January 13, 2022 - 2021 COAL BOOST WON’T LAST: Power generators burned more coal in 2021 as it became a cheaper alternative to natural gas, but the underlying trend is still toward coal’s displacement.

Generators plan to retire 12.6 gigawatts of coal-fired generation capacity in 2022, according to Energy Information Administration figures. That amounts to 85% of the total 14.6 gigawatts of planned retirements across generation sources this year and 6% of the coal capacity that was operating at the end of last year.

Those planned retirements are scheduled to occur after the U.S. saw the first increase in coal power generation since 2014, contrasting the utility of coal in the immediate term with its poor long-term viability.

Scott Segal, head of the public policy group at Bracewell, which represents power and industrial firms, said the consensus within the power sector is to move along with the transition to cleaner sources of energy despite short-term reliability needs.

“The fact that reliance on coal generation has varied over the last few years reflects the usefulness of certain incumbent fossil facilities when addressing severe conditions like weather events and natural disasters,” he told Jeremy.

Segal continued by saying the expectation is for energy storage technologies to eventually help ensure reliability in years to come but that fuels like coal are “a necessary buffer” for the power sector right now.

EIA numbers bear that out. Coal’s average generation share rose to 23% in 2021, which the agency primarily attributes to higher natural gas prices, making for a 17% increase as compared to 2020.

But generators will have fewer plants to enable the buffer going forward due to years of retirements, which Michelle Bloodworth, president and CEO of coal trade group America’s Power, attributes to undervaluation of the fuel.

“There are a number of factors that play into coal plant retirement decisions, particularly overly stringent regulations and the lack of proper signals from markets to properly value the attributes of coal,” Bloodworth said.

Coal’s rise in Europe: The United States’ power sector was not alone in its higher level of reliance on coal last year. Germany and the United Kingdom both burned more because of high gas prices — prices that notably spent the year at levels several fold higher than prices in the U.S. — and to make up for poor performance among wind power assets.

Importantly, both nations have established targets for phasing out coal over the next decade, and the reversion to it displays that Europe’s leading economies, which in many ways are further down the energy transition road than the U.S., have perhaps even greater need for the coal buffer now than their partner across the Atlantic because of gas’s price volatility and renewables’ intermittency.

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writer Jeremy Beaman (@jeremywbeaman). Email jbeaman@washingtonexaminer.com for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.

SPELLING OUT PLANS FOR WIND OFF NEW YORK AND NEW JERSEY: Interior Secretary Deb Haaland and the Bureau of Ocean Energy Management will today announce details of an upcoming auction that will make more than 488,000 acres of federal waters available for offshore wind development off the coasts of New York and New Jersey.

The sale could generate up to 7 gigawatts of carbon-free power — or enough energy for 2 million homes, according to a preview senior administration officials provided to reporters — and falls in line with President Joe Biden’s target of approving 30 gigawatts of offshore wind by 2030.

Today’s announcement is part of a slew of initiatives executive agencies are laying out related to renewable energy development and grid improvements funded through existing congressional authorizations.

Interior, defense, energy, agriculture, and the EPA are forming a new interagency program to be announced today which is designed to improve the review process for clean energy projects on public lands.

Energy is also launching a "Building a Better Grid" initiative to improve electricity transmission infrastructure. The program will finance new lines and upgrades through the recent bipartisan infrastructure law's $2.5 billion Transmission Facilitation Program and through more than $13 billion in grants for states to better insulate their grids against outages.

NORD STREAM SANCTIONS AND SUPPORTIVE DEMOCRATS: Republican Sen. Ted Cruz’s proposal to sanction Nord Stream 2 is headed for a vote with some measure of bipartisan support, despite the Biden administration’s reversal of sanctions on the Russia-to-Germany natural gas pipeline, the Washington Examiner’s Joel Gehrke reports.

Democratic Sen. Catherine Cortez Masto said she has “been consistent on ensuring that we are stopping the Russian aggression not only against Ukraine but the energy independence of the European Union” and that she continues to support sanctions.

The path to 60 votes, however, remains unclear, and each player clearly seems to treat the pipeline as a point of leverage in its favor.

