Will the perpetual political spin, corporate campaigns and legal challenges serve to block President Obama’s plan to cut carbon emissions? It’s unlikely -- even in coal country, which is subtlety making its own progress.
While the pending suits wend their way through the legal system, many states are moving to reduce carbon emissions -- namely by retiring 50-year-old coal plants and replacing them with modern combined-cycle natural gas facilities. Still, 15 states are now suing to stop the Environmental Protection Agency’s Clean Power Plan to reduce carbon emissions by 32 percent by 2030, from a 2005 baseline.
Leading the charge is the state of West Virginia and its Republican attorney general, Patrick Morrisey, who has gubernatorial aspirations. His suit, which also has coal-heavy Kentucky and Wyoming as co-plaintiffs, says that EPA lacks the the “legal authority” to oversee the law under the specific provisions of the Clean Air Act in which the rules were written.
Where Morrisey and his supporters think they will succeed, however, is in the sphere of costs versus benefits and to the extent that they can persuade jurists that EPA has “overreached” and gone beyond its statutory authority -- similar to the U.S. Supreme Court’s recent mercury ruling. To be frank, coal country’s politicos have had success at home pounding the theme of “Obama’s War on Coal.”
Interestingly, just because those states attorneys general have sued the EPA in the U.S. Court of Appeals for the District of Columbia does not mean that their state legislators will disregard the ruling; a federal solution would be imposed on those states that do not comply, which would not satisfy their utility clients.
“If ‘just say no’ is your position, what you’re saying is, I believe I’m going to win in court, and if I lose that, I am willing to accept the federal plan,” says Randy Huffman, head of the WV Department of Environmental Protection, in an interview with West Virginia Public Radio. “You won’t have a seat at the table if you just say no.” A blueprint is due in one year.
No doubt, coal states have suffered -- mostly a function of the energy transition to natural gas. Consider that the U.S. Department of Energy says that natural gas could supply as much as half of all electric generation in two decades, up from 30 percent today. Production, meanwhile, could increase by 60 percent by 2035.
“Natural gas is the big winner,” says Rob Barnett, analyst with Bloomberg Intelligence. “Coal is definitely the loser. To the extent that coal is less of a force, it is death by a thousand cuts.”
Despite the huffing and puffing, even some of the biggest coal-consuming states are in good shape to meet the carbon requirements. The actual rule sets forth a series of “building blocks” that allow the states to pick and choose their paths -- anything from improving heat rates to fostering renewables to trading credits.
For what it is worth, West Virginia sits atop the Marcellus Shale formation, which is already contributing mightily to the state’s revenues. WV Energy Secretary Huffman says that the state has plans to build modern gas-fired plants, although his concern is over how quickly they could replace more than 3,800 megawatts of still-existing older coal-fired electricity.
Kentucky, meanwhile, is on a similar track, with
At the same time, at least one Kentucky town is asking its congressional representatives to sign on to Obama’s plan -- and to take the financial help to rebuild that community. Whitesburg wants to use the millions of dollars that the region would receive to clean up coal sites there, and to create new jobs in doing so.
And Wyoming has begun commercial operations at three natural gas plants to replace three coal plants.
Other coal-heavy states that are not part of the suits are moving along to meet the Clean Power Plan. Take Georgia, where a quarter of its coal plants are being retired and where Southern Co. is purchasing solar power from WGL’s unit Washington Gas. Altogether, 3,388 solar panels will provide 1.5 million kilowatt hours. The utility is also investing in utility-scale solar farms as well as carbon capture and sequestration, and nuclear power.
“If we want to receive a carbon reduction, I’m happy to move ahead,” says Tom Fanning, chief executive of Southern Co., and who is headlining a Public Utilities Fortnightly conference on this subject in November. “But let the free market work. EPA is well intentioned, but we are the only guys who can be reliable.”
“Today we are thinking about shale gas and all these distributed technologies,” adds Nick Akin, chief executive of AEP. “We need a balanced portfolio. We need more arrows in the quiver ... We will manage through this.”
Coal-country states like West Virginia, Wyoming and Kentucky are fighting so hard against the Clean Power Plan because in addition to relying on the carbon-rich fuel, their economies depend on mining it. And coal does not look to have much of a future under the federal plan -- made even more apparent by the decisions of its biggest utility customers.
Even a major legal victory at the U.S. Supreme Court would only delay the inevitable -- the need to invest in an array of modern energy technologies. As more states commit to cleaner fuels, the more ingrained the EPA regulations will become. That will serve to further curtail King Coal’s influence and to increase the imperative for it to negotiate, now.
