The new UCS analysis shows how Pennsylvania can comply with the Clean Power Plan by implementing a carbon trading program and strengthening its renewable energy and energy efficiency policies. Moving forward with these policies will generate significant economic and public health benefits regardless of the temporary stay on the Clean Power Plan.
We examined the economic and environmental impacts of Pennsylvania complying with the Clean Power Plan (CPP) by joining a mass-based trading system for carbon allowances, while simultaneously strengthening state policies for renewable energy and energy efficiency. We dubbed this suite of policies the Clean Energy Compliance Pathway (or “Clean Path”) Case, and found that it provides significant environmental, economic, and health benefits for the state, with minimal impacts on residential electricity bills. We found that the policies in the Clean Path Case would:
The Clean Path Case assumes that Pennsylvania adopts the Clean Power Plan’s mass-based targets, including both new and existing fossil-fired power plants. It also assumes that Pennsylvania strengthens both its current targets for renewable energy in the Alternative Energy Portfolio Standard (AEPS) to 13 percent of electricity sales in 2022, growing to 20 percent in 2030, as well as its energy efficiency targets in Act 129 (increasing gradually to 1.5 percent of statewide electricity sales per year).
More details on our methodology can be found in the report, as well as in the technical appendix.
The clean energy growth in Pennsylvania spurred by the Clean Path Case is not only achievable, but also affordable. The Clean Path Case (which focuses on new renewable energy projects, energy efficiency programs, and carbon trading) leads eventually to modest customer savings over business as usual (which we call the Reference Case). By 2025, the average monthly electricity bill for a typical household under the Clean Path Case is virtually unchanged.
Ultimately the Clean Path Case leads to financial savings, given that the cost to operate most renewable energy facilities is much lower than fossil-fuel plants, and energy-efficient buildings and appliances cost less to operate. Thus in 2030, the clean energy policies lead to 3.4 percent lower electricity bills for a typical residential customer, saving the household nearly $54 in that year.
We applaud Governor Wolf’s commitment to creating a robust and commonsense pathway to comply with the Clean Power Plan. The Secretary of the Department of Environmental Protection, John Quigley, said:
“The rule’s in effect, the rule hasn’t gone away. We, at least currently, see a path to submitting [a state plan] on Sept. 6. … It’s clear that renewables are the future. What the Clean Power Plan is calling for is really good business.”
They recognize that the Supreme Court’s decision cannot slow down the growing impacts of climate change, like heat waves and heavy precipitation, which are being felt in Pennsylvania and around the world.
First Energy, one of the state’s electric utilities, committed to continuing to engage on compliance, saying in a statement, “While the legal challenges are addressed, we will work with our states if they chose to continue development of their compliance plans.”
Our analysis shows that a robust set of policies would raise much-needed revenue that could be invested in Pennsylvania’s economy and building a clean energy future for coal dependent communities in southwestern Pennsylvania; double down on the state’s commitment to energy efficiency and renewable energy; and simultaneously cutting carbon emissions that contribute to rising sea levels and other climate impacts.]]>
Last week saw the introduction of the bipartisan RECLAIM Act, short for the “Revitalizing the Economy of Coal Communities by Leveraging Local Activities and Investing More Act of 2016” (H.R. 4456). Introduced by long-time Kentucky Representative Hal Rogers (R-KY-5), and cosponsored by Representatives Matt Cartwright (D-PA-17), Evan Jenkins (R-WV-3), Morgan Griffith (R-VA-9), and Donald Beyer (D-VA-8), the bill would unlock $1 billion over five years from the Abandoned Mine Land fund “for the purpose of promoting economic revitalization, diversification, and development in economically distressed communities through the reclamation and restoration of land and water resources adversely affected by coal mining.”
The Abandoned Mine Land (AML) Reclamation Program was established as part of the Surface Mining Control and Reclamation Act (SMCRA) of 1977 through the collection of fees from coal mining operations. The funds are released in the form of grants to states and tribes for cleaning up land and waters damaged from coal mining operations and also through mandatory distributions to fund retiree health and pension plans for the United Mine Workers of America (UMWA).
It’s important to note that the $1 billion represents existing funds—this is not a new tax. These are existing funds that have not yet been appropriated, and the bill speeds up the distribution of this money to address the urgent needs that communities are facing today. Importantly, the bill prioritizes projects that are “reasonably likely to create favorable conditions for the economic development of the project site or promote the general welfare through economic and community development of the area” and of communities that have been “adversely affected economically by a reduction in coal mining-related activity over the preceding 5 years.”
The need is great. A report from last summer found that $9.6 billion is required to remediate the remaining 6.2 million acres of lands and waters degraded by from coal mining activities.
President Obama’s FY17 budget proposal once again puts forward the Partnerships for Opportunity and Workforce and Economic Revitalization Plus (POWER+) Plan. The program offers four buckets of investments in coalfield communities:
The full POWER+ Plan can be found here.
