Brown on Business
April 19-25, 2021
Old King Coal’s lofty status is quickly waning
By Wesley Brown
Not that long, coal was king of the U.S. energy mix without rival.
In March, the influential U.S. Energy Information Administration (EIA) released a report highlighting how far coal use in the U.S. has fallen since former President Barack Obama began dismantling the industry through his signature climate change mandate called the “Clean Power Plan.”
Although hated and widely criticized as government overreach by Obama administration opponents, the federal Environmental Protection Agency (EPA) in August 2015 released final rules on President Obama’s far-reaching and controversial “plan. Hundreds of pages long, the regulations put the nation on track to cut carbon pollution from the power sector 32% below 2005 levels by 2030.
A year earlier, EPA officials said the plan received the more than 4.3 million comments received from states and stakeholders across the country following the first draft on June 2, 2014, setting achievable state-by-state goals to cut carbon pollution from existing coal-fired power plants 32% below 2005 levels by 2030.
“By 2030, we’ll see major reductions of pollutants that can create dangerous soot and smog, translating to significant health benefits for the American people,” former EPA Administrator Gina McCarthy at the time. “The Clean Power Plan is a historic step forward to give our kids and grandkids the cleaner, safer future they deserve.”
Under the plan, each state had a carbon emission-cutting goal assigned to it and were asked to submit a proposal to the EPA on how it will meet the target. The initial Arkansas target of 46% reduction in carbon emissions was also reduced to about 37% for Arkansas.
In early 2016, the Arkansas Department of Environment Quality Director (ADEQ) and (PSC) Public Service Commission Chair submitted final comments to federal environmental regulators providing a snapshot of how the state intended to move forward to comply with the Obama era Clean Power Plan.
In a two-page letter to EPA, state ADEQ Director Becky Keogh and (PSC) Public Service Commission Chair Ted Thomas cited Gov. Asa Hutchinson’s dual strategy of seeking compliance options to the wide-ranging federal mandate while pursuing legal challenges through the office of Arkansas Attorney General Leslie Rutledge. The memo to the EPA director also included nearly 30 pages of comments from Arkansas regulators on the pros and cons of the president’s plan to shut down the nation’s coal-fired power plant fleet.
Keogh and Thomas closed the letter urging the EPA to reconsider certain design choices for the Clean Energy Incentive Program, or CEIP, which rewards early investments by states in renewable energy choices to meet the federal carbon emission standards by 2020. State participation in the CEIP is optional yet states that choose to participate in the CEIP must make known their intent by submitting a plan by Sept. 6, 2016.
Keogh and Thomas argued then that current CEIP proposal by the EPA limits flexibility and thwart the president’s goal of incentivizing investment in renewable energy and energy efficiency programs in low-income communities.
About that same time, the U.S. Circuit Court of Appeals for the District of Columbia had denied a request to halt implementation of the Clean Power Plan until litigation on the proposed carbon emissions rules runs its course. In August 2016, Arkansas Attorney General Leslie Rutledge joined with West Virginia Attorney General Patrick Morrisey and 22 other states to ask the EPA for an immediate stay of its Clean Power Plan pending the outcome of an impending legal challenge to the rule.
Rutledge and the other petitioners argued that they would suffer irreparable harm if the D.C. Circuit did not put a judicial stay on the emissions regulations, which seek to cut carbon pollution from the power sector 32% by 2030.
As litigation concerning the Clean Power Plan worked its way up to the U.S. Supreme Court in late 2016 the EIA released a sobering report showing that U.S. coal production had dropped by more than 10% in 2015 to 897 million short tons (MMst), the lowest production level since 1986. In addition, that same report showed employment at U.S. coal mines also had declined 12% to about 66,000 employees in 2015, the lowest level since EIA began collecting coal mining employment data in 1978.
That report was released just days after former President Donald Trump was elected as president in November 2016 with strong support from the coal lobby to rollback the Clean Power Plan. Four months later after taking his oath of office, Trump keep his campaign promise in March 2017 by issuing an executive order that took the legs out from under the EPA and the Clean Power Plan. At the time, he directed direction the agency’s former Administrator, former Oklahoma Attorney General Scott Pruitt, to immediately “suspend, revise, or rescind four actions related to the Clean Power Plan that would stifle the American energy industry.”
After taking office, the Trump administration cited pro-coal industry reports that the Clean Power Plan could cost up to $39 billion a year and increase electricity prices in 41 states by at least 10%. Under Trump’s executive order, the EPA dismantled all the Clean Power Plan mandates and announced plans to slash the EPA’s 2018 budget by 31% to only $5.7 billion and cut more than 3,200 jobs from the agency’s payrolls.
Despite those best laid plans to prop up the coal industry, the Clean Power Plan’s influence on the energy industry remains today. Two-month Trump’s repeal of Obama era EPA rules, Entergy Corp. Chairman and CEO Leo Denault announced that the utility giant plan to execute its strategy of transitioning from a hybrid power generator to a “pure-play” utility operator with subsidiaries in Arkansas, Texas, Louisiana and Mississippi.
At the parent company of Entergy Arkansas’ 68th annual shareholder meeting held in Little Rock, Denault said regardless of what happens with the Trump administration and the EPA’s rollback of President Obama’s Clean Power Plan, Entergy will continue to improve its environmental footprint.
Under the Entergy Plan, Denault said the utility decommission its merchant nuclear plants and cease all coal-fired operations at Entergy Arkansas’ two coal-fired units in the state by 2027 and 2028. In late 2018, Entergy Arkansas reached a deal with the Sierra Club and other environmental groups to shutter all the utility’s aging coal and natural gas plants.
Fast forward today, Denault has accelerated Entergy’s efforts to lower the company’s carbon footprint by announcing a climate change plan in 2019. That and similar plans by other top utilities across the U.S. would essentially shut down the nation’s coal-fired utility fleet over the next decade and make renewable energy use common for all energy consumers.
According to the EIA report on March 17, U.S. coal-fired electricity generated totaled 774-million-megawatt hours (MWh) in 2020, which is less than both natural gas-fired (1.6 billion MWh) and nuclear-powered generation (790 million MWh. Last year also marked the first time that coal was not the largest or second-largest source of annual electricity generation in the U.S. since at least 1949.
Similarly, the past decade has seen more than 50 US coal companies fall into bankruptcy and over 100 gigawatts (GW) of coal capacity either retired or slated for closure. U.S. coal-fired capacity peaked at 318 gigawatts (GW) in 2011 and has been declining since then because many plants retired or switched to other fuels and few new coal-fired plants came online.
That means that by the next generation, coal-fired power may be a thing of the past. And the consensus today, given the coal’s industry “dirty air” past and unhealthy reputation, is that may be a good thing for all.