The Country Needs Coal Too Mr. President
Call it an admission of pragmatism. While talking to the nation’s energy future last night during the State of the Union address, President Biden went off script and admitted that “we’re still going to need oil and gas for a while.” It was a statement of fact even if it made climate hawks grimace.
What the country desperately needs is the same kind of pragmatism when it comes to the coal fleet. Unfortunately, without intervention from Congress, we’re going to get just the opposite from the Biden administration. Coal has been made the sacrificial lamb of the Biden administration’s energy and climate agenda and it’s a colossal mistake.
U.S. Environmental Protection Agency (EPA) Administrator Michael Regan has boasted of a suite of rulemakings designed to force coal plant closures. That regulatory wave is now underway.
The loss of so much coal capacity, so quickly, will saddle consumers with biting costs. The deliberate destruction of the nation’s dispatchable fuel diversity will place an ever-growing burden on the nation’s natural gas supply and our overly stretched natural gas infrastructure. With the return of natural gas price volatility and ever-growing U.S. natural gas exports, the loss of coal as a hedge against spiking gas prices couldn’t come at a worse time.
The Price of Constrained Supply
Even with natural gas prices moderating since summer, multiple states continue to face crippling gas costs and soaring gas-driven electricity prices. For both California and New England, natural gas prices have become a shockingly heavy burden.
In a letter to the Federal Energy Regulatory Commission, California’s Governor, Gavin Newsom, asked for “immediate attention” to alarmingly high gas prices in his state. Heating bills in California are proving to be double or triple what they had been a year ago. For one consumer, her previous high bill was $142, but her January bill soared to $425.
Tyson Slocum, the energy program director at Public Citizen, a non-profit consumers group, recently told Politico that, “Benchmark [natural gas] prices on the West Coast are completely insane. In some instances, they’ve been higher than they have been in war-torn Ukraine and in Beijing.”
On the other side of the country, natural gas prices in New England and New York have also been exorbitantly high.
In Massachusetts, the state’s largest utility raised residential electricity rates approximately 64%. A spokesman told The Hill that the global energy crisis and supply constraints are “being acutely felt in New England and Massachusetts because natural gas is the fuel that drives electricity prices and our region is supply constrained.”
Both New England and California have put nearly all their eggs in the natural gas basket. Dispatchable fuel diversity is all but gone in both places and consumers are stuck with the consequences, which is exactly the situation that will become pervasive across the country should EPA’s regulatory wave have the kind of effect on the coal fleet its authors hope.
For example, EPA estimates that its proposed Transport Rule alone could cause 23,000 MW of coal retirements by 2025. The Transport Rule is just one of six rules barreling down on the coal fleet.
Already limited natural gas pipeline capacity cannot handle additional burden during periods of peak demand–nor can we expect new pipelines, which will take years if not decades to build – to come to the rescue. Building any kind of interstate energy project – be it a pipeline or electricity transmission line – has become a herculean effort tied up in litigation and endless battles over permitting. And given the enthusiasm for our renewable future, it would be difficult to imagine securing the support required for extensive new fossil fuel pipelines to replace existing, well operating fossil fuel coal power plants.
Renewable energy additions – while poised to potentially increase system-wide capacity – won’t even come close to providing the accredited capacity needed to ensure a secure and reliable supply of energy. Consider what has happened in the Midcontinent Independent System Operator (MISO) electricity market, which covers much of the Midwest. Despite installed generating capacity increasing by more than 4,200 MW over the past five years, accredited generating capacity – that is, capacity that can be counted on to perform when needed – has fallen by 8,300 MW as intermittent sources of power have been unable to fill the gaps left by ill-advised coal retirements. While total generating capacity has risen, MISO has effectively been left with a gaping power supply shortfall during periods of peak demand.
We have our crystal ball. Whether it’s the tight and exorbitantly expensive operating conditions in California, New England or even parts of MISO, we know what’s coming for the rest of the nation’s electricity consumers should the EPA be allowed to continue down its proposed path.
The nation desperately needs a hardy dose of energy policy pragmatism that pumps the brakes on this runaway regulatory agenda. We need to maintain dispatchable fuel diversity as a bridge to the future to underpin grid reliability but also to hedge against natural gas price volatility and soaring energy prices. A less reliable and increasingly expensive supply of power isn’t the energy future anyone wants.
- On February 8, 2023