It’s heartening to see Rep. Rogers leading the Congressional charge to release much-needed funding for Appalachian communities, and great to see the president pushing on this too. Given the partisan gridlock gripping Washington, it’s clear that they won’t get everything they proposed. But, given the groundswell of local support for investing in Appalachian communities, some of these ideas have a chance of moving forward.
Let’s keep up the pressure—get involved.]]>
I’ve come across dozens of stories over the past few months on the continuing decline of the coal industry. While we are still waiting for final numbers for 2015, it’s clear that the U.S. is using less coal than ever before. In November, coal plants generated 29 percent of U.S. electricity, dropping from almost 35 percent in July and 39 percent for all of 2014. SNL Financial reports the ten stories (subscription required) that explain why 2015 was a terrible year for the coal industry.
Strikingly, two states have actually committed to stop using coal altogether, driven by public pressure to address climate change. Oregon’s utilities have agreed to support a proposal that would phase out coal use by 2030. New York’s governor announced in his state of the state that he plans to close the state’s small number of remaining coal plants by 2020, affirming plans to cut the state’s carbon emission by 40 percent by 2030 and 50 percent by 2050.
While the announcements might not add up to much in terms of overall coal megawatts of coal capacity (neither state has much coal-fired generation), it’s clear that these two states, along with others, are making concrete commitments to a clean energy future.
And there’s not much optimism for coal internationally. China announced that it plans to close 4,300 small and inefficient mines and simultaneously ban new mines for three years. Much of China’s recent attention to reducing coal use is driven by the urgent need to reduce air pollution, which is estimated to kill 4,000 people per day, according to a new report.
Another report found that 65 percent of the world’s coal production is unprofitable at today’s prices, and it’s likely more than 70 percent of the coal in Central Appalachia.
Coal companies continue to falter under the financial pressure. Last month, Arch Coal, which holds the second largest coal reserves in the United States, filed for bankruptcy. Financial analysts are now speculating that the world’s largest private-sector coal company, Peabody Energy, may be next on the list.
Over the past five years, the coal industry has lost 94 percent of its market value, falling from $68.6 billion to $4 billion.
Workers suffer most. Alpha Natural Resources, which went bankrupt in August, announced just last week that it would lay off more than 800 coal miners in West Virginia. As part of its bankruptcy proceedings, the company is also seeking to cut health and life insurance benefits for some 1,200 retirees to save $3 million a year, while simultaneously proposing to pay its executives $11.9 million in bonuses.
I guess that was their reward for making risky financial bets that bankrupted the company.
As a scientist, I’m trained to be analytical and unbiased. But it was hard, if not impossible, to contain my outrage when I read about this. I wonder: how do these people sleep at night?
This month, American Electric Power, which through its subsidiary Appalachian Power controls electricity generation in the southern half of West Virginia, said that it plans to decrease coal use over time, with or without the Clean Power Plan.
The sober comments from a senior executive from a major utility were eye opening for many state officials. State senator Ron Stollings (D-Boone) said:
“We have to somehow have a huge sense of urgency to try to figure out what we can do, whether it’s workforce training, whether it’s somehow using post-mine land use opportunities or our proximity to Charleston.”
Boone County is the place where coal was first discovered in the region in the 1740s, and it remains home to the state’s largest coal reserves. Boone has been hit hard by the decline in coal use, not only through layoffs, but also by dwindling severance tax collections.
West Virginia Governor Earl Ray Tomblin, in his annual State of the State address on January 13, specifically called for diversifying the southern coalfields. The governor outlined specific proposals for investing in struggling coalfield communities, including a proposal for developing an industrial site using an abandoned strip mine site in Boone and Logan Counties.
Governor Tomblin and Senator Stollings join a growing chorus of people in West Virginia calling for change. It gives me hope that our elected officials are beginning to reach the acceptance phase. When another state legislator ridiculed climate change by jokingly handing out sunscreen to fellow legislators in preparation for snowstorm Jonas, the editorial board of the local paper in Beckley roundly criticized him for ignoring the overwhelming evidence.
It’s significant that a local paper in the southern coalfields recognizes the reality of climate science and our collective role in climate change.
And there’s more cause for hope. The omnibus spending package approved by Congress in December included $19 million to the Department of Labor to provide job training and assistance for workers laid off from coal mines and coal-fired power plants, and $90 million for cleanup and economic development of abandoned mine lands in Kentucky, West Virginia, and Pennsylvania—and a bill just introduced in Congress would release $1 billion over five years for reclamation of abandoned mine lands. In Virginia, the General Assembly is considering legislation that would have the state join a carbon trading program, and direct some of the revenue toward coal communities in southwest Virginia.
As reality sets in, it’s critical that we put policies in place to chart a path forward for Coal Country, to ensure that the workers and communities who helped build this nation don’t get left behind.
