Facing Coal's Inevitable Decline

As I noted in my last post, Sen. Fred Thomas would have you believe that over the last couple of decades, coal fired power plants have achieved dramatic reductions in carbon pollution. And he also claims, without offering a shred of evidence or explanation, that requiring new power plants to meet EPA emissions standards will bring all development of new carbon pollution control technology to a screeching halt (you can read Thomas’s Missoulian column here).  But before you decide you can rely on the power industry to usher in a brave new energy future all by itself, you’d better take a closer look at what’s really going on here.

You can start with the fact that carbon emissions from burning coal grew by 81% between 1973 to 2005, and only after that did they begin to fall. And here’s the thing: over those same years, according to the US Energy Information Agency, the amount of carbon emitted per ton of coal burned did not change at all.* That means, of course, that the decline in emissions after 2005 could only have come from one source: burning less coal.  That happened because coal was getting displaced as a fuel by natural gas and renewables, and at the same time, the thermal efficiency of coal fired power plants improved some, meaning that it was possible to generate the same amount of juice with less fuel.

Now if you’re a coal enthusiast like Thomas, the fact that emissions have gone down because less coal has been burned is not a good thing. No, what you want is to reduce emissions but dig up and burn more coal.** That means reducing emissions per ton of coal burned, which sounds, and is, pretty hard to do, since it requires the deployment carbon sequestration technology. That simply hasn’t happened, and isn’t likely to happen unless emission standards are so tough that the only way coal fired plants can stay in the game is by successful sequestration, aided perhaps by a substantial public investment in developing the requisite technology.

Thomas has this point backwards: he implies that first the technology comes along, apparently out of the blue, and then emission standards can be set to match what’s possible. But that won’t work. Absent standards or subsidies or regulations, there is no incentive for sequestration. No company is going to attempt it, particularly with no guarantee of success, out of the goodness of its corporate heart. On the contrary, it has to be told, or be paid, to toe the line. So Thomas is shooting himself in the foot here: he is opposing the one regulation that might make it possible to arrest climate change and stop coal’s slide into oblivion.

But Thomas may be  on to something here: maybe the EPA regulations aren’t the best way to cut carbon emissions.

The problem here is that there are all sorts of strategies to reduce carbon pollution: residential energy conservation and efficiency, better vehicle mileage, displacement of fossil fuels with renewables or coal with natural gas, improved public transportation, carbon sequestration and many, many more.***  Inevitably, any comprehensive policy to arrest climate change (assuming it’s not too late) is going to rely on a mix of these strategies, and the premium in selecting that mix should be on minimizing the cost of reducing emissions. We can’t fool ourselves here: as much as we might wish it were otherwise, arresting climate change is going to be costly and adopting high cost strategies to get us there will be a luxury we can’t afford.

That’s where sequestration comes in. No matter how good we get at it, it is unlikely that sequestration will be cost competitive enough to become the only or even the principal method we rely on to reduce emissions.  And since almost everything else we can do means using less coal, we need to face the fact that an efficient and cost effective national policy to arrest climate change inevitably means that less coal is going to get mined and burned. If the EPA regulations have the effect of forcing the pace of sequestration and delaying that inevitability, they are arguably standing in the way of progress.

Because Montana is an energy producing state, and because energy producing interests tend to dominate the conversation, it is perhaps predictable that Montanans tend to look at climate policy through the wrong end of the telescope. We don’t ask what’s the most efficient and effective way for the world to get to where it desperately needs to be. Instead we usually ask what’s in it for us here in Montana: how many jobs, how much tax revenue, how many dollars to spend. The two aren’t the same thing, and while it may be understandable that Montanans think that coal jobs are sacrosanct, it is also understandable that the rest of the world, faced with the climate change crisis, might find that attitude hopelessly self-indulgent.

* The data point I am referring to here is carbon emissions per BTU of energy consumed by burning coal. The US EIA doesn’t calculate this number for you, but you can do it yourself using the data in Tables 1.3 and 12.1 in the March 2014 Monthly Energy Review.

** Actually, it’s not clear that Thomas cares about reducing carbon emissions.

***Back in 2007 Governor Schweitzer created a Climate Change Advisory Committee which was charged with identifying policy options for reducing Montana’s green house gas emissions. The committee produced a report (available here) which unfortunately got lost in the shuffle when the Great Recession claimed all of the attention of the public and state government.

Fish or Cut Bait

One of the favorite tropes of my Republican colleagues in the Montana legislature is that the Obama administration, working through the nefarious EPA, is waging a “War on Coal.”   Dealing with this rhetoric, which I have done in previous posts, is getting a little tedious, but Sen. Fred Thomas’ most recent broadside in this so-called war is so absurdly ill-founded that it really requires a response.

