In Western states, coal-fired power plants are phasing out and many communities are feeling the pinch. But where will we go from here? As world leaders prepare to meet for climate talks in Paris in December, questions loom over the future of energy economies, a major part of the American West.
On November 18, High Country News brought in experts to begin to answer some of those questions for its annual High Country News University Soundtable program. Brian Calvert, HCN’s managing editor, joined Noah Long, of the Natural Resources Defense Council, in Santa Fe; Robert Godby, director of the Center for Energy Economics & Public Policy at the University of Wyoming and Tom Huerkamp, board vice president of Delta County Economic Development, Inc., in Colorado.
Here’s a full transcript of the discussion:
Brian Calvert: I’m Brian Calvert, the managing editor of HCN, broadcasting from Paonia, Colorado, and tonight we’re going to talk about coal and the climate.
Coal these days is taking a beating, and that’s mostly due to the prices of natural gas and other economic factors, but it’s also part of a bigger picture–a global push to reduce carbon emissions and tackle global warming. More and more coal-fired plants are closing, thanks to tighter regulations under President Obama’s climate agenda, and coal-mining companies are feeling the pinch.
Right now, the future of coal — any fossil fuel, really — is not that bright. And with world leaders set to meet in Paris for talks on even more action, we thought it would be a good time to take a close look at what the fossil fuel industry means to the West.
That means we’re going to talk about jobs, we’re going to talk about energy, and we’re going to talk about the things that communities can do to transition into a future that will likely be less be less friendly to coal, oil, and natural gas.
To help us tonight, we’re joined by Noah Long, director of the Western Energy Project for the Natural Resources Defense Council. Hello, Noah.
Noah Long: Thanks for having me.
BC: And we’re joined by, Robert Godby, director of the Center for Energy Economics and Public Policy at the University of Wyoming. Hello, Rob.
Rob Godby: How are you?
BC: I’m fine. And here in the studio we have Tom Huerkamp, board vice president of the Delta County Economic Development organization in Colorado. Welcome, Tom.
Tom Huerkamp: Glad to be here. Thank you.
BC: This live show is part of the High Country News University program. You can join the conversation on Twitter by following us at @highcountrynews or following the hashtag #HCNU.
So, I want to get started with just an idea of what’s happened to coal, and for that let’s go to Rob Godby at the University of Wyoming.
Can you briefly explain where the coal industry is right now and how we got here?
RG: Sure. So the coal industry is struggling right now — at least several companies are. Coal shipments are down across the country, and really the reason for that is two-fold.
One, is economic growth in international markets. So, what we call the met coal industry has really struggled. Say five years ago or so, it looked like southeast Asia, countries like China, with their incredible growth were just gonna be a major market for steel-making and things like that. And it looked like American exports of coal might be poised to take off. That’s not really happened.
In fact, the opposite has been the case. As exports have declined, as growth in those areas has slowed down, and simultaneously we’ve had a lot of demand, or a lot of supply competition, I should say, around the world, which has, you know, depressed prices. And inside the United States, what we call the thermal coal market, has also really struggled, primarily due to the price of natural gas.
You mentioned in your introduction, that you know, coal-plants are shutting down in part due to the Obama Administration’s Clean Power Plan, and you know, the so-called War on Coal. That’s not really true.
Really, the true problem with coal plants has been that they just haven’t been able to compete with the low, low natural gas prices that we’ve been seeing these days. And so consequently, demand for coal is down. And then you add to that some regulatory changes that have been in the works for a while, that have required additional pollution control, and then the fact that these plants are just aging — a lot of them were built in the 1970s, and you know, the average plant is about 40 years old now, so they’re beginning to age out.
And looking forward, it just doesn’t look like electricity producers are going to be replacing these coal plants with new coal plants, and so there really aren’t any new ones planned. And so what you see is the future of coal begins to decline as these plants just shut down or age out of the fleet.
BC: Right, so that has an impact in two different ways. One, it has an impact on jobs. And two, it has an impact on the way that communities are gonna get their power.
So I want to talk about, a little bit, for a second, about jobs, because here in Delta County, we’ve traditionally had three coal mines supporting the economy.
TH: That’s correct.
BC: And so, Tom Huerkamp, here in Delta County, what does it look like now in terms of the coal production?
TH: Well, right at the moment, we only have one mine that’s really in production anymore, and that’s the West Elk Mine, owned by Arch Coal.
The Bowie Resources Mine is in a longwall move mode, which has resulted in them laying off all but, something less than a hundred miners because they’re doing the continuous mining to make the move of the longwall possible. But they’ve said that if the market conditions aren’t improved, that they probably won’t move that longwall and will lay off the rest of the people.
