Ken Silverstein | Nov 15, 2013

When the Tennessee Valley Authority said yesterday that it would retire more than 3,000 megawatts of coal-fired power, it said that it was because of federal environmental regulations as well as weak demand for electricity. What other companies are making such moves and what is the future of coal?

The coal industry has long argued that restrictive regulations are not just dooming an inexpensive and reliable power source but that they are also deterring national investment in advanced coal technologies -- the same ones that the current administration says will determine the fate of that industry. In point of fact, the U.S. Environmental Protection Agency has released its proposed regulations that would box-out the development of new coal plants unless they can install carbon capture and sequestration technologies.

An EPA administrator testified this week that the technology is present and that it can and should improve. Those comments, however, were met with antagonism from Republican lawmakers who said that the tools simply don’t exist and yet, the Obama administration is insistent on tightening the noose around coal’s neck. A further point was then made that cheap natural gas would not last and could not be relied up to deviate from the issue at hand.

“Make no mistake – EPA’s proposed greenhouse gas New Source Performance Standards would effectively ban new coal-fired generation,” says Rep. Ed Whitfield, R-KY, chair of the House Energy and Commerce Committee’s Subcommittee on Energy and Power. “It would essentially require carbon capture and storage technologies, which are nowhere close to being commercially viable.”

He goes on to point out that Charles McConnell, a former Assistant Secretary for Fossil Energy in the Obama administration, had recently testified before Congress that it is “disingenuous” to say that the technology is ready, when it is not. The chairman said he is doubly concerned because the Obama administration’s rules apply to any future coal plant and that the plan is to draw up the rules for those that currently exist by next summer.

The proposed standards for all future power plants: New large natural gas-fired turbines could emit no more than 1,000 pounds of carbon dioxide per megawatt hour while new coal-fired units could release no more than 1,100 pounds for the same measurements.

“The standards reflect the demonstrated performance of efficient, lower carbon technologies that are currently being constructed today,” says EPA’s Janet McCabe, who oversees air and radiation issues, at the congressional hearing. “They set the stage for continued public and private investment in technologies like efficient natural gas and carbon capture and storage."

Natural Gas Prices

The EPA’s greenhouse gas proposed standards are just one regulation. There are also those tied to mercury, nitrogen oxide and sulfur dioxide.

The result, for better or worse: About 22,000 megawatts of coal-fired capacity is expected to be retired by 2022, says SNL Energy. The most notable of those is American Electric Power, which will shutter 6,000 megawatts. Others: FirstEnergy Corp, which said it will ditch another 2,000 megawatts this year as well as Duke Energy, NRG Energy and Southern Company, all of which will retire 2,000 megawatts or more before 2018.

The greenhouse gas proposal has already had a “chilling impact,”  Tony Campbell, chief executive of East Kentucky Power Cooperative told lawmakers. “When that proposed rule was issued, approximately 15 coal-fired power plants had received pubic service district permits, but had not commenced construction. By the time the rule ... was re-proposed in 2013, most of those plants had been scrapped.”

As far as his cooperative goes, Campbell says that it has invested almost $1 billion in retrofitting existing coal-fired power plants with modern air pollution control equipment. He adds that it has spent an additional $1 billion building two of the cleanest coal plants in the country. His concern is that the those investments may be “wasted” under the proposals and that the facilities would need to be converted to natural gas plants.

Circling back to TVA, it is a federally owned wholesaler of power, which generates the energy and then sells it the suppliers that distribute the electrons to their localities. TVA has a dual mission to reduce its emissions using the cleanest possible electricity sources while also trying to pare down its massive debt levels.

Yet, it prides itself on producing reliable electricity at competitive prices. Its moves into nuclear, natural gas and renewables are part of its plan, although it is dealing with public outcry as a result of some of its strategic decisions -- whether they be linked to consumer rates, capital outlays or nascent ventures.

For now, coal-fired power can be “quietly” retired and replaced with natural gas-fueled units. That scenario is routinely occurring in some parts of the country, and at a price point where most utilities appear to have become acquiescent. But the coal industry maintains that it still has a key role, although if its future is to brighten then it must fund the research and development of advanced technologies.


Twitter: @Ken_Silverstein

 

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