ON JUNE 8, E&E TV HOSTED A DISCUSSION, MODERATED by reporter Monica Trauzzi, as part of a special report on the “shifting economics of coal.”
The participants were Steve Miller of the American Coalition for Clean Coal Electricity; Bill McCollum of the Tennessee Valley Authority; Wyoming Sen. John Barrasso, R-Wyo.; Reps. Colleen Hanabusa, D-Hawaii, Bill Johnson, R-Ohio, and Joe Barton, R-Texas; Jeff Holmstead of Bracewell & Giuliani; David Hawkins of the Natural Resources Defense Council; and Christine Tezak of Robert W. Baird & Co.
The remarks offered by Senator Barrasso and David Hawkins were of particular value and interest.
But what if the Wyoming Outdoor Council had been invited to participate?
What would we have said and how would we have tried to encourage people such as Mr. Barrasso to move to a position that better recognizes the need for a cleaner environment?
To answer those questions–and in an attempt to add to the larger conversation–we’ve asked Richard Garrett, the Wyoming Outdoor Council’s energy and legislative advocate to weigh in on the following transcript of the discussion and offer responses as though he had taken part in the discussion.
Here, then, is the transcript, with Richard’s remarks added in.
Click here for the original transcript.
Lawmakers, analysts debate the changing dynamics of coal markets in the U.S. (Special Report, 06/08/2011)
Transcript courtesy E&E TV
As the United States’ most abundant source of energy, what role will coal play as the United States moves toward a clean energy future? Is coal still a stable investment for utilities? Can clean coal and coal-to-liquids save the industry? During E&ETV’s Special Report, “Debating the Future of Coal,” lawmakers and analysts discuss the shifting economics of coal.
Sen. John Barrasso: Coal continues to be the most available, affordable, reliable and secure source of energy we have in the United States and we have a lot of it. It’s going to continue to play a very, very important role in our energy mix.
Steve Miller: I view the future of coal-based electricity as one of limitless possibilities.
Bill McCollum: Coal is challenged today, there are more concerns about the environmental impacts of coal, particularly regulated emissions and the need to put environmental controls on our existing coal plants over the next several years if we’re going to continue to operate those.
Jeff Holmstead: Energy policy in the U.S. is determined almost entirely by EPA and the environmental community and we’ve seen over the last couple of years that there’s a real sense that at least the Obama administration doesn’t want any more coal.
David Hawkins: Coal is very dirty in many respects, starting from when it’s mined to how it’s used and how the ash is disposed of. So it’s a fuel that needs to clean up its act and why does it need to clean up its act as opposed to we should just stop using it? Well, coal is very abundant.
Richard Garrett: There is no question that coal is available and, because of shifted costs, seemingly cheap. A study by the Center for Health and the Global Environment at Harvard Medical School has shown, however, that the burden of health care costs that result from the use of coal are substantial–Harvard estimates as much as $500 billion annually—but are largely unrecognized. If those costs were included in the delivery of electricity through the consumer’s electric meter we’d get a much clearer idea about the real cost of coal to our health, economy, and even to the environment.
Monica Trauzzi: With Washington debating the long-term prospects for coal, is it still a stable investment for utilities?
Jeff Holmstead: The uncertainty created, especially by the new permitting process for CO2, makes it very difficult to permit new plants. So a part of what EPA has done, which is the regulation of greenhouse gases under this permitting program, has created just a lot of uncertainty. It’s very hard to get people to invest really in anything, but coal in particular.
Richard Garrett: Some forward-looking executives at large utilities, including Ralph Izzo at PSEG, have recognized that climate change from greenhouse gas emissions has widespread implications for economic development and that there is a need to develop new technologies that are created by leveraging market mechanisms. He has also said that government should play a role in helping this along. In other words he is saying that climate change is real but that there are economic opportunities that can result from a reasonable mix of market forces and government regulation. Closer to home, an executive with the parent company of Rocky Mountain Power, Cathy Woolums of MidAmerican Energy Company, recently called on the state of Wyoming to begin to look at ways to permit greenhouse gas emissions. Underlying all of this is the fact that utilities are asking for predictable markets and regulations. Policy makers must play their part.
Bill McCollum: There are cost challenges in the electric generation business, just as there are in any business these days. But there are also opportunities to look at the energy mix that we have, the energy portfolio that we use in this country to generate electricity, and to make the right sort of economic choices going forward. The potential of having to put controls on all of the existing coal-fired generation or make decisions to retire some of those, certainly creates cost pressure. TVA will spend $3 to $5 billion on clean-air controls for our fleet going forward and for alternative generation. And so that’s an important factor to look at as we go forward and consider how to best manage our energy mix.
David Hawkins: Oh, there are very definitely financial risks, I think that’s why you see essentially no new coal plants being proposed today in the United States. Wall Street understands that’s a terribly bad bet financially and it will continue to be a bad bet as long as there’s policy uncertainty about what happens with global warming policy. Coal use is not going to disappear overnight. What’s going to happen is that the growth in coal use is going to stop and it’s going to start losing market share. That is not going to put the coal industry out of business, but it is going to mean fewer and fewer growth prospects for coal.
Steve Miller: But we’re seeing major utilities like American Electric Power, like Southern Company, rural electric cooperatives around the country who are still making and proceeding with their investments in clean coal technology and in new coal plants.
Monica Trauzzi: Can clean coal, CCS and coal to liquids save the industry?
Christine Tezak: Well, certainly clean coal is in the eye of the beholder. I don’t think to certain environmental organizations there is such a thing and I would say that there is definitely a constituency that believes that we really have missed an opportunity as a country to not more robustly pursue supercritical coal, which has much lower emission rates on conventional pollution like NOX and SO2, plus about 15 to 20 percent less carbon intensity.