And so we’ve, in the last two years, lost a little over 600 jobs in our community of roughly 30,000 people.
And the West Elk, of course, Arches is under some financial distress at a corporate level, but it appears that West Elk is not threatened by their reorganizations. So it’ll probably continue on and have some good contracts for a few more years, but beyond that, it’s pretty bleak at this point.
BC: What kind of impact does that have on a community like this one, economically?
TH: Well, it’s huge.
The Oxbow shut-down when they had the fire a couple of years ago and couldn’t get back in, the total average of the payroll lost — it was over 350 guys — was over $105,000 per job. When you’re in a community that has an average household income of $44,000-some, it’s a tremendous impact because now that number takes a real beating.
The problem with the shutdown in the mining industry, and it’s true not just of coal, but of almost all extraction of natural resources, when jobs disappear in one area, the people don’t stay put and retrain or find other work, they move.
They move to where there are jobs in the field that they have kind of earning potential. And so we lose population, we lose students of our schools, we lose funding for our schools. And then, of course, the severance tax issues impact towns, counties, hospitals, schools, special districts. I mean, it’s a serious problem for local government.
BC: So, right on the ground we have a problem.
And also, I want to go over to Noah Long at NRDC to talk about the sort of bigger picture that that impact can have, in terms of trying to move policy when we’re talking about climate change mitigation, or sort of, these bigger picture things.
What kind of political impact can that have? Or what kind of challenges can that present in terms of moving policy?
NL: Sure, and thanks for having me again. Maybe before I do that I can just take a quick step back to say, I agree with everything that’s been said by my fellow guests tonight. And I just want to add a couple of things.
One, this has to be looked at in that the economic impact locally has to be looked at in context.
The policies that have been partially driving the move toward cleaner energy and the energy replacement are, of course, part of this conversation. Not to disagree with anything that was said on the international market or the competitiveness vis-a-vis natural gas. I think there are sort of three other pretty important points here that are moving the market away from coal.
Not only is natural gas cheaper now than coal in most markets, renewable energy and energy efficiency are increasingly competitive and even cheaper than even existing coal plants.
And secondly, I think that the nation is really taking a hard look, for the first time really, at carbon emission.
And of course, coal plants are one of the principal culprits for carbon emission in the country — power sector overall, about 40% of the carbon emission. And coal plants are twice as emitting or polluting as natural gas plants. And of course, renewable energy and energy efficiency are non-emitting.
And lastly, this administration has really taken seriously the charge from the Clean Air Act, the mandates from the Clean Air Act to deal with other pollutants — many of which have local impacts. Toxic pollutants from mercury, but also haze, invisibility-causing pollutants, that are also much more prominent from coal plants.
And I think that combination, along with global and national competitiveness changes that were mentioned earlier, is really driving it.
I will say, you know, from a national perspective, this is a bright future in regard to the transition to clean energy.
Overall, investing in lower-cost, cleaner-solutions is not only saving lives from health, reduced-health impacts. But also producing overall, on a national basis, producing more jobs than it’s losing. A lot of those jobs are coming from investments in energy efficiency, not just the folks, you know, that can make the buildings more efficient, but also people when they save money on their power bill, they have more money to spend in their local economy.
BC: Well, let me ask a question about that because we have a couple of tweets coming in now about the Clean Power Plan, specifically, and I think this one kinda speaks to what you’re saying.
This is from @AndrewGraham88, and the question is, when will we know the Clean Power Plan impacts on towns like Colstrip, Montana?
And I think even embedded in that question, there’s some angst or anxiety that’s maybe not reflective of what you’re saying, like in terms of the jobs being there or you know, other things coming back economically in a town like Colstrip, Montana.
NL: Yeah, I just wanna emphasize that that comment really raises an important disparity, I guess, between the national impact and the local impacts.
And there are, the fact that on a national basis, clean energy is a winner and producing more jobs than it’s taking away, doesn’t at all minimize the real challenges faced by towns like Colstrip, or some of the towns on the western slope, that are largely dependent on coal-mining and coal plants.
Those towns that are built up around those industries have real challenges ahead of them. Not, frankly, just because of the Clean Power Plan, and maybe not even mostly because of the Clean Power Plan, but because of the economic factors and broader societal questions that we’ve all mentioned.
And you know, as to when folks will know when, or if, any of those Colstrip units are closing, or for that matter, any of the coal plants around the West, and one of the points that I’d really like to emphasize tonight, is it’s hard to know.
