Previous posts in this series: Donald Trump’s War on Coal , Trump’s War on Coal II
In January I looked at the state of US coal and concluded:
It is highly probable that demand for coal will fall by the order of magnitude implied by the FERC data. My prediction is that the pace of closures, and the loss of mining jobs, will roughly triple.
I did not predict that it would happen so fast.
FERC regularly updates a table including planned retirements of coal generating plants up to three years ahead. The April table gave 13,992 MW. In May this rose to 17,054 MW: an increase of 3 GW in one month, just over 1% of the remaining capacity.
It’s technically possible, given the rolling horizon, that these 3 GW were already in the spreadsheet for May 2022 and the forecast has just caught up. This is very unlikely, and makes little difference even if it were true.
The obvious interpretation is that utility executives across the United States have concluded:
1. Their coal plants are increasingly uneconomic compared for gas, renewables, and storage, and carry growing reputational and policy risks at federal (>2020) and state level.
2. The Trump Administration’s policy to save coal is a sham. Even rhetorically, it is disappearing: Trump did not mention coal in his lastest set-pieces on energy (July 8 remarks, fact sheet).
3. They might as well bite the bullet now. Nothing will get better for coal.
The information the utilities supply on closures to FERC, the federal agency responsible for the reliability of the national electricity supply, must be hard. These aren’t predictions but decisions. There is more of the same they are still mulling over. And once they have decided to close a plant, there are pressures to bring the date forward. The collapse will go on speeding up.
With oversight from Washington in the hands of feckless, inept and amoral ex-lobbyists, the end of coal mining in America is coming at an appalling social cost. David Roberts at Vox documents one example, the Eagle Butte and Belle Ayr mines in Wyoming. The short version:
1. The mines were run by Alpha Natural Resources. Alpha made a very bad bet on Appalachian coal and declared Chapter 11 bankruptcy in 2015.
2. Te restructuring involved abandoning critical health benefits to 4,580 non-union miners and spouses, slashing the cleanup liabilities, multi-million dollar bonuses to executives, and spinning off the mines.
3. The buyer of the two mines was Blackjewel, run by an Appalachian grifter called Jeff Hoops. Hoops had apparently no plan to nurse the mines back to viability. Instead he milked the cash flow for more insider bonuses while not paying taxes and other creditors. IANAL but it looks to me like a classic long-firm fraud.
4. Blackjewel suddenly collapsed two weeks ago in a cloud of bouncing cheques, some for wages. It is heading for Chapter 7 bankruptcy and a full liquidation. The state will be left with the uncovered cleanup liabilities, and support for the abandoned miners, assuming they are nor just left to cough their lungs out untreated in the rugged Western way.
5. Roberts does not go into this, but I assume that the political influence of Philip Anschutz, the wind baron of Wyoming, has been strengthened by the fiasco. Wyoming will be less helpful in future to his coal rivals. The state may even go after Mr. Hoops. Good hunting.
PS: let me advertise an old proposal I made here in 2010: nationalize coal. It really is the most humane way to manage the rundown of an entire sector in the public interest. US coal companies are to a first approximation worthless, once you include the cleanup, pension and health liabilities they are trying to evade. So the fair price to shareholders is $0 a share. Bondholders and unsecured creditors? How about their taking the same haircut they are getting anyway under Chapter 11 bankruptcy? The taxpayer will be on the hook for the shortfall in the funds for cleanup, pensions and health, but that’s inevitable in any scenario. What nationalization saves is the looting by the likes of Mr. Hoop, and it allows for proper planning of the reconversion measures.
Socialism? Sure. That’s what makes my proposal sadly unrealistic. Do you have a better one?
I had not heard about that. The intergoggle says Wyoming did not expand Medicaid under the ACA, leaving those folks even worse off - so it seems to me that it would be a great place for one of the jillion Dem candidates to go and make a big media fuss. Or all of them. Dislike coal, love the coalminer.
So, I have one of my patented simpleton questions. In LA, the local (City owned) power company union is protesting the mayor’s decision to not replace/refurbish? 3 natural gas plants, as he thinks we won’t need them after the next 10 years, given a desired shift to renewables. (The union may mostly be mad bc they think it will mean fewer jobs. I am not worried about the politics, it is kind of a fake fight.)
How would someone in the cheap seats, with a middling attention span for this kind of thing, and very little knowledge of power plants go about evaluating this claim - that we won’t need natural gas as a backup? I am just asking if you know of an honest referee for this kind of thing?
It seems a large leap of faith to assume that we will have figured out batteries by then. Or, am I wrong?
