My WordPress Blog

Even With Trump as Cheerleader, the Coal Industry Can Only Decline

92 0

As President Donald Trump announced plans to withdraw from the Paris climate pact, the last coal-fired power plant in New England quietly closed its doors for good.

Cheerleader2Despite the administration’s avowed support of coal jobs, energy industry analysts and economists who study the sector say that even Donald Trump’s executive order scuttling the EPA’s Obama-era Clean Power Plan and a pullout from the Paris accord won’t bring back coal’s boom times.
“Economics, not regulation, is the prime driver of near-term coal sector distress,” wrote Swami Venkataraman, an analyst with Moody’s Investors Service.

Cheaper natural gas and renewable energy will be the primary culprit behind coal power plant closures for the next three to five years, he said. “The trend of low gas prices and declining renewable costs are independent of expectations created by the CPP and will continue to affect coal-fired generation even in its absence.”

Over the long term, Venkataraman wrote that rolling back the CPP would slow — but not halt or reverse — the secular decline of coal. “Many coal plants will need financial support to survive into the next decade given the sector’s dire economics. There are no concrete proposals for such support at this time,” he wrote.

According to a January report published by regional utility operator ISO New England, “Several factors are making it hard for coal- and oil-fired resources to recover the cost of capital investments to maintain their older plants.” Coal-fired plants contributed just 2 percent of the region’s power in 2016, down from 18 percent in 2000.

Renewables and Natural Gas Power the Nation
Although ADP’s report on job growth found that the private sector added 3,000 mining jobs in May, those New England statistics echo a similar decline nationwide: A decade ago, coal was responsible for about half of electricity generation, according to the American Action Forum, a figure that has fallen to around 30 percent, below the 33 percent natural gas now contributes. In that time frame, renewable energy (excluding hydropower) has ticked up from the low single digits to around 10 percent.

Philip Rossetti, a data scientist at the American Action Forum, noted in an April report that coal’s contribution to the nation’s power needs dropped around the time of the Great Recession. Although it never recovered fully, its use in energy generation remained more or less steady even as a slate of new environmental regulations were introduced by the Obama administration.

The pro-environmental Conservation Law Foundation called the closure “a win,” saying the “outdated” plant had subjected the region to “roughly 50 years of spewing air, water, and carbon pollution.”
David Onufer, spokesman for Brayton Point’s parent Dynegy, said that the “irreversible” decision to close the plant was made in 2013, before Dynegy purchased it.

“Low electricity prices and the high cost to maintain aging facilities led to the decision,” he said. Of the roughly 170 employees at Brayton Point before the closure, Onufer said a small number would stay on to decommission the plant over the next two months, and Dynegy guaranteed an interview to any employee who wanted to apply for a job at another one of its facilities.

“It was a very old plant,” Rossetti said. “Natural gas was getting cheaper [and] natural gas power plants are getting more efficient.”

That growing efficiency is one reason why coal just can’t keep up, an imbalance that is exacerbated by sustained low prices for natural gas. “Economically, it was time to retire it,” said James Stevenson, director, global coal at IHS Markit.

No Return to Coal’s Heyday
Cheaper natural gas means gas-fired plants can produce electricity more cheaply — good news for people who want to crank the AC this summer, but bad news for coal-fired power plants that have to lower prices to compete. “It’s great for industry — it keeps U.S. industries affordable by keeping electricity low, but it does hurt the margins of power companies,” Stevenson said.

Coal-fired plants also take longer to build than their gas counterparts, and have such a long life that power companies might not want to run the risk that any single administration’s policies would have the kind of longevity necessary to justify the capital expenditure.

“You’re playing a long game. You’d expect it to be operating for 50 to 60 years,” Stevenson said.

While regulations do play a role, experts say rolling back Obama-era regulations wouldn’t have kept Brayton Point open. “The big thing is they already paid the hundreds of millions to have retrofits put in,” Stevenson said. “There has been a regulatory story that hurt coal… but for the most part that’s baked in.”

“The technologies to prevent the pollution that causes those problems have already been widely adopted,” Rossetti pointed out, and energy companies would be unlikely to abandon those significant investments. “I don’t see a return to coal’s heyday,” he said.

Source: nbcnews

Leave A Reply

Your email address will not be published.