It’s hard to know because there’s a bunch of political factors, there’s a bunch of economic factors that will describe the specific date that any of these plants will close. But the more that local communities can do early to start planning for that eventuality, and recognizing that no coal plan is going to last forever, I think the better-off they’ll be, when and if that happens.
BC: Right, and I think it’s important to point out that there’s a kind of a longer timeline here for people who are worried about their communities to make some kind of transition. That’s something we’re going to talk about in a little bit.
Right now, about 40 percent of the nation’s electricity was produced from coal in 2014. It’s estimated by about 2040 that’s going to be down to about 30 percent. So you can kind of get an idea of the timeline of how things are moving here.
But, Rob, what are the impacts on towns like Colstrip, Montana, when we talk about this bigger picture with coal decline?
RG: Well, so, it really depends on the size of the local community that you’re near.
Many generators are near larger communities and so this is more of an industrial shutdown. Certainly that’s not disruptive. But, you know, when you’re really a one-horse town, so to speak, Paonia may be an example of that, some agriculture in the area but otherwise, you know, coal mining is, you know, kinda their cultural history.
Obviously Appalachia, you know, places like West Virginia, Kentucky, they’re probably a really good example. Although again, different communities, far more productive mines, so more people were affected. That’s one of the reasons why they shut down first.
The bottom line is when you have these large transitions in the local economy it is very disruptive. And as Tom pointed out earlier on, you know with the loss of 600 jobs, people moving, depending on the tax structure of those, each location is a little different, but it has a lot of impacts.
These impacts aren’t just direct, they’re what we call the indirect impacts — those people that whose jobs depended on supply industry, for example, welders or service people, those people are also affected.
Then downstream what we call the induced effects — the people who are affected whose incomes are no longer being spent. So you could find somebody at, say, a local store being laid off or losing their job because of what happened in the coal mines. And you know, it wouldn’t really be obvious to them that that was going to happen or when, or predictable sometimes. So they’re wide ranging.
And you’ve already mentioned schools. Schools typically, school systems often depend on coal as well, so we can get a lot of different effects in the economy. And though we’re going to talk about it later, really, you know, the politics of the, of all of this, and moving the policy as you mentioned–really, the success of those policies really depends on how you deal with the transition.
Clearly those that are heard and recognizing things, and also, across the economy, people respond to threats much more than they respond to optimism. So you know, if they’re concerned that it’s possible that their power bill could go up, we heard from Noah that, you know, some of these energies have lower cost. But some of them don’t, you know?
We’re looking at the Clean Power Plan, it’s expected that potentially rates rise. And what he mentioned with respect to energy efficiency means your use goes down, so maybe your overall bill goes down, but that’s hard to say.
It depends on the person, what kind of adjustments they can afford to make. And so there’s this uncertainty really kind of bears down and weighs down economy.
BC: That’s right.
There’s uncertainty and there’s those bigger questions of severance taxes. Montana 12% of its 2013 revenue came from severance taxes. For Wyoming, 39% from severance taxes. So that’s going to be something there.
We’re going to take a quick break right here, and when we come back we’re going to really dig into the question about communities and the way that they’re dealing with this.
So remember if you just tuned in, you can join this conversation on Twitter by following the hashtag #HCNU, and we’re going to do our best to input those questions into this conversation as we go. But for now we’re going to take a little break.
Music break.
BC: Alright, and we’re back.
Welcome back to Soundtable. This is a live show brought to you by KVNF and High Country News. I’m Brian Calvert the managing editor of High Country News, and we’re talking about the future of fossil fuels, in a way.
And right now we’re talking about coal, and it’s taking a hit, and kinda the effect that has on local communities. So in a way, things get spread around or divvied a little bit differently, but when you have a town or a county, like Delta County, that relies on these things that can be problematic.
Talking to Tom, what are kind of the problems you see? And what are the solutions communities can look for in making a transition?
TH: Well, first of all, I agree with some of the ideas that on a national scale this is a different picture.
But when you come into it in a small, rural community like this that has limited resources and infrastructure to begin with, and you start losing what–the mine jobs we’ve lost in Delta County in the last two years would be the equivalent of 25,000 people gettin’ laid off in Denver on one day. So it’s a huge impact.
The problem is that we don’t have the resources to begin with to make some of these transitions that are relatively easy to identify, but the capital that it takes and the infrastructure it takes is hampered even further by the loss of tax revenues and incomes, the disposable incomes within the community.
And so many of these communities, and it applies to oil and gas in western Colorado as well, many of these communities are facing shrinking populations, aging populations, and lower household incomes.
And with that happening, trying to provide a future for these communities by tapping into new economies is a very difficult task because the resources aren’t there to begin with.
