Republican Lawmakers Are Making it Harder for Power Companies to Pivot Away From Coal. Their Constituents May be Paying the Price.
Coal plants that have powered America for generations are increasingly on the chopping block, as utilities around the country move to take advantage of new federal incentives and turn to often-cheaper alternatives like natural gas and renewables.
But in some of the most coal-dependent states, there’s something standing in the way: state lawmakers.
Republican legislators and state officials are making it harder for power companies to retire coal plants even when it makes clear economic sense to do so – propping up the ailing industry at the cost of higher energy prices for their constituents.
While natural gas and renewable prices have fluctuated in recent years amid impacts from the war in Ukraine, supply chain issues and inflation, experts say coal is typically more expensive than the alternatives. New federal environmental regulations and incentives for renewable energy passed by the Biden administration are expected to accelerate the trend.
Considering the mounting costs to operate aging coal plants, the pivot away from coal is increasingly “a no-brainer for utilities and customers,” argued Michael O’Boyle, a senior director at the consulting firm Energy Innovation Policy & Technology. A report his firm released earlier this year found that it would be cheaper to switch 99% of coal plants around the US to renewable energy sources than it would be to keep them running.
Michael O’Boyle
“Policymakers really need to recognize that coal is not competitive,” O’Boyle said. “There’s little to nothing they can do to permanently stop the trend that’s moving away from coal.”
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How Will Industry Be Impacted By EPA’s New Power Plant Proposal?
Manufacturers are sweating the Environmental Protection Agency’s proposed power plant rule to cut greenhouse gases. But they are also touting the steps they have taken to cut emissions, including using combined heat and power and reducing methane.
The courts have given EPA the right to regulate CO2. And with that, the agency wants to provide industry the flexibility it needs to dramatically cut heat-trapping emissions — steps that include capturing and burying CO2, buying renewables and hydrogen fuels, or retiring older plants. EPA says the rule will cut carbon pollution by 80% by 2040 compared to 2005.
A NRG owned coal fired energy facility that plans to convert to a natural gas facility.
Photo by: LOOP IMAGES/UNIVERSAL IMAGES GROUP VIA GETTY IMAGES
The proposal would hit coal and natural gas plants the hardest. As expected, opposition abounds, centered on the combined market share between the two fuels in the electricity production mix. But it is unreasonable to lump in natural gas with coal. The net-zero goal is paramount, not the promotion of specific fuels or the elimination of natural gas.
“With nearly 60% of our nation’s energy generated from natural gas and coal, this will either require deployment of still nascent technologies or force those plants to shut down entirely,” says National Association of Manufacturers Vice President of Energy and Resources Policy Brandon Farris. “The U.S. cannot afford to shut down more than half of our power generation and grind our economy to a halt.”
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World Sees China as Potential Coal Destination Amid Oversupply, Fragile Demand
The oversupply of coal globally and continued subdued demand have pushed sellers and traders from exporting nations to bank on China, the world's largest consumer, to absorb excessive volumes, an analysis by S&P Global Commodity Insights showed.
While China and India have largely been relying on domestic production to meet their requirements, overstocking in Europe and lower-than-expected winter demand drove the continent to nearly stop coal imports in Q1 2023.
As a result, global exporters have been flocking to the high consumption regions in Asia, creating more supply in the region which is already stuffed with coal from Indonesia, Australia, Russia and South Africa.
"China is in the midst of economy recovery and thermal power becomes inevitable as it can help to recover in a faster pace. Coal still remains the primary source of energy in China which is attracting the whole world," a Singapore-based trader, who deals with the China market, said.
"Electricity demand is increasing gradually, faster than the conversion of coal to other green energy. This has resulted in continued high coal consumption in China, therefore it needs to import to balance the domestic coal price."
Prices Suffer Amid Excess Supply
Following weak Asian demand for around 10 weeks now, thermal coal prices have fallen to levels not seen so far this year.
Platts, part of S&P Global, assessed the FOB Kalimantan 4,200 kcal/kg GAR at $60/mt June 5, an year-to-date low. Similarly, the Newcastle 5,500 kcal/kg NAR with 23% ash was assessed at $88/mt June 5, lowest so far this year.
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West Virginia Senator Announces Over $200,00 to West Virginia University for Carbon Sequestration Research
U.S. Senator Shelley Moore Capito (R-W.Va.), a member of the Senate Appropriations Committee and the Ranking Member of the Senate Environment and Public Works (EPW) Committee, has announced a $209,000 grant awarded to West Virginia University (WVU) through the U.S. Department of Agriculture’s (USDA) National Institute of Food and Agriculture (NIFA). This funding will support a study of the trade-offs of carbon sequestration by forests versus carbon credit programs to strike a balance between landowners aiming to sell timber and the natural ability of forests to naturally capture carbon from the air.
Shelley Moore Capito
“West Virginia has the perfect ecosystem to research the ability of our Appalachian forests to capture carbon and the best minds to figure out the right economic balance of how this affects our climate at WVU.” Senator Capito said. “Carbon sequestration is an area I have worked on extensively through my role as Ranking Member of the Senate Environment and Public Works Committee, and I look forward to seeing our students and professionals contribute to the solutions we need in this field.”
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Statement from NMA's Rich Nolan on Today's ENR Hearing
Rich Nolan, President & CEO of the National Mining Association (NMA), released the following statement on today’s hearing in the Senate Energy and Natural Resources Committee concerning grid reliability:
Rich Nolan
“It was impossible to listen to the testimony this morning, including from the nation’s top reliability regulator and from the CEO of our largest grid operator, and not conclude that we’re pushing aside existing, dispatchable generation – namely the nation’s coal capacity – far too quickly. We are already in a grid reliability crisis and the EPA’s regulatory onslaught is making an extraordinarily challenging situation all but unmanageable. As we have heard from one expert after another, the right path forward is to add new resources on the shoulders of our existing capacity – our reliability backstop – not push it aside before we have new, reliable and affordable capacity and infrastructure deployed and operational.
An immediate first step Congress should consider is mandating interagency coordination on reliability. The EPA must work with reliability regulators to evaluate the reliability impact of its rules before proposing them, not after the fact. Senator John Barrasso’s (R-Wyo.) bill, the Spur Permitting of Underdeveloped Resources (SPUR) Act, includes language that can help us achieve this. We strongly encourage its consideration.”
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