Virginia’s General Assembly has just started a whirlwind two-month session, and will be considering significant legislation that would help the state raise revenues from a carbon trading program, to be used for investments in coastal resilience, energy efficiency, renewable energy, and economic development. Today UCS released an analysis that finds that Virginia could generate an average of $251 million annually by participating in a similar carbon trading program.
The bill has been introduced in the House, and a companion bill is expected to be introduced soon in the Senate. Delegate Ron Villanueva sponsored HB 351, the Virginia Alternative Energy and Coastal Protection Act, based on a similar bill he spearheaded in last year’s legislative session. The bill directs the Governor “to seek to join the Regional Greenhouse Gas Initiative or other carbon trading program with an open auction of carbon allowances.” From the sale of carbon allowances, the bill establishes the Commonwealth Resilience Fund, to be used to support specific programs in counties and municipalities, and proposes the following breakdown in priorities for expenditures:
UCS has just released a new analysis that highlights the millions of dollars in auction revenues that would be available were Virginia to adopt a carbon trading program, similar to those outlined in the bills. While our analysis did not analyze the impact of HB 351 directly, we did look at the impact of Virginia joining a carbon trading program. We found that trading carbon allowances would raise $251 million in average annual revenue from 2022 to 2030. If Virginia were to split the $251 million in revenue as directed by HB 351, approximate funding levels would be as in Table 1.
|Approximate Annual Revenue||Proposed Allocation||Purpose|
|$125,500,000||50%||coastal adaptation and resilience|
|$75,300,000||30%||energy efficiency and conservation programs|
|$25,100,000||10%||workforce training in southwest|
|$12,550,000||5%||renewable energy grants|
Our revenue estimate is consistent with other analyses, from the Chesapeake Climate Action Network and the Acadia Center, that have calculated around $200 million per year in potential revenue. While we assumed a carbon trading program would begin in 2022 (the start date for the Clean Power Plan) the state could earn revenues earlier by starting the program in 2017 as proposed in the bill.
Here are three compelling reasons why it makes sense for Virginia to adopt a program like the one outlined in HB 351. And they all come down to how the revenue generated from auctioning carbon allowances could be put to use to benefit all Virginians.
The new UCS analysis shows how Virginia can comply with the Clean Power Plan by implementing a carbon trading program and strengthening its renewable energy and energy efficiency policies.
We examined the economic and environmental impacts of Virginia complying with the CPP using by joining a mass-based trading system for carbon allowances, while simultaneously strengthening state policies for renewable energy and energy efficiency. We dubbed this suite of policies the Clean Energy Compliance Pathway (or “Clean Path”) Case, and found that it provides significant environmental, economic, and health benefits for the state, with minimal impacts on residential electricity bills. We found that the policies in the Clean Path Case would:
The Clean Path Case assumes that Virginia adopts the Clean Power Plan’s mass-based targets, including both new and existing sources, and that Virginia establishes mandatory targets for renewable energy (8 percent of electricity sales in 2025, growing to 16 percent in 2030) and energy efficiency (9 percent of statewide electricity sales in 2022 through 2030) to strengthen its currently voluntary targets.
More details on our methodology can be found in the report, as well as in the technical appendix.
Based on our analysis, UCS offers the following recommendations for Virginia’s CPP compliance plan:
Virginia policymakers have an important opportunity ahead to pass legislation that would address multiple needs: raising much-needed revenue for coastal resilience and adaptation; investing in a clean energy future for coal dependent communities in southwest Virginia; establishing a real commitment to energy efficiency and renewable energy; and cutting carbon emissions that contribute to rising sea levels and other climate impacts.
Action from the legislature could also help Virginia develop a compliance plan for the Clean Power Plan with a carbon trading program as its centerpiece.
It’s not often that so many priorities can be addressed with a three-page bill. If you live in Virginia, please let your policymakers know that you want them to pass the Virginia Coastal Protection Act.
UPDATE (February 8, 2016): This analysis was based on modeling using the National Renewable Energy Laboratory’s (NREL’s) Regional Energy Deployment System (ReEDS) model. Since we released our report, NREL has provided us with an update to correct some minor errors. We have therefore redone our analysis using the most up-to-date version of the model, which had a slight impact on some of our results. Using the updated model, the Clean Path Case would:
The slight change in projected average annual revenue changes the values in Table 1 as follows:
What’s surprising about the piece is not the message—it’s the source. The person making this point was the president of West Virginia’s largest electric utility. It reminded me of my King Coal’s Stages of Grief series from earlier this summer, and led me to wonder, have we finally reached the acceptance phase?
Charles Patton, the president of Appalachian Power, was speaking at the West Virginia Governor’s Energy Summit held this week at Stonewall Jackson Resort. Mr. Patton pointed out, as he has previously, that his company won’t be building any new coal plants for the foreseeable future, simply because they are more expensive than natural gas plants and even wind turbines.