BC: That’s right. And so how is Delta County responding to this threat?
TH: Well, we’re taking a serious look at the fact that it’s highly probable that the coal industry will continue to decline.
And Delta County Economic Development Company has been working very hard, thanks to an EDA grant for Delta and Gunnison counties to do some intensive investigation. And we are reaching maybe the final 30 to 60 days of a more than year-long process.
And we have identified things that we think could, not replace, because that’s going to be a difficult task, but could provide job opportunities and target different context from an extraction industry. Because the extraction industries throughout the West are struggling.
And so we’re looking at things like the agricultural base we have, the outdoor recreational opportunities we have, the river resources–which are significant in Delta County. And the growing agri-tourism is probably one of the more attractive possibilities.
But we’ve got to do some pretty serious things to make this attractive, and that’s where the capital requirements become an issue.
BC: Right, and I think you’re speaking kind of to an anxiety in local communities and that can sort of echo out — not just for one town that has coal miners or something like that. But it also has an effect on the general public perception. And then you get this idea of the War on Coal and it sort of becomes a part of the culture war.
And I want to ask Rob, at the University of Wyoming, how, what are people talking about in terms of ways of figuring out how to help people along so that they’re not just completely opposed to climate change mitigation, or some other measures, when we get into these bigger questions of fossil fuel use?
RG: Right. So really to move these policies, people are beginning to realize that, for example, candidate Clinton, Hillary Clinton, has released a policy on this–other candidates will do the same. If you’re going to be in favor of climate change regulations, then you also need to deal with the impacts.
So there are a lot of things, and Tom mentioned several of them. They have to be community specific.
But general ideas, first of all, he already mentioned that one of the critical challenges is often times, in many communities, these are older workers. They’ve worked in that industry a long time, and they’re used to a high income. So they’re not likely to immediately accept something much lower.
And secondly, you know, their skill-set is more limited. It’s more difficult to retrain older workers–we know that. You may just question the efficacy of it. So retraining becomes an issue, not necessarily in the West so much as the East.
Health care costs are a major issue.
So for example, miners in the East tend to be much more unhealthy than the general population. You can imagine some of the conditions that have caused that over time, although they’ve become much better in the mines.
And simultaneously, like I said, some of them are old and some of them are pensioners that are counting on this. So retirees who had pensions that were funded by some of these companies that no longer can pay for these. So for example, Alpha Natural Resources, who declared bankruptcy are trying to avoid some of their pension obligations.
So it’s a lot of things. So what do you do?
You really do have to look at all of the opportunities in front of you. Generally, what we hear about is investment tax credits for these communities, on a general basis. When you hear about general programs, investment tax credits that try to induce or create incentives for companies to relocate in these areas over other.
Broad-band expansion has been used or talked about a lot. You see school support to offset those tax losses, at least for a time, to try and make sure that schools continue to operate and are high quality. Retraining programs. And then after that, you start to see really examples of community development — the type of work that Tom does — occurring on local scales and regional scales. And that’s really where the efforts tend to be focused, at least on a community basis. And they’re often, they’re everything.
In some counties in the East, they’ve looked at incentives for the arts. In others, they’ve tried to lure new industry into the area. In others, some high-tech services, some retraining.
It’s really a matter of imagination, often.
BC: Right. And we have a question coming in here. Also, what concessions should the Obama Administration make to communities sacrificing economy and jobs because of the Clean Power Plan?
And you know, I think that kind of also speaks to the way this is framed in some ways, and Noah Long, at the National Resource Defense Council, I’m going to go to you in Santa Fe. What do you see in that question, what concessions should the administration make to communities that are sacrificing economy and jobs?
NL: Well, I guess I’d say, I think that the kind of leadership that Tom was mentioning, or the kind of plan — both from the federal level and right down to the local level — to demand, to look for, to seek, and to help, and to ultimately demand economic opportunities for these towns is a much more productive conversation than some of the leadership, unfortunately, that we’ve seen, which is denying change would come, or pinning the plight of the coal industry on the Clean Power Plan or any of the other Obama Administration Policies.
What we’re seeing here is a broad economic change that’s causing, you know, change in the fuels and largely also a shift to cleaner energy. And those are facts on the ground.
I think, you know, instead, having a conversation about what local leaders can do, and then right on up to candidates for president, what they can do to help these kinds of communities that are facing such big changes. It’s a much more productive conversation.
I certainly don’t have all of the answers. I think folks like Tom and Rob are starting to talk about some possible answers. I think there’s more to be thought about out there.
I’ll just add one other piece to that, which is, I’ve been involved in discussions or negotiations around the closure a few of the coal plants in the western United States, and I’ve sort of seen two strategies.
