Saving US Coal - A Path Forward to Preserve the Existing Coal Fleet
By Fred Palmer
January 13, 2020 - There can be no argument that the primary reason for US coal plant closures in recent years, and announced plant closures to come, is coal’s carbon content and CO2 emissions when combusted. In the last 10 years there has been a catastrophic number of coal plant closures in the name of CO2 avoidance with the effect of cutting in half US coal combustion for electricity generation. The coal production numbers tell the story: in 2008 we consumed 1 billion tpy; in 2020 we will consume roughly 500 million tpy. Ironically, the coal plant closures accelerated following the election of President Trump even as he vowed to do everything he could to protect coal.
The number one reason for these closures has been and continues to be coal’s carbon content and CO2 profile when combusted.
Recall that then Senator Obama, running for President, vowed to eliminate and threatened the industry with bankruptcy because of CO2 emissions from the combustion of coal. Staying true to his word, literally as it turns out, the Obama Administration launched a War on Coal in 2009 with the EPA final issuance of CO2 Endangerment Findings, holding that more CO2 in the air from coal combustion and other fossil fuels is a “current threat” to human health and welfare. While no direct coal plant closures were ordered at either the state or federal level, the Obama years saw the EPA Clean Power Plan enacted along with unreasonable SOX, NOX and mercury regulation designed to require billions in capex investment to operate. At the same time, the CO2 Sword of Damocles was held over the head of utilities under the Clean Power Plan, the investments were not made and coal plant closures commenced. Where the federal government had direct involvement with coal plants, TVA and the Navajo Generating Station, tragic closures resulted there as well no matter the negative impact on communities involved, the Navajo Nation and the Hopi Tribe.
With the Trump Administration in place, there was large optimism that the tide would turn and coal plant closures would slow, if not stop. Instead, catching the coal industry unprepared and by surprise, coal plant closures accelerated with major regulated utilities closing coal with renewable and natural gas as replacements. But for EPA CO2 Endangerment, these utilities would have no legal basis to take the closure rout; because of EPA CO2 Endangerment, they had the perfect excuse to game the system and increase profitability for shareholders.
As proof of this proposition, at least thirteen regulated utilities announced coal closures for the same primary reason, “decarbonize”, and announced the same replacements, natural gas and renewables. Why did they take this action as quickly as they could, instead of waiting on the Trump Administration to take corrective coal action at EPA? Each utility management team had an economic incentive to do so independent of their customer base. In each state, they receive accelerated depreciation in cash, tax credits for renewables, new generating plant investment rate base/ return on new capital invested and fuel cost increase for natural gas under a fuel adjustment clause. All of the common stock of these utilities have soared since announcing their new future. XLU is the stock symbol for the publicly traded ETF of shareholder owned electric utilities: Since May 2009 XLU, a dividend stock, has increased over 2x, from $29/share to $64/share today, as management closed in their coal plants.
In other words, the US regulatory system was and is designed for the results being realized, no one saw it coming and there is currently no national coal industry mechanism in place to attempt to prevent the closures.
In November 2018, the New York Times ran a front-page headline hit piece on coal capturing the ongoing reality of declining coal use in the US, as it agonized on the China and India led reality of coal use abroad. In the US the debate is over, the NYT said, and it is just a question of when US coal disappears. At the same time, they despaired over coal use abroad and the headline captures it:
“Coal Endangers A Planet Unable to Stop Using It”
In the January 9, 2020 NYT edition, an op ed by CEO Ted Halstead of the Climate Leadership Council is carried calling for “slowing climate change” through expansion of wind, solar, geothermal, bio fuels and hydro. Too, Halstead calls for a carbon tax of $40/ton, which works out to $80/ton for coal combustion. Halstead importantly noted the creation of a “broad coalition” where oil and gas companies have joined the Council’s efforts to decarbonize the economy as these companies “recognize the threat of climate change”. Included in the companies are BP, ConocoPhillips, Exxon Mobile, Shell and Total. All embrace a carbon tax, which is a coal combustion killer as they know and intend
At the end of the article, energy sources by category as being a part of the future climate answer were listed. Coal was not mentioned and will not exist in Halstead’s world.