While he stressed his opposition to the Clean Power Plan, which sets the first ever limits on carbon dioxide emissions from existing power plants, and says he supports the lawsuits challenging it (led by West Virginia), Patton recognizes an important reality:
“With or without the Clean Power Plan, the economics of alternatives to fossil-based fuels are making inroads in the utility plan. … Companies are already making decisions today where they are moving away from coal-fired generation.”
Read that again for emphasis. The president of a coal-heavy utility in a coal-heavy state recognizes that the times they are a-changing.
Blaming cheaper alternatives and environmental regulations already imposed, Patton said Appalachian Power expects its coal consumption to be down by 26 percent by 2026—regardless of what happens with the Clean Power Plan.
West Virginia continues to lead the legal challenges to the Clean Power Plan, supported by 23 states. But even here in the heart of coal country, where “EPA” might as well be a four-letter word, practical considerations are beginning to take hold over political grandstanding.
West Virginia’s governor, Earl Ray Tomblin, told attendees at the Energy Summit that he intends to submit a plan for West Virginia to comply with its carbon reduction targets under the Clean Power Plan. Governor Tomblin has rejected Senate Majority Leader Mitch McConnell’s call for states to “just say no” and refuse to submit compliance plans. The governor instead recognizes that refusing to submit a plan means that West Virginia would risk getting stuck with the one-size-fits-all Federal Implementation Plan.
Also speaking at the summit was the president of the United Mine Workers of America (UMWA), Cecil Roberts. The UMWA is also a party to the lawsuit challenging the Clean Power Plan. But Roberts, too, said that he doesn’t think “just say no” is a viable strategy for West Virginia, and he believes it’s time to look toward the future.
Reading through his written remarks as prepared, I was struck by what he said at the end:
“Here is the truth that many don’t want to think about: The next administration, of whichever party, will be still be bound by the Supreme Court’s 2007 decision that says the Clean Air Act gives EPA authority to regulate carbon emissions. And the Court has rejected appeals of EPA’s so-called ‘endangerment finding,’ which has put us on the course of regulating greenhouse gases.
“Different administrations may take different approaches to implementing the Clean Air Act, but no administration can just ignore it. People can try to score all the political points they want, but the fact is that we are facing a lower-carbon future no matter which party is in control of the White House or Congress. It’s really just a question of how fast we go.”
Patton struck a similar tone in his remarks, noting that nearly two-thrids of Americans favor stricter limits on greenhouse gas emissions, with even greater support among young people. He suggested that the debate around what to do about climate change “largely … has been lost.”
I was actually heartened to read these statements by folks who continue to defend the coal industry. And while we may disagree about what that future might or should look like, I think that facing that low-carbon future with a clear eye is a critical first step.
I would have liked to hear, particularly from Governor Tomblin, about the importance of diversifying the economy in a place like West Virginia. But fortunately, the conversation has already begun to shift on the local level.
Recently, local governments in Lincoln, Fayette, and Wyoming counties in southern West Virginia have approved resolutions in support of the POWER Plus plan, designed to invest in economic development in coal-heavy regions of Appalachia. The Obama administration recently announced initial grants as a down payment on that future funding yet to be approved by Congress.
It will be a great day when our statewide officials and our Congressional delegation in Washington catch up.]]>
This analysis looks at state progress toward meeting the 2022 benchmarks and 2030 final targets set forth in the final rule, based on committed actions. We analyzed four types of committed actions that help cut a state’s emissions: Ramping up renewable energy to meet mandatory state Renewable Electricity Standards (RESs); ramping up energy efficiency to meet mandatory state Energy Efficiency Resource Standards (EERSs); bringing on line under construction nuclear power units; and replacing coal plants already announced for retirement with renewable energy, energy efficiency, and natural gas.
As allowed by the rule, renewables and efficiency can replace coal- and gas-fired generation in proportion to their share in the state’s current (2012) generation mix. We examined how these committed actions would contribute to states’ progress under both the rate-based and mass-based approaches for compliance that the EPA has provided.
Under a rate-based compliance approach, we find that 31 states are on track to be more than halfway toward achieving their 2022 benchmark, and 21 are on track to surpass it.
Our analysis also shows that 20 states are on track to be more than halfway toward their final 2030 emissions rates, and that 16 states will have exceeded their required rate reductions by 2030.
Many states are on track toward meeting their rate reduction benchmarks and targets laid out in the final CPP. For example:
The final rule incorporates a number of important changes, based on the 4.3 million comments that the EPA received on its June 2014 proposed rule. These changes create additional flexibilities for states, including delaying the start date of the initial compliance period from to 2020 to 2022, allowing a more gradual phase-in of the “glide path” of emissions reductions through 2030, and enhancing opportunities for emissions trading.
The final rule also treats all covered fossil-fired units equally by setting the same technology-specific (fossil steam and NGCC) emissions rates for all units nationwide. It’s also true that while energy efficiency potential was excluded from target setting, states are still free to use energy efficiency measures to achieve low-cost reductions.