One is recognizing that the plant is ultimately going to close, and sometimes the mine too, you know, mine-mouth operation either close or reduce in size. And trying to figure out a timeline that works for power supply and for the needs of the community and for the company to address that change.
And then the other strategy, is sort of fighting and fighting and pretending it’s not going to happen until the very day that the door slams shut and is locked and a lot of people lose their jobs.
And I think the former, that planning, is a much better place for these towns to be in — whether they’re looking at the mine closing in one year, or five, or ten. The sooner you start planning ahead, the more likely that you’re able to come up with some local solutions and also raise the profile of this issue right up to the national level to make sure that these towns are getting support from all levels of government.
But also, it’s not just a government thing. I think that it’s also about the companies that have been benefitting for so long from the extraction of these resources or from the production of this power.
BC: Let me throw this to Tom real quick because I want to take it to a community level for a second.
First, I want to know if this was a surprise. Did you see this coming? Or there’s a sense that some of this could have been predicted; there’s also a sense that this was quite sudden. What are the timescales you’re working on in this community?
TH: I think serious, knowledgeable people realized that there was a day out in the future that this would happen and that we had to be looking for other alternatives.
The situation in Delta County was, with the fire at the Oxbow, that was such a sudden thing that it was really a shock. The layoffs we’ve seen subsequent to that haven’t had quite the detrimental effect because everybody was sort of anticipating.
But one of the points I want to make is that when it’s said that we should fight for concessions or assistance at a political level, that’s pretty hard to do when you live in an area that covers over 30 counties with one congressman.
We don’t have a lot of political muscle out here in this part of the world. So, my challenge to the Natural Resources Defense people, all the other environmental groups that are supporting this — and I’m not opposing it — but who are supporting the clean energy initiatives: help us.
You know, you’re the ones that are propagating the benefits of this, but you have more political muscle than we do. So when this starts impacting these small, rural communities it would be great if you guys were our advocates instead of our opposition.
BC: Noah, do you feel like you’re an advocate for the smaller communities, and if so, how?
NL: Well, like I said before, I think both Tom and Rob have much greater expertise in economic development than I do. I work on air quality issues and I’m a lawyer, so I would certainly offer our partnership.
I think that part of the question here is if we can get political leadership in this country, and certainly in Colorado, to focus on opportunities for these towns as their economies change, rather than fighting or denying climate change, or pretending that the Clean Power Plan, or any other environmental policy is solely to blame for that change.
I think that frame, you know, you mentioned earlier, the War on Coal frame, is both dishonest and unhelpful in terms of finding solutions for these towns.
And if we can talk about real solutions that are part of the broader economic conversation, and frankly, like I said earlier, I think overall, the story’s pretty bright in terms of the move toward clean energy, in terms of job benefits and economic benefits across the economy. But that’s not to discount the real difficulties and challenges faced by smaller communities that are so dependent on extractive industries.
Let’s focus on those solutions and work together. And force politicians to talk about that seriously rather than putting their heads in the sand, and ask all of us to put our heads in the sand about climate change or about the environmental impacts of coal power or fossil fuels, generally.
BC: Well, let me take that to Rob then, at the University of Wyoming. Do you feel like that’s an accurate assessment of what’s happening? Or do you feel like communities do have some political clout? Or are they sort of at the mercy of these sort of national policies?
RG: No, I wouldn’t say that I disagree with anything that’s been said.
I think that smaller communities, and I think that Tom nailed it, I mean, particularly if you look at the West. A state like Wyoming produces 40% of the country’s coal. And then what are its two other major industries? Oil and gas. So they’ve tripled down on fossil fuels, that’s just the nature of the economy.
But how much congressional representation does a state like Wyoming have? It has, you know, two senators and a congressperson.
So really, once you get down to the local community, they feel powerless. And a question that has to be asked here, and I’ll raise it, well, there are a couple questions: One is, how can we make these policies, if society has chosen — and we have chosen — to regulate greenhouse gases and to do something about climate change? That’s a policy. The costs of that policy fall disproportionately on certain communities.
This is not a market change in the way safe, free trade would be or auto bailouts. We’ve seen bailouts, though, for major industries, but they probably had a lot more clout. So you know, these people who are in these communities feel a lot of fear, and they feel like they lack any of control over what’s going on.
Many of the people affected recognize that these climate threats exist and are kinda pitted with, what do I do? I’m between a rock and a hard place. I know this, I think this has to change, and yet in order to change I lose my livelihood. And so on a personal basis this becomes really a difficult question.