Our weather is such that in a prolonged blackout, or even a bunch of rolling ones, people will die. He won’t be mayor then though. (Otoh, he does not seem to be a bad person - and often people say he is too cautious.) The utility execs made comforting noises in the article but I have no way of weighing them.
If you’re bored, here is the article:
https://www.latimes.com/local/lanow/la-me-ln-green-new-deal-garcetti-dwp-union-clash-20190714-story.html
Paywalled, can’t read. But for starters, your weather is such that decentralized solar should be really effective, no? And any centralized renewables (utility solar, wind) have any blackout risks that are greater than a small number of gas-fired plants? Just not following, I guess.
Sorry about the paywall! Does this count as irony? (I have this lit scholar friend who was always telling me I misused it…) Despite being in households with paper subscriptions, I too get caught by those, bc I don’t want to hog the online accounts, and it seems like you only get one (I may be wrong about that). Bummer.
Anyhow, if that is what you were asking … what I was worried about was whether we were really ready to not use gas at all, or even have it as a peaker option. Bc that appears to be the plan.
And now that you mention it, not only do I not know if blackout risk is worse with the other sources, but, I also forgot about our earthquake risks. No idea what that will mean.
The natural gas plants that are being replaced by batteries are peaker plants, which means that they are only fired up to provide power during demand spikes. They provide the dirtiest and most expensive power on the grid and sit idle for most of the time. Lithium battery storage has declined sufficiently in price that it is now competitive with this type of generation. In addition, lithium batteries are easier to site (less environmental impact than a new gas plant) and can make money for their owners by providing other services which peaker plants cannot (load-shifting, frequency regulation). Lithium batteries are not yet (and may never be) cheap enough to provide the long-duration storage that would allow us to start retiring baseload natural gas plants but they are cheap enough that gas peakers will likely go extinct in the next decade.
Thank you, I did not know these were peaker plants. I also don’t understand the technical difference btw a baseload plant (I guess that means just a regular plant that is relied upon all the time?) and a peaker, or why one is dirtier. (Don’t worry - I don’t expect you to explain it. I will need to go out and read more.)
Getting to 80% zero-carbon electricity is SFIK pretty uncontroversial. The issue is getting rid of the last ca. 20%, for which you need a despatchable, currently gas. Mark Jacobson’s first go at a 100% renewable scenario for the USA included an off-the-wall scheme to retrofit most current hydro dams with vastly more generators to run in burst mode. Clack, a pro-nuclear expert, challenged this, leading to an unseemly academic knife-fight. Mind you , nuclear reactors, which are inflexible as well as expensive, do not help solve the problem.
The source I rely on, mainly because it’s simple enough for an amateur like me to understand, is Andrew Blakers’ work on Australia. His 100% renewable scenario for the Australian NEM (the eastern part that has people in it) relies just on HVDC transmission from the interior and west, and 450-500 Gwh of off-river pumped hydro storage (say 45-50 GW at 10 hours). These are mature technologies with known costs and zero technological risk. The overall markup on the farm-gate raw wind and solar cost is about 50%. He still comes out slightly cheaper than the current coal-heavy grid. If you want to accept some technical uncertainty, you can expand the firming menu: demand response, geothermal, V2G (using electric car batteries as a virtual grid battery), P2G (using solar and wind electricity to catalyse water and make hydrogen or ammonia), CSP (thermal solar towers with hot salt storage). If any of these work, the bill comes down.
I see no reason why Blaker’s conclusion should not extend to other regions and countries. Most have the additional option of cross-border trade in electricity. It looks to me like a solid argument that you can affordably phase out gas. Nitpick: is it worth the expense to go beyond 98% or so? For example, grids need a large reserve for security, consisting of capacity that hardly ever runs. We would save a lot of money by using existing gas turbines for this and using the savings for more cost-effective mitigation measures, say electric trucks and ships. Offset the small net burn with reafforestation.
As usual, you have cheered me up enormously. This is great, bc maybe if there are issues, the Australians will confront them first and figure them out for us. Shameless freerider here!!! I will have to follow that link.
Meanwhile, thank you for this happy phrase, it gave me a good chuckle - “an unseemly academic knife-fight” - academics being unseemly is always fun. It is much better to mock people than actually stab them, I surmise.
Also I liked this part verrrry much - “These are mature technologies with known costs and zero technological risk.” Anxiety levels are a bit elevated these days. I think this should be set to music.
There is a lot to think about here. Very interesting, thank you.
PS: the operator of the British grid, National Grid, has just released a report on UK emissions scenarios. Remember, these are electrical engineers tasked with maintaining a reliable supply minute by minute.