Emissions trading options for states and utilities are a further flexibility. The fact that our analysis finds that so many states are positioned to go well beyond their prescribed targets, while some are less far along, creates a clear pathway for mutually beneficial emissions trading to help all states reach their goals.
The final rule also provides an option for states to comply by meeting a mass-based emission target, measured in tons of carbon dioxide (CO2). Mass-based targets can help facilitate interstate and utility-based trading of emissions credits, and are also compatible with existing programs like RGGI.
Each state’s target was derived from its corresponding rate-based target, and is thus reflective of the best system of emission reduction (BSER). The EPA quantifies mass-based goals that are equivalent to the rate-based goals, with certain additional requirements to help align potential differences between the two, including allowing affected electric generating units the opportunity to increase output (and emissions) so long as it is offset by excess generation from the renewable energy building block (see EPA’s Technical Support Document of Goal Setting for more details).
Our estimates of CPP compliance progress under a mass-based approach assume that no affected electric generating units exercise this option. As a result, we find that the planned activities considered here position states farther along toward meeting their mass-based targets than their rate-based targets. If affected electric generating units did increase their output in accordance with this provision, total progress toward compliance would decline accordingly.
In our analysis we looked at four specific actions that states are taking (or have already taken) that will help them meet their emissions reduction requirements under the Clean Power Plan. These are: announced retirements of coal-fired power plants since 2012; incremental renewable energy demand from mandatory state Renewable Electricity Standards that comes on line after 2012; avoided generation from mandatory Energy Efficiency Resource Standards that occurs after 2012; and the completion of nuclear power plants under construction as of 2012.
Following the EPA’s methodology in the final rule, our calculation of state progress toward meeting emissions benchmarks and targets assumes that zero-emitting resources like renewables and efficiency displace existing fossil-fired generation in direct proportion to each state’s fossil steam and natural gas generation mix.
In our calculations, we use future electricity sales based on the reference case from EIA’s Annual Energy Outlook 2015. We include expected retirements of coal plants that have been announced through the end of July 2015 (SNL data). And we reflect the projected impact of state RES and EERS policies as of July 24, 2015, based on LBNL and UCS calculations respectively.
Our analysis may be considered a conservative estimate of state progress because we did not include other types of mandatory state measures and programs, apart from EERSs, that could advance energy efficiency. We also did not explicitly incorporate emissions trading which would allow states to take advantage of low-cost emissions reductions outside their borders, nor do we account for the potential emission reduction benefits from the EPA’s proposed Clean Energy Incentive Program.
This analysis updates a previous study we completed in June 2015 for the draft rule.
The final Clean Power Plan includes multiple compliance flexibilities for states, and sets targets that can be achieved by continuing down the path of progress that many states are already on. Our analysis shows that complying with the Clean Power Plan is well within the reach of most states through committed actions and, with the option to trade emissions credits, all states should be able to readily comply. It’s now up to states to take charge of their clean energy future, helping to meet our climate goals, and simultaneously generating economic benefits.]]>
In this post we’ll take a look at how job losses in the industry have affected communities around Appalachia, and we will point toward some positive steps forward, toward the final stage: acceptance and hope for a better future.
The coal mining industry in Appalachia has shed jobs over the past few years, no question. In my home state of West Virginia the average number of coal miners fell from 22,786 in 2012, to 20,281 in 2013, the most recent year that the Energy Information Administration has released data. In Kentucky over the same period, employment fell from 16,381 to 12,905. Those numbers are consistent with a trend that started decades ago, and that trend has almost certainly continued to decline in 2014 and into 2015, with new rounds of layoffs being announced all the time.
Making matters worse is that many of the places where these job losses are occurring are in areas where not many other jobs exist. We are talking about places where people have been mining coal for generations. And when the coal company picks up and leaves town, its legacy is often degraded land and water resources and abandoned buildings.
I’ve noticed a disturbing trend in the many media reports I’ve read and linked to in this series. Many writers are referring to coal companies as miners, for example, as in “Coal Miner Alpha Natural Resources released a statement….” It’s disturbing to me because there’s a huge difference between the people who run the companies and the people who actually dig the coal; conflating the two, while possibly making for good prose, does a huge disservice to a rich labor history.
While most of this series has focused on company earnings, financial stability, public statements, and the like, it’s pretty hard to find statements from company representatives that illustrate the depression stage. Maybe that’s because they have good PR folks, or because they’re mostly still a stage or two back. Or it could be because it’s probably safe to assume that most coal company executives have golden parachutes that will save them from the inevitable fallout.
But what about the miners and their communities?