So, I think that policy-makers have to think about both those transitions because, you know, policy is political, and transitions are what you have to manage. A successful management of a transition will allow policy to continue.
You only have to look at Australia and the perceived outcomes of a carbon tax there, and it was repealed within two years of being implemented. Really, that’s a pretty quick turnaround. So we have to think about those sorts of things.
The second thing I’d say, is that we really have to think about how we regulate. The way we’ve chosen to regulate carbon is probably not the least-cost method of doing it across society, and there are political reasons for that.
We have to remember in 2008 — both parties had emission-trading strategies, Senator McCain and President Obama. But what happened afterwards? Congress moved away from that, and what we’re left with is trying to bend the Clean Air Act to work in this way and separate vehicle and mobile source emission controls.
And all of those things mean that we’re probably doing this in a way that cost society more to accomplish the same goals. So there’s a lot of things to think about here.
What would be the most cost-effective way to do this? And that discussion really hasn’t been done honestly, I would argue.
And secondly, then we have to manage the transitions with these communities. We have do decide should we do something and that’s a social choice. And secondly, if we decide we should be doing something that’s a fair way to go about it — because it’s a social choice made by the nation — but falling on fewer shoulders. Then what should we do? And so there’s a lot of questions to be answered.
BC: That’s right, and I think that’s a good place to stop and take one more little break here.
But when we come back from the break, I think we are going to try to get kind of the long-view here, try to think of the bigger picture, talk a little bit about oil and gas, talk about renewables, and kind of more of this sort of energy-sourcing sides of things.
It’s pretty clear that in coal communities that are relying on coal, things are not looking great, but there are some things that can be done. And there are some other things that are moving inside of this bigger issue.
So we’ll talk about those things when we come back.
Music break.
BC: Alright, welcome back to Soundtable.
This is a live show brought to you from KVNF in Paonia, Colorado in conjunction with High Country News. I’m Brian Calvert, the managing editor of High Country News.
We’re talking tonight about coal, fossil fuels, and the impact of some of these economics and policies on local communities. One thing we haven’t talked about yet is where this is all going.
And I think maybe we could just start with you, Tom, and talk about powering up a community — not so much about jobs, but more about where the power comes from, renewables and other potentials.
What’s happening there in Delta County?
TH: One of the things that’s happening here in Delta County. Our local REA Delta Montrose Electric, which serves approximately 3200 meters in Delta and Montrose Counties has recently won a court ruling that allows them to purchase renewable power from third party choices, sources under that contract was tri-state generation.
And so we think, Delta County Economic Development thinks that this is probably our best opportunity to really improve the attractiveness of Delta County to the rest of the world. Because we do have the opportunity to probably look at a number of hydro-projects within the county, that are related to, for the most part, to our irrigation systems, and also some smaller projects related to our domestic water treatment plants, which we have several of in the county.
We’ve also partnered with Solar International, here in Paonia, in looking at the possibility of some significant solar installations.
We could tap into the Delta Montrose Electric grid and become a community that is producing a lot of its own renewable energies.
We’ve also taken a look, and we do have one existing coal-bed methane power plant that is working here, sending juice over to the Aspen area.
One of the opportunities that I see is that if Delta County, if we can, we’re in the midst of bringing high-speed internet into this community, and that’s been a long battle. In the next year to two years, it should happen throughout the county. That, coupled with the ability to provide a significant amount of the power load locally from renewables makes us an attractive place to locate a business that probably is regional in nature.
My own business, for example, about between 2 percent and 4 percent of my annual gross revenues comes from Delta County. I market throughout western Colorado and even to some neighboring states, but I have a tremendous staff here because of quality of life. And they’re well-paid, and it’s those kind of businesses that I think would come here if we were able to market, not only our wonderful vistas and our fabulous outdoor recreation, but our energy independence and our internet services.
BC: Right. That’s right. And I think what’s interesting here is one part of the economy is in bad shape. Then another part of the bigger picture there’s some space for that.
Maybe I would put this to you, Noah, at the Natural Resources Defense Council in Santa Fe, what are we kind of seeing in terms of a bigger transition? What’s the sort of big picture transition look like when we’re moving from one kind of economy to another kind of energy source? And it just kind of seems like there’s a lot moving in across the West in this way.
NL: Sure, and maybe for the benefit of the listeners, I think everybody likes a little bit of controversy. We’ve all been agreeing so much, I’ll push back on something Rob said just a minute ago and maybe instead focus on something he was saying at the beginning of the show.
There’s a broader economic change in competitiveness with regard to coal, both from competition from natural gas prices which have plummeted in the last few years, and also from renewables and energy efficiency, which are also becoming more and more cost-effective relative to existing coal.