Talks between the U.S. and Russia are ongoing over the conflict. ClearView Energy Partners assessed at least two possibilities as they relate to the pipeline and energy in a note this morning. One is the talks yield a negotiated stand-down.

“If not,” ClearView noted, “escalation could raise energy prices, not only via Western sanctions (potentially including NS2) but also because Russia might see fit to deploy its ‘energy weapon’ in response to Western economic force projection,” i.e. by disrupting much needed gas supply to Europe as a consequence.

OIL AND GAS SPENDING TO GROW: A new analysis from Rystad Energy projects a $26 billion increase in spending on oil and gas activities globally, a 4% increase from the $602 billion invested last year.

Rystad estimates that spending on upstream gas and LNG will lead the way with a 14% boost in investments.

“Despite the ongoing disruptions caused by Covid-19, the outlook for the global oil and gas market is promising,” said Audun Martinsen, head of energy service research at Rystad Energy.

The projected boost in spending would be welcome to analysts and industry leaders, who have warned against the pitfalls of underinvestment in oil and gas in coming years.

The International Energy Forum and global analytics firm IHS Markit said in a report last month that upstream investment alone needs to increase and hold at around the $525 billion mark through the end of the decade in order to keep the market in good shape.

TESLA LOBBIES AGAINST NET METERING PROPOSAL: Electric vehicle and solar giant Tesla is urging Californians to oppose a new proposal from the state’s Public Utilities Commission that would charge solar customers a tariff of $8 per kilowatt of installed solar per month. The fee is designed “to capture residential adopters’ fair share of costs to maintain the grid and fund public purpose programs.”

Proponents of the proposal argue it levels the playing field, where current rules allow solar customers to sell their excess electricity back to utilities, and require solar customers (typically higher earning households) to pay more toward maintaining the grid.

Opponents insist it will make rooftop residential solar uneconomical in California, which has by far the most solar installations of any state, per numbers from the Solar Energy Industries Association.

Tesla estimates the proposal could add between $50 and $80 per month to the electric bill of a home solar customer.

“Bizarre anti-environment move by govt of California,” Tesla head Elon Musk said in a tweet.

The Public Utilities Commission will take up the proposal on Jan. 27.

SPECIAL RAILCAR FOR NUCLEAR WASTE BOUND FOR TESTING: A new railcar designed specifically to transport the personnel who accompany shipments of spent nuclear fuel, or SNF, and high-level radioactive waste, is on its way from the Oregon site where it was built to Colorado for testing.

The “rail escort vehicle,” which includes lodging, workspace, and surveillance equipment for the transport journey, was developed by the Navy and the Department of Energy and is the final component to a complete railcar system the department will use to move waste to disposal and storage facilities, DOE said explained in a blog post yesterday.

A permanent site for the disposal of tens of thousands of metric tons of spent fuel remains outstanding.

ELECTRIC VEHICLE SUMMIT TO FEATURE BIDEN BRASS: Deputy Secretary of Energy David Turk and Deputy Secretary of Transportation Polly Trottenberg will make a joint appearance at the National EV Charging Initiative’s summit on Jan. 20, where they will to discuss the novel Joint Office of Energy and Transportation and its responsibility for deploying the $7.5 billion in funding for electric vehicle charging stations authorized by the bipartisan infrastructure law.

CRES WELCOMES HOUSE CLIMATE COMMITTEE ALUM: Conservative energy policy group Citizens for Responsible Energy Solutions announced yesterday that Martin Hall will join the organization as senior policy fellow beginning Jan. 16.

Hall formerly worked as Republican staff director for the House Select Committee on the Climate Crisis and as senior vice president and chief of staff at Business Roundtable.

The Rundown

E&E News Florida eyes rooftop solar clampdown

Associated Press Germany faces ‘gigantic’ task meeting energy, climate goals

Calendar

THURSDAY | JAN. 13

10 a.m. The Congressional Western Caucus and House Committee on Natural Resources Republicans will virtually host a joint forum entitled “Minnesota Mining and American Potential: An Opportunity for a Brighter and More Secure Future.”

THURSDAY | JAN. 20

12 p.m. The National EV Charging Initiative will host a first-of-its-kind electric vehicle summit.