A DISCUSSION OFPresident Obama’s War on Coal? Some Historical Perspective
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In “President Obama’s War on Coal? Some Historical Perspective” (Issues, Winter 2018), Charles Herrick offers some helpful insight, but he misses a key set of developments. In 1987, Congress passed the Powerplant and Industrial Fuel Use Act, repealing an existing federal ban on the use of natural gas for new power generation—a ban that had been instituted in part to promote coal. This repeal, combined with natural gas price deregulation, the advent of wholesale electric competition, improvements in gas generation technology, and finally the onset of unconventional gas exploitation through fracking, opened the floodgates for inexpensive natural gas-fired power generation. Today, natural gas fuels over a third of US power generation, roughly equal to coal’s share, which is down from roughly 50% a decade ago.
In short, this is largely a story of market forces and technical innovation, not regulation, much less a “war on coal.” An April 2017 report by the Columbia University Center on Global Energy Policy titled “Can Coal Make a Comeback?” found that competition from natural gas accounts for about 50% of coal’s erosion in the past decade; another 26% comes from lower than expected energy demand that reduced headroom for the more-expensive-to-operate coal plants; and about 18% stems from wind and solar, which steadily improved in cost and performance over this period, aided by federal tax policies supporting research and development. (The same market forces have challenged US nuclear power generation, but no one complains of a “war on nuclear.”) In contrast, the Columbia study found that less than 10% of coal’s loss was due to environmental regulation of harmful air pollutants—regulations, by the way, that have already saved tens of thousands of lives, reduced neurological damage to children, reduced ecosystem damage, and improved visibility. As for prospective regulation, most analyses of President Obama’s Clean Power Plan have concluded that much of the anticipated emission reduction would already be achieved due to these ongoing trends; the rule simply locks in and makes enforceable these early reductions.
Beyond the Clean Power Plan, in a world more constrained by carbon, coal can continue to play a role by adopting carbon capture utilization and storage (CCUS) technology—at both new plants and as retrofits on existing coal-fired plants. CCUS technology has been commercially demonstrated in Texas and Canada. Congress, with the support of a broad coalition of environmentalists and industry, recently approved tax credits for CCUS projects roughly equivalent in value to the wind production tax credit.
Though some people may find it convenient to blame regulation for the problems of the US coal industry, free markets and American ingenuity are the real culprits, if that is the word. If coal is to have a significant future, more technical innovation is essential.
Clean Air Task Force
Coal is abundant, with America possessing a 200-400-year supply, and is more reliable and less expensive than every other source of electric power except natural gas. Competition with natural gas plants is the primary reason why many coal-fired power plants have recently closed or are slated for early retirement. But if one is concerned about price volatility, coal beats natural gas in many instances as a long-term fuel source because its price is less prone to rise or fall in response to weather or surging demand from alternative uses. Coal can compete under fair conditions.
Charles Herrick’s article indicates that he believes it misleading to call former President Obama’s actions vis-à-vis coal a “war on coal.” I disagree. Nearly a year into his presidency, Obama’s Environmental Protection Agency (EPA) issued an endangerment finding ruling carbon dioxide, the gas plants need for life and every human and animal exhales, a danger to human health or the environment. Never before had EPA found a naturally occurring chemical dangerous at levels that have no toxic effect. During his tenure, Obama also successfully pressured Congress to increase the subsidies to wind and solar power plants and directed agencies such as EPA to expand their regulatory authority to tighten regulations on coal-fired power plants. Combined with competition from natural gas, these regulations and subsidies caused the premature closure of more than 250 coal-fired power plants nationwide.
President Donald Trump is in the process of reversing many of these policies by withdrawing the United States from the Paris climate agreement and rescinding the Obama era clean power plan. However, additional federal and possibly state actions are required to fully level the playing field and provide electric utilities with coal-fired generating units some degree of confidence that they will be allowed to compete fairly in the marketplace and thus should keep vital power plants open.
Ultimately, Congress should eliminate all energy subsidies. Absent subsidies, wind and solar power would largely disappear from the marketplace, being less reliable and more expensive than other sources of power. Coal, hydropower, natural gas, and nuclear power would thrive, competing solely on the basis of reliability and price, rather than government favors. This action would also strongly encourage state legislators to repeal renewable energy mandates. Absent generous federal subsidies and tax credits, electric power users would have to pay the full costs for renewable power. The result would be a dramatic increase in the price of power in states with renewable mandates. The howls of outrage over the price shock would likely cause state legislators to repeal renewable mandates.
Most important, Congress should bar the EPA from regulating carbon dioxide emissions unless and until it adopts a law specifically regulating carbon dioxide by name.
The Heartland Institute
Arlington Heights, Illinois