In the West, we’re seeing power purchase prices for renewable energy contracts in the two-cent per kilowatt hour range, that of course includes the production tax credit, but even without it it’d probably be in the four-cent range. Many of the existing, older coal power plants can’t produce power at that rate. And energy efficiency’s often in the two to three-cent range per kilowatt hour. And solar, now we’ve seen contracts in the four-cent range.
So, again, this has been an economic change that has been happening independent of the Clean Power Plan or frankly any other, single environmental policy.
From 2012 to 2015, we saw carbon emissions from the power sector drop 15 percent, and the percentage of power coming from coal dropped about proportionately — from over 50 percent to the mid-30s.
And you know, I think all of those changes are economic changes related to the competitiveness of these various sources of energy that are continuing, frankly, regardless of the Clean Power Plan.
The other thing that I’d push back on, again, for the benefit of a little more controversy here, is whether we’re bending over backwards to use the Clean Air Act in this regard. I know that’s maybe a little bit of a tangent, but I won’t take too long.
To emphasize that the Supreme Court has ruled on this decision several times and said that not only can the EPA, but EPA must regulate carbon dioxide through the Clean Power Plan.
And of course, my organization and many others did support a broad national cap on emission that might have complied to that a few years ago, but absent that leadership from Congress, you know, the federal agency that regulates pollution in our air has a responsibility to move forward on this.
So I think there are a number of meaningful changes in the air here, both before and of course, including, the Clean Power Plan that are going to mean we’re continuing to move toward clean energy.
And I just, in that regard, want to absolutely praise what Tom is saying here about this community that is looking to all these new economic options, right up to and including the opportunity for embracing clean energy for economic development in the region.
I think that’s just absolutely wonderful to see.
BC: Well, Rob, let me just go to you real quick. Rob Godby, at the University of Wyoming, what are you saying needs to happen policy-wise if we’re going to be more efficient about what we’re trying to do here?
RG: Well, I, so to be honest with you, there really isn’t any controversy. I was just pointing out the fact that—
NL: Rob, you’re making it so much less fun.
RG: I know. We should really have a debate, and I’ll put on my fossil fuel hat and go after you. But to be honest with you, this is something that I’ve been telling policy-makers here.
Certainly there’s a lot of resistance to change, in part because in Wyoming fossil fuels are the dominant industrial sector, private industrial sector anyway, but you know, what I was trying to say was that the Clean Air Act — I agree with now. It had to be done this way because of Supreme Court rulings.
But, you know, I wonder sometimes, for example, suppose we had a policy where we said, look, what if we move towards a revenue-neutral carbon tax and simultaneously begin to reduce the regulation that say, the Clean Power Plan or the new cafe standards coming in, and just allow the economy to openly transition with just the price on carbon?
I think most economists would say that would be the optimal way to go. So it’s kind of a wonky argument. I recognize the legal constraints that go along, that really the Clean Air Act was the only tool left in the power sector.
What I was pointing out is because we’ve kind of gone to this second-best solution. We’ve probably increased the cost of this transition to American society.
And it probably increases the cost to some energy producers who produce fossil fuels because there may be ways to create an offset elsewhere in the economy that would allow, for example, some coal plants, in say a very cheap place to mine like Wyoming, to continue to produce.
Because let’s face it, fossil fuels aren’t going to leave the energy mix for quite a while under any carbon plan.
BC: That’s something I do want to talk about now, and we have about ten minutes left here, because we haven’t really talked a lot about oil and gas.
And it just seems to me that right now we’re talking about coal, but we’re not always going to be talking about coal.
If global leaders are meeting over the climate and we’re going to start to see mitigation efforts, that’s really going to come into, not just coal, but other fossil fuels as well. So economies, especially in the West that are kind of based on an extractive model and are used to that, and are even used to the booms and busts of that, sort of psychologically.
It just seems to me that we’re going to be having a different kind of discussion eventually.
And I wonder, Rob, let’s put this back to you, what we can learn from coal that we could take into, you know, local decision-makers or state-wide decision-makers or even national policy-makers. What are we learning from this when it comes to the fossil fuel question and larger mitigation efforts?
RG: That’s a great question, and I don’t know if I have the answer to it.
Some of the ideas we’ve already heard tonight, you know, facing the future honestly and transparently is probably a better way to go than denying this is going to happen because when, finally, reality, as we think it’s going to happen, occurs, the transition is much more difficult. So obviously, recognizing that, I mean, we see it right now.
For example, in a state like Wyoming that depends on coal, natural gas, and oil production, you know you kinda got the triple whammy here.