As a nation, I believe, we have a collective responsibility to invest in the communities and workers who have sacrificed greatly for the greater wealth of our nation. Vice President Joe Biden, speaking at the Good Jobs Green Jobs conference in April 2015 sponsored by the BlueGreen Alliance, gave an impassioned speech calling on us all to take responsibility for helping these communities:
“For the last 150 years, the people in coal mining regions of America have made considerable sacrifices and commitments—sacrifices of their health and their well-being—to spur the Industrial Revolution and to sustain our economic growth. And they did it. They did before we became aware of the consequences of pollution generated by this form of energy.
“And now that we’re transitioning away to new cleaner energy, a new cleaner energy economy, we can’t leave them behind. Just as they never left us behind.”
And the Veep correctly highlighted the market forces helping drive this transition:
“All this matters because the market is proving a simple fact: Companies are pricing carbon as a cost of doing business across the board. If we didn’t have a single regulation, the days of coal are fundamentally changing. Because it’s no longer cost effective. It’s a simple fact that reality has a way of intruding. And the reality of the day is market forces … are intruding on the way we generate electricity and energy in this country.”
I was lucky enough to see the vice president in person, and it was truly inspiring. Check out the video of his remarks.
As we collectively begin to accept the new reality facing the coal industry, I hope we can envision and create a brighter future for coal miners, their families, and their communities. Acceptance is not enough—we must move beyond that, to hope.
The vice president highlighted a new administration proposal, called POWER Plus, for investing in Appalachian communities in his remarks in April. Ideas abound. Elected officials from around the region seem slow to come around to this new reality. But some West Virginia communities aren’t waiting, and instead are banding together to go solar.
Coming from a coal mining family from a coal state, I think the important thing is that we have to imagine ourselves as more than just coal. Coal has a storied and rich history, one that we can in many ways be proud of. But it is not our future. We have to build something new. Let’s get started.]]>
One of the favorite arguments among opponents of action on climate change is that anything we do to reduce emissions here in the U.S. is pointless because of growing emissions in the developing world, particularly in China and India. All pain, no gain, they say. Let’s look at this flawed argument in more detail.
This argument has until recently been a powerful one against action—mostly because of the scale of the emissions problem. Any action or effort to reduce GHGs, taken by one country alone, is not sufficient to solve the global problem. That’s true whether you consider the phase-out of incandescent light bulbs, the tailpipe standards improving gas mileage for motor vehicles, or the proposed Clean Power Plan for existing power plants. And it’s as true for the U.S. as it’s true for any other country in the world. The point is that we all need to use all tools available to us in order to reduce global emissions to address the climate crisis. The fact that that any one action is insufficient to solve the global problem is not a reason to give up—it’s a reason to do more, and do it together.
U.S. leadership is critical and is already helping to catalyze climate commitments from China and Brazil among others, and helping to pave the path toward a global climate agreement. Demonstrating that leadership is a big reason why we argued that the EPA should strengthen the proposed Clean Power Plan.
Opponents of action on climate also argue that just because the U.S. leads on reducing emissions, other nations won’t necessarily follow. China won’t agree to emissions reductions and has no incentive to cut back on coal use, they say. But the truth of the matter is that China is acting—in big ways—to reduce emissions.
Late last fall the U.S. and China announced a joint agreement to reduce emissions. China pledged to produce 20 percent of its electricity from renewable sources by 2030 and to peak emissions by that date—which will have big implications for how much coal the country will consume. China submitted these actions as part of its nationally determined commitments by 2030. The agreement breathed life into international climate negotiations and has laid the groundwork for a robust agreement this December in Paris.
In fact, China’s CO2 emissions were essentially flat from 2013 to 2014, along with a 2.9 percent decrease in coal consumption.
China has another big motivation for reducing coal use—air pollution. Beijing’s famously bad air got a new round of attention earlier this year after an online documentary went viral. Beijing announced this spring that it plans to permanently close all four major coal fired power plants within the city in order to cut pollution.
And India, also heavily reliant on coal, doubled its tax on coal earlier this year and plans to use the revenue to invest in renewable energy projects. The new tax, equivalent to about $3.20 per ton, went into effect on April 1.
As the domestic market for U.S. coal continues to falter, many companies have looked toward exports as a way to continue to make money. However, China’s commitments to reduce coal consumption could put the brakes on the supposed boom in coal exports. That, combined with a sharp decrease in China’s economic growth rate, paints a dour picture for the future of U.S. coal exports.
China is the world’s biggest emitter of greenhouse gases. It’s true. On an annual basis. That is, China surpassed the U.S. as the world’s leading annual emitter of greenhouse gases around 2006 or 2007.
Historically speaking, however, the U.S. and the rest of the developed world have a huge responsibility for GHGs emitted since the dawn of the Industrial Revolution. This is important, because carbon dioxide, once released to the atmosphere, remains there for a long time, on the order of centuries. So, in a very real sense, the critical number is not the annual emissions of GHGs, but rather the cumulative emissions.
