U.S. CHAMBER OF COMMERCE

Conflicting Coal Plant Autopsies

By Dan Byers

With presumptive presidential candidates Hillary Clinton and Donald Trump both in West Virginia this week ahead of the state’s upcoming primary, the issue of coal has emerged as a major media storyline.

This focus began as a result of Secretary Clinton’s two-day damage control tour through West Virginia, Kentucky, and Ohio, where she attempted to explain away her March promise to “put a lot of coal companies and coal miners out of business.”

Essentially, the gist of Clinton’s non-apology apology is that she never meant she would put coal companies out of business with regulations, but rather that the market would:

“It was a misstatement because what I was saying is the way things are going now, they will continue to lose jobs. It didn’t mean that we were going to do it.”

This has emerged as a go-to answer for EPA advocates and even EPA itself when questioned about the War on Coal. At an April congressional hearing, EPA Administrator Gina McCarthy put all of her chips on this narrative: "I can't find one single bit of evidence that we have destroyed an industry or significantly impacted jobs other than in a positive way," adding that "there are challenges in those communities, without question, but the vast majority of that is related directly to the market shift, not to EPA regulation.” [Emphasis added.]

Democratic Senator Sheldon Whitehouse was quick to endorse McCarthy’s claim, asserting that “"I do believe that it's been reported in a variety of forums that the war on coal is actually waged and won by the natural gas industry." And in a May 5 FoxBusiness segment on West Virginia’s woes, Democrat strategist Richard Goodstein noted that the Clean Power Plan doesn’t take effect until 2022, thus “the markets here are the enemy of the coal industry, not Barack Obama.”

The conclusion is obvious: the War on Coal is a myth, and any forensic examination of what is killing these coal plants simply does not lead back to environmental regulations. This position is so entrenched that EPA and its allies would sooner blame Colonel Mustard in the Billiard Room with the candlestick than any federal policies.

While there is no question that cheap natural gas has made coal less competitive, the notion that “the vast majority” of coal shutdowns are due to a market shift is simply not supported by the evidence. In fact, an analysis by the Obama Administration’s own Energy Information Administration pinned the blame squarely on EPA, concluding that 90% of the 60 gigawatts of coal-fired capacity planned to be shutdown between 2014 and 2020 (roughly 20% of total nationwide coal capacity) would do so as a result of EPA’s 2012 “MATS” regulation.

This analysis was affirmed by Wall Street in a Credit Suisse report, Growth From Subtraction: Impact of EPA Rules on Power Markets, which concluded “we can realistically envision coal plant retirements in response to EPA rules exceeding 50 GW (50,000 MW) on the installed 340 GW fleet with another ~100 GW requiring fairly hefty investment to meet anticipated EPA emissions rules.”

The reality of these regulatory impacts hit states all over the country, such as with Ohio utility FirstEnergy, which shuttered six plants in the Cleveland area in response to EPA: “With the cost of those regulations, it just didn’t make sense to make those investments,” company representative Stephanie Walton stated at the time of the announcement.

My colleague Heath Knakmuhs set out to quantify the link between EPA rules and coal shutdowns in further detail, and found that owners of 163 power plant units across the country explicitly cited EPA regulations (primarily MATS) as a cause for their closure announcements between 2012 and 2015. Additional detail and examples of this clear cause and effect relationship can be found here.

These figures of course do not include the forthcoming Clean Power Plan, which EPA and EIA both project will force about 50 additional gigawatts of coal capacity to shut down. Nor do they include the horde of non-power sector rules that severely restrict mining permits and make operations uneconomical.

So despite the steady spin from EPA and its allies, the bottom line is clear: any thorough and objective whodunit look into the cause of coal’s troubles points back to a single prime suspect: EPA, in the White House, with the regulatory lead pipe

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