From Obama to Halstead, then, it is all about CO2 emissions from coal combustion. It has always been thus, since the beginning in 1988 and will be forever from here. Coal is on the climate chopping block, and once done in the US the agenda and threat to oil and natural gas will evaporate with high fives all around.
Can this be stopped? Is it a done deal? If we say nothing will it simply go away? It will not go away, but it can be stopped.
It can be stopped because all the false CO2/ climate apocalypse scare stories as advanced by the UN and 100% embraced by the Obama EPA, can be shown to be false based on actual observations. It can be stopped because the industrial evolution of the human community has thrived through fossil fuel use with massive improvement of the natural environment through enhanced atmospheric CO2 content. But it can only be stopped if coal as coal engages. Our only dependable ally is ourselves.
“Saving US Coal” has been created to be the vehicle for turning the tide for the full acceptance of coal in the US energy market by undertaking a campaign to repeal CO2 Endangerment at EPA. That requires a compelling EPA filing, of course, one that proves the benign and beneficial nature of more CO2 in the air based on the incredible work that Craig Idso has carried on for his Dad, Sherwood Idso and mentor, Sylvan Wittwer. However, it also requires creation of a coal coalition, like the Climate council quoted above, and the make-up of that coalition can be learned from coal’s past.
In 1992, CEED was formed to meet the challenge to coal plants due to coal combustion and its CO2 profile and engage at the state level. Like today, in the early 1990s the environmentalists had unleashed in state regulatory agencies the Gore CO2 Vision of the Apocalypse. Using the Vision, they were asking for dollar penalties for coal generation to be assigned under the framework of environmental externalities. The link below describing CEED and its history is a desmogblog link: I was unable to find any other source for our history, which is maybe not shocking, but thanks to one of coal's greatest enemies for keeping the history record there for reference and possible guidance.
CEED was successful in the 90s and the approach used then can inform for today. Coal's challenge today at the state level is much more serious than it was in 1992, for the simple reason that the great investor owned utilities in CEED have switched sides and they own the regulated coal plants. But the CEED model never depended on the nature of CEED's members, it depended and depends on defending CO2 in defense of Coal. “Saving US Coal” is the only entity that can do this today and its leaders were engaged directly in the 90s with CEED and succeeding years. “Saving US Coal” can perform the same function today as CEED did then in a virtual way.
Once filed at EPA, “Saving US Coal” will engage virtually at the state level with regulators directly and through NARUC to educate on the benefits of CO2 to the biosphere and the human environment. At the same time Craig will develop additional, original research showing the truth of CO2 which will be distributed as generated to the regulators. By doing so, coal suppliers can then engage directly with the regulators with challenges to the announced closures; rep-opening previous announcements where the plants are still operating is not out of the question.
“Saving US Coal” also will work to create a coalition of the willing to take the message to the White House, the Congress and to civil society through our coalition. Today, there are groups sitting right in front of us and ready to go in coalition, I believe. These include:
Count on Coal through NMA
Friends of Coal in West Virginia, Kentucky, Illinois, Indiana and Pennsylvania
RMCMI in Colorado
The American Coal Council
The state coal associations, a very powerful and overlooked resource
CoalZoom interviewed Bob Murray a few years ago and mention was made of 800,000 people whose jobs depend on coal. Many of those jobs are gone today but many remain, too. Also, with coal conversion on the horizon and economical coal-to-liquids being deployed and developed right now, the industry cannot take for granted the ability to deploy new technologies given coal’s carbon content and the continuing existence of EPA’s CO2 endangerment finding. Cannot those of us remaining, no matter our roles, make the existing loose coal confederacy a true union in defense of coal and CO2?
Union it should be; if realized success can follow.