clean up coal for many years," said EDF's Holstein. "But clearly the Trump administration has put a much bigger emphasis on it."