Why the Clean Power Plan isn’t a death knell for coal

Obama’s new rules won’t necessarily knock out the West’s aging power plants.

 

On a Thursday afternoon in early August, Wyoming’s governor, both its U.S. senators and its lone House representative joined dozens of coal miners and other locals in a library in the town of Gillette. The Bureau of Land Management — under pressure to reform its coal-leasing program — was holding a listening session on royalty rates for federal coal, and Wyoming’s political heavyweights had opinions to share.

They all vigorously opposed raising the rates. But the frustration and fear they expressed had at least as much to do with President Barack Obama’s announcement a week earlier that power plants would soon have to answer for their carbon pollution.

Finalized Aug. 3, the Clean Power Plan sets carbon-reduction targets for 2030, for states and tribes with power plants. Nationwide, the plan is expected to yield a 32 percent cut in emissions from 2005 levels. From an environmental perspective, this is momentous: Carbon dioxide is easily the most abundant power-plant pollutant, and until now, the federal government has completely neglected regulating it at existing facilities. But Wyoming, which mines 40 percent of the nation’s coal and claims 23,000 coal-related jobs, sees the plan as an existential threat. “What’s happening to coal right now is a disaster for this state,” Gov. Matt Mead, R, told BLM officials. “We just ask that you don’t kill the golden goose,” Republican Sen. Mike Enzi added. “If we put them out of business, it will ripple through the entire economy.”  

Percentages indicate how close states will get to their 2030 goals using the plans they already have in place, based on rates of CO2 emissions, a common method of measuring EPA compliance.
Source: Union of Concerned Scientists

It’s worth remembering that while Obama and the U.S. Environmental Protection Agency had some choice in how to regulate carbon dioxide, they had no choice in whether to regulate it. Supreme Court decisions since 2007 have affirmed that carbon is a pollutant the EPA is legally required to control.

Still, the coal states’ hostility is understandable. Coal is responsible for 75 percent of the electricity sector’s carbon emissions, and aside from improving energy efficiency, the easiest way to cut climate-changing pollution is to start burning less of it. There’s room under the plan for natural gas, wind and solar to grow, but barring major advancements in carbon-capture technology, coal has no option but to shrink.

Despite this, the plan isn’t a certain deathblow for the West’s oldest facilities. That’s partly because a number of those units are already slated for closure, either to comply with federal regulations to clear haze from national parks and wilderness areas, or to meet states’ carbon goals. Any shutdowns after 2012 will count toward the 2030 targets and could go a long way toward helping to meet them.

Take the Navajo Generating Station and Four Corners Power Plant, both of which sit on the Navajo Nation. Under the Clean Power Plan’s draft version, released last year, the Navajo would have been required to cut emissions by 6 percent, an easy goal since three units at Four Corners were idled in 2013, and one at the Navajo Generating Station will likely close in 2019. In the end, the EPA revamped how it calculated the targets, and the reservation’s goal leapt to at least 38 percent. And that’s a goal that the planned closures at the two plants could still achieve — or at least come close to — under one of the EPA’s proposed compliance options, according to a rough calculation provided by the Natural Resources Defense Council.

Similarly, New Mexico’s existing renewable energy and efficiency standards, plus the planned closure of two units at the San Juan Generating Station, seem likely to put the state within striking distance of its 2030 goal. PNM, New Mexico’s largest utility, agreed this month to reconsider the remaining units’ future in 2018, and environmental groups remain hopeful it will abandon San Juan. Since the EPA is encouraging participation in emissions trading markets under the Clean Power Plan, PNM might even stand to profit from closing more units. If it reduces emissions more than required, it will have credits to sell on the market, explains Steve Michel, an attorney with Western Resource Advocates.

The Navajo Generating Station, a coal-fired powerplant located on the Navajo Indian Reservation near Page, Arizona, provides electrical power to Arizona, Nevada, and California.
Jonathan Thompson

In the West as a whole, says Noah Long, director of NRDC’s Western Energy Project, some additional coal-fired units will have to be shuttered to meet targets, even if it’s currently unclear where those closures might happen. And one way or another, the states that are most reliant on coal, like Montana and Wyoming, will have to do more to cut pollution than they’re currently planning, which is very little.

As the West’s largest coal economy, Wyoming in particular faces big changes. Rob Godby, a University of Wyoming energy economist, says the concern is less how Wyoming will meet its own target than how other states — its coal customers — will meet theirs. Godby led a recent study that found that the regulations could reduce Wyoming coal production by 34 to 50 percent. How big the hit will be depends in part on how much coal power Wyoming’s customers will have the option of keeping, which in turn depends on whether emissions can be offset elsewhere, by improving energy efficiency or buying emissions credits. “This isn’t the death of coal,” Godby says, but it is a formidable new challenge.

In the short term, the coal industry’s wellbeing hinges primarily on gas prices. In the long run, however, carbon limits are one of its greatest threats — one it and the states it bankrolls may no longer be able to evade.