And in terms of cumulative emissions, as well as per capita emissions, the U.S. is handily the world leader. World Resources Institute did an interesting and comprehensive analysis of the world’s top emitters, and the U.S. tops the list of cumulative emissions of carbon dioxide from 1850 to 2011, at 27 percent of the world total, more that the 28 members of the European Union combined. Where’s China? 11 percent, although it’s catching up frighteningly quickly. India is down the list at just 3 percent of the world total. Check out the Global Carbon Atlas for some interesting ways to visualize worldwide emissions.
In short, the bargaining stage represents an attempt to delay the inevitable. The problem is that we can’t afford more delay. We are already witnessing major shifts in the Earth’s climate that will have profound impacts on human society. We’ve got to make serious changes. As this reality sets in, we can see signs of our next stage of grief, depression. That’s why we need to commit to making those changes in a way that is just and equitable to coal miners and the communities that depend on coal for their livelihoods.]]>
These events are having and will continue to have real world impacts on the folks employed at these companies. Which leads me to the second stage of grief: anger.
Anger is evident everywhere you go in Coal Country. And it’s understandable—the communities hardest hit by these job losses are the least able to adapt to the changes, simply because there’s not a lot to fall back on. Coal mining has been the backbone of these communities for generations.
But let’s make an important distinction—between owner-operators who have gotten rich for generations, and the workers who make them rich by digging coal.
You can see the tension as the mining company bankruptcies play out. Patriot Coal tried unsuccessfully in its first bankruptcy to avoid obligations for retiree health benefits. In Patriot’s second bankruptcy only 18 months later—which portended the coming wave—executive bonuses aren’t being disclosed. Executives seem to get bonuses no matter how well their companies are doing.
The problem is that the industry has largely directed public anger around these real world impacts (layoffs) toward the Obama Administration’s EPA through a coordinated and relentless public relations campaign.
It pains me to watch how this “War on Coal” mantra has dominated the conversation around coal in recent years. The rhetoric seems to be increasing from shrill to apoplectic. Politicians are evidently in an arms race of sorts to produce the most shocking, “sky is falling” press releases, op-eds, and sound bites. Senate Majority Leader Mitch McConnell is a case in point.
Even in the face of proposed initiatives that would actually support these communities, they criticize environmental regulations or worse (and inexplicably) reject the ideas outright.
Look, it’s true that additional environmental regulations affect the economics of coal production—but as I’ve discussed in detail, as have many other commentators, the industry faces strong and more dominant headwinds on a number of fronts. (Also, it’s worth emphasizing that environmental regulations are designed to force the coal industry to clean up its act, and begin to pay for all those externalities I mentioned before.)
When people say “War on Coal,” they usually mean that somehow the industry’s troubles and job losses can be blamed entirely on President Obama, and that once there is a new occupant in the White House, King Coal can return to its glory days. It simply isn’t true.
If there’s a “War on Coal” underway, it began a long time ago. Since the mid-20th century, direct employment in coal mines has declined dramatically, while production has continued to increase. There are two big reasons for this—the advent of longwall mining (greater mechanization) and the boom in strip mining, both of which require vastly fewer workers than traditional forms of mining.
This history—and the other factors helping drive the decline in employment—seems to get lost in all the rhetoric.
As Ken Ward thoughtfully points out over at Coal Tattoo, an actual war would involve people shooting at each other, so we really ought to call it something else. In this toxic political environment, and on a topic that brings up so many emotions on both sides, I often wonder if it’s even possible to have a civil and intelligent public discourse.
I sure hope so, because the future of coal communities like the one where I grew up depends on finding solutions. That means we’ve got to get past our anger over the situation (and at each other) and learn how to work together.
Up next in blog series, the next stage of grief: bargaining.]]>
I suspect that coal miners across the region are not celebrating the Bank of America policy change, if they’re even paying attention. Back home, people are understandably more worried about the massive job losses that have rocked Coal Country over the past few years—and how to pay the bills. For many, it’s easier to blame environmentalists and regulations for the job losses than to face the deep and fundamental changes affecting the industry. (I’ll turn back to the critical issue of job losses in a later post in this series.) Much has been written about the headwinds facing the coal industry, but it’s worth highlighting a few points here.
Simply put, coal’s fundamental economic problem is the rise of natural gas. The proliferation of hydraulic fracturing, or fracking, has pushed natural gas prices to historic lows. The cost of fuel has helped push utilities away from coal and toward natural gas generation. Case in point: Southern Company in 2010 generated 53 percent of its power from coal and 29 percent from natural gas; in 2013 their split was 37 percent coal and 42 percent gas. Southern reflects the national trend: in 2008 about 48 percent of our electricity came from coal and last year just under 39 percent came from coal.
UCS has reported on the economic vulnerability of coal-fired power plants, most recently in the 2013 update to our Ripe for Retirement report. We noted that the falling cost and increased deployment of renewable energy like wind and solar is now competing with coal generation. See also our recent report on the risks of an overreliance on natural gas.
