The real lesson of Rick Perry’s Grid Report: Coal can’t survive without subsidies
The Energy Department’s controversial new grid study evoked a storm of criticism last week from clean energy stakeholders, but if you read it through, the agency actually makes it clear that coal can only swim with today’s energy sharks — natural gas and, increasingly, wind and solar — with the help of new taxpayer subsidies. The economics just don’t work for coal any more.
By Tina Casey
Holy boxed into a corner, Batman! The Republican Party in general and President Trump in particular have been leaning on coal stakeholders for political support, but they’ll be playing with electoral fire if they introduce new taxes or other public subsidies to prop up the coal industry.
Coal To Trump: I’ve Fallen And I Can’t Get Up!
I took quick note of the tax-and-spend dilemma last week, just before the new grid study hit the Intertubes.
For a more in-depth look at the box into which the Republican Party has inserted itself, check out a long form analysis in Vox that came out after the full study was publicly released.
The piece, by David Roberts, is well worth a read in full. For those of you on the go, the title starts things off with a bang:
The US coal industry is going out, not with a whimper, but with a burst of rent-seeking
And, it all goes downhill from there:
The US coal industry is dying — but not with any dignity. As the end approaches, its sense of aggrieved entitlement is increasingly naked, its demands for government handouts increasingly frantic. As dread builds, shame has left the building.
Okay, so that’s a little dramatic, but Roberts’s main point is the same nail that RedGREENandBlue and CleanTechnica have been hammering on over the course of almost ten years and thousands of articles: the age of coal has come and gone.
That’s not to say that coal will evaporate completely off the energy map. However, it is well on the way to becoming marginalized.
Natural gas has been the driving force pushing coal aside over the past several years, and renewables have also begun to challenge both coal and natural gas.
So, Taxpayers To The Rescue?
With that in mind, let’s take a closer look at some of the details Roberts has assembled.
The first point he makes is that natural gas goes together with wind and solar like gin and tonic.
Although I would argue with Roberts’s characterization of natural gas as a “moderately clean” fuel (fewer carbon emissions than coal at the burn point would be more accurate) he’s on the right track in terms of the interplay between gas and intermittent energy sources. Gas turbines can be ramped up and down quickly, unlike coal power plants.
The natural gas industry brought up just that point shortly after word of the new grid study leaked out in April. A memo from Energy Secretary Rick Perry indicated that the study would be front-loaded in favor of coal, and by May the American Petroleum Institute (which also represents gas interests) pushed back with the release of a new 50-state study supporting Roberts’s observation that “variable and flexible work well together; they are the basis for the modern grid.”
For that matter, the Energy Department has been hard at work on the aptly named Grid Modernization Initiative, which leans heavily on variability and flexibility. Oddly, the agency trolled Perry’s memo with an update on the initiative in May, indicating that the modern grid could support more renewables without sacrificing reliability.
Caution: Capitalism At Work
For Roberts, the demise of coal is a simple case of the march of technology, fed by the “creative destruction” of capitalism.
That’s great for people whose skills and opportunities march in step with the times, but many others pay the price:
Without creative destruction, capitalism doesn’t work — productivity and wages don’t grow. But there is no creative destruction without pain for the workers and communities on the losing end…
A willing Congress could muster taxpayer support to increase social services that enable coal communities to transition into new economic activity.
But, that’s not likely to happen.
Welfare For Me, Not For Thee
That brings us to the rent-seeking.
Roberts sums it up nicely:
…It is instructive, as coal mining companies go bankrupt and coal plants shut down, to watch as industry leaders vigorously shed their purported free market principles in support of public assistance.
The examples cited by Roberts include the West Virginia Governor Jim Justice, who argued that coal needs taxpayer support as a matter of national security — you know, just in case terrorists blow up all the gas pipelines:
…Justice pushed a rather brazen proposal: a federal subsidy of $15 for every ton of Eastern coal burned in a US coal plant. (To his constituents, he called this request for $4.5 billion in taxpayer handouts a “new, bold idea to put coal miners back to work.”)
Another example is Bob Murray, CEO of Murray Energy. Reportedly, Murray has been expecting the Energy Department to issue an emergency order protecting coal power plants from early retirement on account of, you know, national security.
However, that expectation was based on a series of contacts with Trump last month, and it appears that Murray should have gotten it in writing. The Energy Department recommended turning down the request last week, with approval from the White House.
Coal And National Security
Speaking of national security, it’s worth recalling that in the 19th century the US Navy turned from wind power to coal power in the global race to control the seas.
So, how much coal does the Navy use today?
Ummm…not much. Navy vessels converted from coal to oil about 100 years ago, then picked up on nuclear. More recently, the Navy has begun transitioning to biofuel and other alternatives, as highlighted by its Great Green Fleet initiative.
The Navy is also rapidly shaking loose from its land-based coal dependency. Back in 2013 the Navy began laying plans to retire the 1950s era Goddard coal power plant at a base in Indian Head, Maryland.
That was the last coal power plant at at Navy facility in the US.
It was replaced by a new natural gas system, which reached its first full year of operation in May 2016. The Navy marked the occasion with a press release packed with a stab in the back for coal:
Replacing the Goddard Power Plant, the new, decentralized steam system provides a much more environmentally-friendly footprint, as well as a substantial reduction in the Navy’s dependency on fossil fuels; specifically, the vast amounts of coal — approximately 15,000 tons per year — needed to provide power and steam to NSF Indian Head.
Hey, when you’ve lost the Navy…