Speaking at the Edison Electric Institute’s annual financial conference in Hollywood, Fla., last week (Nov. 12), Southern Co. CEO Chris Womack said, “As we look at responding to demand growth, looking at coal operating longer is a consideration. Maybe those units get extended further into the next decade before they retire.”
POWER magazine reported that Duke Energy’s latest integrated resource plan pushes its original plan to phase out coal-fired generation by 2035 to 2038 and “scaled back plans to expand its use of renewable energy resources.”
Are there more than economic forces such as the predicted increase in growth of demand driving a rethinking of the long-held plan to phase out coal generation? Is politics in play?
At a rally in August, Trump proclaimed “I am announcing today that when I return to the White House, I will end this anti-American energy crusade and terminate Kamala’s so-called Power Plant Rule.”
The arrival of a new administration in Washington with a desire to push fossil fuels and antipathy to renewables may have much to do with this nascent trend. A key development could be a decision by the administration to scrap the Environmental Protection Agency’s April Clean Power Plan to reduce carbon dioxide emissions from electric power plants. The targets are coal and gas generation.
In a Bloomberg interview, Brian Savoy, Duke Energy chief financial officer, said his company would reconsider its plans to convert coal-fired units to dual-fueled coal-and-gas generators if the Trump administration rolls back the EPA rules. “We’ll see if the dual conversions in Indiana make sense,” he said, or if it allows them to keep firing just coal. “The pace of the energy transition could change.”
According to Greenwire , “Conservative groups that have long rejected the science underpinning climate action are lining up behind a policy wish list that calls on the incoming Trump team to ax climate agreements, make coal a ‘preferred means of electricity’ and immediately freeze spending tied to the 2022 climate law, the Inflation Reduction Act.”
Greenwire reported that a coalition of groups that were prominent in Trump’s first administration have given the new transition team a memo outlining a strategy for coal’s comeback. Backing the plan are the Heartland Institute, the Energy and Environment Legal Institute, the Committee for a Constructive Tomorrow, Truth in Energy and Climate, and the American Energy Institute.
The article quotes Steven Milloy, longtime global warming skeptic and denier of the health impacts of second-hand tobacco smoke, now affiliated with the Energy & Environment Legal Institute. Milloy said the memo advocates a regulatory rollback to push coal-fired generation and LNG exports, making the U.S. less susceptible to global markets. He was a member of Trump’s 2016 transition team.
Coal has been on a steep 15-year decline a from its long position of dominance in the electric industry. At the turn of the century, coal’s share of electric generation was about 50%. Today, it is about 15%.
How bad is that? Cowboy State Daily reports that Wyoming, long the nation’s largest coal producing state, faces a historic decline in coal production. With less than nine weeks remaining in 2024, “It’s been 32 years since Wyoming produced less than 200 million tons of coal, a streak that’s about to be broken.” The daily quoted University of Wyoming economist Rob Godby, “To hit 200 million tons, you’d need another 40 million tons mined in nine weeks, and that ninth week is always a partial week.” That’s about 5 million tons a week, which Wyoming’s mines haven’t hit for any week so far this year.
A series of EPA regulations over the years aimed at reducing pollution from coal plants – primarily what the Clean Air Act has defined as “criteria air pollutants” (carbon monoxide, lead, nitrogen dioxide, ozone, particulate matter, and sulfur dioxide) backed out some coal generation. But the precipitous fall of coal came when new gas drilling techniques – directional drilling and hydraulic fracking – rendered coal uneconomic, combined with a move to remove greenhouse gas (chiefly carbon dioxide) emissions.
Trump’s electoral success produced a quick bump for coal company share prices. Barron’s reported, “Few industries soared as much as coal on Wednesday after Donald Trump won the presidential election. Arch Resources and Consol Energy were up 12%, and Peabody Energy rose 10%. The S&P 500 gained 2.5%.”
David Allen, founder of Octane Investments and manager of the Octane All-Cap Energy Value ETF, told Barron’s, “The election heralds a new era for coal production and use in this country. The recently promulgated EPA rule accelerating the closure of coal plants will likely be removed in January, and companies that produce thermal coal should enjoy a sharp revaluation.”
–Kennedy Maize
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