The EIA announcement on declining MTR coal production noted above is well worth a quick read. While MTR production has declined by 62 percent since 2008, total U.S. coal production has declined by 15 percent over the same period. A mix of causes is to blame, according to EIA:
Lower demand for U.S. coal, primarily used to generate electric power, driven by competitive natural gas prices, increasing use of renewable generation, flat electricity demand, and environmental regulations, has contributed to lower U.S. coal production.
Central Appalachian coal, which comes almost entirely from southern West Virginia and eastern Kentucky, along with a small amount from southwest Virginia and Tennessee, faces an additional set of challenges. Namely, as a Downstream Strategies report made clear a few years ago, the highest quality and most accessible coal has already been mined and burned. What’s left is getting harder—and therefore more expensive—to mine. Labor productivity for coal mining, measured in short tons of coal produced per miner hour, has declined nationally from 2000 to 2012, but the worst declines were in the Central Appalachian region.
The current economic challenges facing Central Appalachian coal should come as no surprise. In its 2001 update on Appalachian coal reserves, the United States Geological Survey (USGS) concluded that:
“Sufficient, high-quality, thick, bituminous resources remain in (major Appalachian) coal beds and coal zones to last for the next one to two decades at current production. After these beds are mined, given current economic and environmental restrictions, Appalachian basin coal production is expected to decline.”
And, here we are today, in 2015, in the midst of that decline.
As I often say, geology wins in the end—this is the nature of a nonrenewable resource.
Central Appalachian coal is in particularly bad shape economically, unable to compete with other coal mining regions in the U.S. like the Powder River Basin and the Illinois Basin. But surely the coal industry is faring better in other parts of the country, right? Well, not exactly.
Peabody Energy, the largest private-sector coal company in the world, runs coal mines in the West and Midwest regions of the U.S. as well as in Australia. The company’s most recent earnings report offers a glimpse into the declining state of coal markets around the world. Notably, Peabody is losing cash on every ton of coal sold in Australia, as highlighted by this good rundown of the company’s first quarter financials. The company not only expects domestic coal demand to drop by 10 percent this year compared to last year, but also sees seaborne exports falling materially this year.
And it’s not just Peabody. The Carbon Tracker Initiative highlighted the fact that the U.S. coal industry has lost 76 percent of its value in the last five years. Some financial analysts have concluded that the U.S. coal industry is in terminal decline, with 26 companies going bust in just the last three years. Just a few weeks ago, Patriot Coal filed for bankruptcy protection for the second time in three years, citing the slump in the price of coal and poor prospects for raising capital. And more bankruptcies may be on the way. Arch Coal, for example, fell out of compliance with New York Stock Exchange rules last month, after its share price failed to close at $1 per share or above for 30 consecutive days.
Supporters of the coal industry often tout the need for cheap electricity, both here at home and abroad. But here’s the thing: coal is not cheap. That’s because of what economists call “externalities”—all the damages and costs incurred by mining, transporting, burning, and cleaning up after coal, many of which aren’t included in the prices we pay for electricity, but are nonetheless borne by society at large.
In the context of climate change, we talk about the social cost of carbon, a way to measure the damages caused by carbon emissions in the form of climate impacts. A new study has estimated costs of various types of air pollution to public health and climate, finding that coal-fired generation costs an additional 24 cents per kWh, under conservative assumptions. Or, in the words of the study’s author,
“These results suggest that total atmosphere-related environmental damages plus generation costs are much greater for coal-fired power than other types of electricity generation…”
The impacts from MTR in particular are potentially even more devastating. West Virginia is now initiating an evaluation of the multitude of health studies that have found increased risks of serious illness and even premature death for people living near MTR sites. UCS has long advocated for policies that account for these externalities, specifically advocating a ban on MTR and the need for tougher mine safety standards. In our 2008 report, Coal Power in a Warming World, for example, we recommended that policymakers:
Adopt statutes and stronger regulations that will reduce the environmental and societal costs of coal use throughout the fuel cycle. Our use of coal, from mining through waste disposal, has serious impacts on the safety and health of both humans and our environment. Policies are needed to reduce these impacts and place coal on a more level playing field with low-carbon alternatives. This would include a ban on mountaintop removal mining and tougher standards for mercury emissions, mine safety, and waste disposal. Any federal policy that promotes coal use, including ongoing or expanded CCS subsidies, must be accompanied by such measures.
Bank of America’s policy change focuses on MTR in particular, but in general, companies are increasingly concerned about risks from climate change. They are also responding to various shareholder resolutions and pressure to be more environmentally conscious. And then there’s an entire movement of young people pushing for universities to divest from fossil fuel investments.
My point here is that the world is moving away from coal as a fuel source. Mind you, coal will continue to be mined in Appalachia and elsewhere for decades—it remains critical not only to producing electricity, but also to making steel. But it should be clear from this post that the transition is well underway. The question for coal communities is how to reinvent themselves for the future. And fortunately there is great potential, which I will explore in future posts.]]>