For the first time ever, at least in the past 50 years, coal is declining. You know, if we’re sitting here in Wyoming, last year, state revenues always follow prices by about a year. So last year at this time, natural gas was by far the largest sector for energy revenues, oil was next, and coal was third. Here we are a year later, and coal is the top, oil is last, and natural gas is second. What happened?
Well, natural gas prices fell last year and they never bounced back. Oil, we all know about that because we put gas in our tanks, usually, if most of us have cars that use gasoline or diesel. We can see where that’s gone. And you know, if you’re sitting in Wyoming, front and center, this could be the future.
Right now it’s a market challenge for natural gas and oil and coal, to be honest. But you know, when the best horse you have in the stable is coal — and you’ve already talked about, for most of the hour, the dire challenges that coal might face — it forces you to look at reality.
Now, policy-makers, obviously there’s politics here. And politics, you have to recognize, is going to play a role, so there will be politics playing games. You say what you think your constituency wants to hear. You don’t preach to them a dismal message where things have to change and we have to deal with it.
Think about how that worked when you’re a parent dealing with a child, it works kind of the same way. So what do we do?
Well, we really do, first of all, have to look at what the future might look like, just so we can get a handle on what we’re probably dealing with.
And you know, the state of Wyoming, it doesn’t make a big deal about this, but it actually commissioned a study, and I think we’re actually probably still the only state that really looked hard at this of the extraction states. And we actually worked out what we think are possible outcomes for the Clean Power Plan, and it really was an exercise in looking around the corner.
It wasn’t advocating against the plan or to scare people, it was just to say, look, this is what we’re looking at. Once you know what you think you’re looking at, then you have to start planning. You have to start saying, okay, what are our options? What’s still gonna be here? And what are we going to be losing? What do we need to change?
And it starts right at the top. You’re probably going to change revenue distribution formulas in states. You’re going to have to look at community impacts, like Tom’s already talked about. And eventually you’re probably going to have to do everything you can to get the national dialogue thinking about these impacts.
Have we reached any of those stages yet? No. But I think, a realistic policy, one that considers the future, would have to do that.
BC: Well, let me ask you, Noah. What sort of space has opened up that you see in this bigger move, maybe in terms of renewables or what kinds of things can happen? What’s possible right now?
NL: Sure, well, like I said at the beginning of the program, I think from a national perspective, the boom of renewable energy efficiency, bringing lower costs and carbon-free energy is a great economic story for most of us, which doesn’t at all minimize the rest of some of these communities in the West and Appalachia region that are coal-producing from a change that is and has been coming for a while.
I guess I’d also just go back to the question of political leadership and political power. I don’t think these communities should under-estimate their political power.
You know, it’s true that Wyoming only has three members of Congress — two in the Senate, one in the House — but they all belong to the parties that control both of those houses right now. And what have we seen that party do? Just this week, the congressional review act passed a piece of legislation on the Clean Power Plan even though Obama promised to veto it.
But you know, using that same power, they could be talking about opportunity for change and how to plan for that change — along the lines of what Rob talked about and what Tom talked about for the western slopes of Colorado — and that’s what we need, and we’re starting to see that.
Just this week I also saw an article from the head of Appalachia Power in West Virginia, basically saying, look, you know, change is coming. We can’t continue to rely on coal. We’re relying on older and older and less and less competitive plants, and we need to start looking at new sources and what that means for our economy, our local economy and for our jobs, and taking that seriously.
So, I think that if folks in West Virginia, the head of Appalachia Power, can say that honestly, then maybe some of the political leadership from the western states can too.
And I think, overall, there’s a great story to be told for the opportunity. You know, Wyoming, for example, is one of the best wind producers in the country. That’s not the only answer, but I do hope it’s part of the solution.
BC: Let’s give Tom the last say here. Let’s give you thirty seconds to tell us, you know, what are we looking at?
TH: I want to push back a little bit because politicizing this, as you just did, doesn’t solve the problem for anybody.
If we don’t, as the energy-producing parts of the country at this moment, and the people that are in the opposite camp, can’t come together and work together, we’re never going to solve problems that we’re facing in these communities. And the other resource we lose in this process is people.
As these communities age and population losses go down, we lose leadership. I’m a 75-year-old, 50-year resident of the Delta county, and I’m perceived to be the leader? I mean, really? Are we in real deep trouble here?
I think so.
BC: Well, maybe not. Let’s leave it at that.
Paige Blankenbuehler is an editorial intern at High Country News. She tweets @paigeblank. Jana Wiegand, a environmental journalism graduate student at the University of Montana, contributed to this report.
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