In a recent column in the Missoulian, Thomas goes after the EPA’s carbon emission standards for new coal fired power plants. Among other things, he claims that the EPA, evidently in cahoots with unnamed environmental groups, has imposed these standards to “end coal development.” The result, he claims, will be that no new coal fired power plants will be built, resulting in the loss of “hundreds of thousands of jobs supported by the American coal industry.” The price Americans pay for electricity will go through the roof. The diversity of our energy supply portfolio will decline. And there will be an “immediate cessation” in the development of new carbon emission technology by an industry that has achieved “dramatic reductions” in pollution without goading from the EPA

It’s hard to know where to begin with this muddle, but let’s give it a try.

As has been noted over and over again, and despite what Thomas thinks, the EPA’s new source carbon standards are not going to block the construction of new coal fired power plants, for one simple reason: even without the standards, nobody is planning to build such plants anyway. Look at the figure below, which is taken from a US Energy Information Administration forecast of where new generating capacity is going to come from for the next 25 years. The little black bars, which can hardly claw their way above the horizontal axis, represent coal’s contribution to that new capacity.  Over the whole period, coal accounts for only three percent of the total, leaving almost all of new electrical generating capacity to come from natural gas and renewables.

Since the EPA standards can’t stop new coal fired power plants from being built if they weren’t going to be built in the first place, the obvious corollary is that the standards are not going to destroy “hundreds of thousands” of coal supported jobs. Of course even if the standards were to prevent new plants from being developed, the effect would simply be to slow the growth of coal supported jobs, not to destroy the jobs that are already in place. So even in the worst case, “hundreds of thousands” of coal supported jobs have never been in jeopardy from the EPA regulations, and Thomas should know that.

The same thing goes for the trajectory of electricity prices. How these prices behave in the future is going to depend on how fast the supply of energy grows relative to the growth of demand. Look at the figure again. Coal is not expected to contribute in any significant way to new generating capacity, and that means the EPA standards will have nothing to do with how fast supply is going to grow. The standards therefore cannot produce the electricity price spikes that Thomas wants you to be alarmed by, nor can they hasten the decline in coal’s market share (not that that means what the senator thinks it does*).

Thomas is right about one thing: there is a war going on here. But it’s a war on climate change, not coal, and frankly, it’s off to a pretty lame start. The EPA new source standards aren’t going to deflect emissions from whatever rising path they are on, let alone reduce them. But make no mistake about it: if the war on climate change ever gets serious, carbon emissions are going to have to go down (slowing emissions growth will not be enough) and that means that short of a technological miracle we are going to have to reduce the amount of coal we dig up and burn. That’s a tough fact for Montana politicians to swallow, but let’s face it: we can talk all we want about “responsible resource development” or how “coal is always going to be a part of our energy future” or “hundreds of thousands of coal jobs,” but if we are serious about arresting climate change, we can't have it both ways. We're going to have to fish or cut bait.

None of this means we should shut down coal, declare victory and go home. It can't be done and it won't work.  And largely empty gestures like the EPA new source standards are not going to get us where we want to be. The efficient path to reducing emissions is going to involve a lot more than that: more renewables, less oil as well as less coal, more energy conservation and efficiency and possibly carbon sequestration.  What we should dread is that we will never start down than path in the first place. Or that when we do, it will already be too late.

* Thomas believes that when coal’s market share declines we lose diversity in the energy supply portfolio. How does that work? Coal is by far the largest single source of energy in the electricity supply portfolio. As it is displaced by other energy sources such as wind or natural gas, it loses market share, we become less dependent on a single source for our energy, and we have a broader set of alternative sources to choose from. That amounts to greater diversity, not less.

Bill Ballard

There's an obituary in today's Missoulian for Bill Ballard, who was a professor of mathematics at UM, a real progressive his entire life, a true union man, and a stalwart of the University Teachers Union throughout the 1970s and 1980s, up until the time he retired. He was 88 when he died, and was of the generation of guys like Howard Reinhardt, Arnie Silverman, Ron Perrin, Mike Chessin, John Lawry and many more, who made up the liberal old guard at UM when I arrived in 1970. Of course they were younger back then, but still, they were the repository of wisdom and common sense and a steadying voice when we needed it as we went through two representation elections, negotiated the first contract, and dealt with retrenchments and the other trials and tribulations of making the UTU more than a "marching and chowder club," as one AFT national rep once put it.

There are a dwindling number of people around who knew and worked with those guys, and I suppose that someday they will all be forgotten. But for today, remember Bill. He was a very quiet man, very serious and thoughtful, who could bring you back down to earth with a sensible and pointed question or observation. His presence in the union leadership was critical but not highly visible. I was always glad he was around. He was small physically, but one of those giants whose shoulders we stand on.