Short take: both 80% emissions reductions by 2050, and 100%, are feasible. The latter requires strong new policies, and 20% more renewables than the former. So ambition drives up the amount of overbuild. However, even 50% overbuild only drives up the average cost by the same amount, and with offshore wind now coming in at a shade over £50/Mwh, a net price of £75/Mwh looks quite affordable. The USA gets onshore wind and solar at half British offshore prices, which themselves will fall further as >10 MW turbines become the norm.
Is this the sort of thing you’re referring to? https://www.reuters.com/article/us-ge-power/general-electric-to-scrap-california-power-plant-20-years-early-idUSKCN1TM2MV
Reading a little more, it seems that in addition to not being competitive with renewables, this particular model takes a lot longer to startup than newer models, even though this model is less than a decade old. So maybe that’s why they’re ditching it — it got overtaken sooner than they’d hoped.
My takeaway is that sure/sure maybe we need some gas-fired capacity for peak …. but just saying “gas-fired” doesn’t actually cut it, and we need to dig into the details to figure out whether the particular plant that’s slated for closing is actually viable as a peak power plant.
It’s amazing to me if coal companies were never required to post a bond to cover eventual clean-ups. Is this yet another government failure? Where were those protectors of the public interest, Elizabeth Warren and Bernie Sanders?
Let me channel every pro-business politician who has ever lived: “What are you, a Communist?” This would be a guaranteed way to get pilloried in the “Capitalists” section of every newspaper in the country for a century running. Oh, sorry, I meant the “Business” section. Funny that there’s no section for “Nature” or “Workers” or “People”. Just for “Capitalists”.
The way I read Roberts, the Alpha cleanup bonds sorta disappeared in the Chapter 11 bankruptcy. Some states have allowed coal companies to self-bond, which comes to the same thing when they fold. Yes, it’s a huge scandal and Democratic pre-candidates should be making more of a fuss. If I’m right that the decline is speeding up, they will.
Looks like market forces will kill coal, and not a minute too soon.
But, suppose we do nationalize. Now, rather than letting market forces do the job-and they will, though they’ll make a messy job of it, enriching who-knows-how-many grifters along the way-now we’re relying on the US Congress.
At present, the institutional momentum cuts against coal: Only a massive program of new subsidies could save it. Just now we’ve got an administration that will talk a big game but won’t put much real effort behind it, correctly reasoning that the big talk will go over very nearly as well with their base as actually delivering, and at far less cost. Any administration that follows it will likely be still less coal-friendly.
But institutional momentum would be very much on the side of a nationalized coal industry. The default would be to keep it stumbling along, at whatever ghastly cost, and nothing short of a filibuster-proof Democratic majority that didn’t rest on any coal-state senators could turn it down. My infant son may live to see such a majority, but I don’t expect to, and I certainly don’t expect one to arrive until long past the day we’ve locked in the nightmare carbon scenario.
We can argue about unlikely hupotheticals till Miami is six feet under water. For my money, if coal nationalisation were politically feasible, so would be a phaseout mandate. Charbonnages de France and the British National Coal Board had the institutional bias you mention, but neither were able to stop the decline of the industry, in much less unfavourable circumstances. The ownership structure does not alter the fall in demand; to halt that against the tide of much cheaper gas and renewables, you need some drastic and very costly intervention in the vastly bigger and more influential electricity generation industry. That’s what has emasculated Trump’s rescue plans.
US coal companies are to a first approximation worthless, once you include the cleanup, pension and health liabilities they are trying to evade. So the fair price to shareholders is $0 a share. Bondholders and unsecured creditors? How about their taking the same haircut they are getting anyway under Chapter 11 bankruptcy?
How about the bondholders getting behind the pension plan? And if the pension plan is underfunded how about clawing back some of those bonuses from the guys who underfunded them?
That current and former employees are routinely stiffed this way angers me. There seems to be an underlying belief that a pension is an act of generosity by the company. It’s not. It’s earned income and ought to be paid.
How about the Democrats making an issue of this? It seems to have a few things going for it. It’s the right thing to do, and it ought to appeal to lots of working class/middle class voters.
Agreed. In the UK, there was a major scandal in the Thatcher years when publishing tycoon Robert Maxwell looted his company’s pension fund before drowning off the side of his yacht in the Med. As a result of this and other screw-ups, there is now a pretty effective system of regulation of private pensions, with minimum funding levels, restrictions on self-investment, firewalls in case of bankruptcy, and a backup guarantee fund. My daughter Lucy works for the regulator.