Not Resting. Dead. I Know a Dead Industry When I See it.
April 6, 2017
Mr. Trump’s bloviating aside, coal is dead. Not tired and shagged out. Dead.
Don’t miss the last line for bottom line Utility reasoning.
WASHINGTON — In Page, Ariz., the operators of the Navajo Generating Station, the largest coal-fired power plant in the West, have announced plans to close it by 2019. The electric utility Dayton Power & Light will shut two coal plants in southern Ohio by next year. Across the country, at least six other coal-fired power plants have shut since November, and nearly 40 more are to close in the next four years.
President Trump campaigned on a pledge to restore the limping American coal industry, vowing to bring jobs and production back to a sector that has been on a steady decline for over a decade. But to do that, he would have to revive demand for coal by electric utilities, which for decades have been the largest consumer of the heavily polluting fuel. Nearly all the coal mined in the United States generates electricity.
But executives at the nation’s largest electric utilities say Mr. Trump’s announcement and the eventual fate of the regulations known as the Clean Power Plan make little difference to them. They still plan to retire coal plants — although perhaps at a slightly slower pace — and, more significant, they have no plans to build new ones.
“For us, it really doesn’t change anything,” said Jeff Burleson, vice president of system planning at Southern Company, an Atlanta-based utility that provides electricity to 44 million people across the Southeast, of the prospective rollback of the Clean Power Plan. “Whatever happens in the near term in the current administration doesn’t affect our long-term planning for future generation,” he said.
As do most electric utilities, Southern Company plans its investment on a 50-year horizon, the expected life span of a new power plant. Its planners do not see coal as economically viable in that time frame.
With or without the Clean Power Plan, power companies say, coal is simply no longer the fuel of choice for keeping the lights on in America — and they do not expect it to make a comeback. Cheaper natural gas and renewable sources like wind and solar power have replaced it.
Reuters surveyed 32 utilities with operations in the 26 states that sued former President Barack Obama’s administration to block its Clean Power Plan, the main target of Trump’s executive order. The bulk of them have no plans to alter their multi-billion dollar, years-long shift away from coal, suggesting demand for the fuel will keep falling despite Trump’s efforts.
The utilities gave many reasons, mainly economic: Natural gas – coal’s top competitor – is cheap and abundant; solar and wind power costs are falling; state environmental laws remain in place; and Trump’s regulatory rollback may not survive legal challenges.
Meanwhile, big investors aligned with the global push to fight climate change – such as the Norwegian Sovereign Wealth Fund – have been pressuring U.S. utilities in which they own stakes to cut coal use.
“I’m not going to build new coal plants in today’s environment,” said Ben Fowke, CEO of Xcel Energy, which operates in eight states and uses coal for about 36 percent of its electricity production. “And if I’m not going to build new ones, eventually there won’t be any.”
Of the 32 utilities contacted by Reuters, 20 said Trump’s order would have no impact on their investment plans; five said they were reviewing the implications of the order; six gave no response. Just one said it would prolong the life of some of its older coal-fired power units.
North Dakota’s Basin Electric Power Cooperative was the sole utility to identify an immediate positive impact of Trump’s order on the outlook for coal.
“We’re in the situation where the executive order takes a lot of pressure off the decisions we had to make in the near term, such as whether to retrofit and retire older coal plants,” said Dale Niezwaag, a spokesman for Basin Electric. “But Trump can be a one-termer, so the reprieve out there is short.”