Jeff Holmstead: I think people in the energy business would say, you know, when you achieve these very low emission rates because you have an ultra-supercritical boiler, so you minimize your CO2 emissions as much as possible, you have a scrubber, you have an FCR, you have a bag house or some combination of those controls, that that really is as clean as you can make coal today.
Christine Tezak: I think the biggest challenge for the coal sector is this perception that it’s a redeemably dirty.
Colleen Hanabusa: To me, if you call anything a clean coal it’s got to be something that has no negative adverse effects. It isn’t something that if you weigh a cost-benefit analysis on something that you say, well, it seems to me that the benefits may outweigh the costs, whatever that cost may be.
David Hawkins: We try very hard not to use the term clean coal, because it just doesn’t accurately describe any coal use anywhere in the world. There is no such thing as clean coal.
David Hawkins: Well, NRDC has been very active and proud to be active in fighting new coal plant proposals in the United States and we have worked for 40 years to clean up or shut down coal plants that are dirty, polluting coal plants in the United States. So the efforts to do one or the other, clean up or shut down, are far from symbolic. They are critical to delivering public health benefits to American people.
Christine Tezak: Even when we’ve brought substantially cleaner plants to market that are dramatically better than what we have in place, there’s a resistance to bringing a cleaner coal plant to market instead of a recognition that we’d be better off replacing an older plant.
Rep. Bill Johnson: We’ve got lots of coal in this country and one of the problems that we have is the administration’s reluctance to go after our own natural resources. I think we need to explore more coal liquefaction. If we can determine how to turn coal into refinery grade crude, we solve a lot of problems.
Sen. John Barrasso: We all want energy to be as clean as we can, as fast as we can. That’s why I’ve introduced some bipartisan legislation. There are advanced technologies. You know, Wyoming’s coal is low-sulfur coal, clean coal efforts to go with technology to go, you know, coal to gas, coal to liquid.
Richard Garrett: I’d have to challenge the senator on that–recently when he was asked, “What is clean coal?” he answered: “Wyoming coal” is clean coal. The fact is that coal is not clean–there are environmental challenges and disruptions all the way from the mine to the transmission line. While we are encouraged that Senator Barrasso is co-sponsoring legislation that would stimulate development of carbon capture and sequestration, we also see him working to roll back environmental protections that were signed into law by President Bush that were designed to reduce the military’s carbon footprint. So it seems like the Senator is taking one step forward and two steps back.
Steve Miller: We’re very interested in the legislation that’s being pushed by Senators Bingaman, Murkowski, Rockefeller, Barrasso on carbon capture and storage technologies and ways to advance that.
Jeff Holmstead: I don’t know anybody on the industry side who believes that renewables will be able to take up a big chunk of the slack for many, many years. So if we can get to seven, eight — I mean DOE has a very ambitious proposal that says we could get to 20 percent renewables. But that still leaves 80 percent that needs to be produced by something that’s more reliable like coal or gas or nuclear.
Richard Garrett: The president has said that as a nation we should strive to get 80 percent of our energy from clean sources by 2035. Secretary Chu has said those sources should include nuclear, renewables, natural gas, and even coal. While this sounds a lot like the “all-of-the-above” approach that others have advocated, there is one key difference. The president has said these sources must be clean—and so he is articulating a vision that doesn’t include business as usual for industries and resources that are damaging our environment. The president has committed some of our nation’s financial resources to advancing this goal and is trying to work with legislators to make it a reality. But one step forward and two steps back is not progress.
David Hawkins: Renewable energy is a tremendous opportunity and we can have renewable energy that is also firmed up with cleaner fuels like natural gas. And I think anyone who follows this issue realizes that a lot of existing coal plants are going to get replaced with natural gas plants and that will be a cleaner use of that electricity resource.
Steve Miller: We’re concerned as a coal centric organization about significant efforts to force or induce fuel switching to natural gas. Natural gas historically has been an extremely volatile fuel in terms of price and no one is certain right now whether the promise of shale gas will really prove to be one that can be relied on for any kind of significant fuel switching going forward.
Richard Garrett: Natural gas by many estimates is really not a lot cleaner than coal when the full life cycle of its extraction and use is calculated. In Wyoming, exploration for natural gas has created health risks that we never faced before, including potential contamination of groundwater from hydraulic fracturing. We’ve also seen hazardous levels of ozone as a result of gas field development. So while we recognize that natural gas has a role to play in our nation’s energy portfolio, we don’t see it as a magic bullet. In fact, if there is one (a magic bullet), it’s energy efficiency–research by McKinsey and Associates has suggested that the U.S. economy has the potential to reduce annual non-transportation energy consumption by 23 percent by 2020 which in turn eliminates over $1 trillion in waste. Not only that, but the reduction in energy use would also result in the abatement of 1.1 gigatons of greenhouse-gas emissions annually—the equivalent of taking the entire current U.S. fleet of passenger vehicles and light trucks off the roads.
Bill McCollum: Overall I think you’ll begin to see our electric generating mix shift a bit toward a lower percentage of coal, while it will still be significant, and a higher percentage of gas-fired generation, nuclear and some of these other sources.
Monica Trauzzi: The Tennessee Valley Authority, a federally owned power company, recently reached a settlement with U.S. EPA to shutter 18 of its poorest performing coal-fired power plants.
Rep. Bill Johnson: You know, 18 plants, those are a lot of plants. I can’t speak for TVA, but I can tell you that that’s not something that the coal industry is excited about.
Richard Garrett: Taking 18 of the dirtiest coal-fired power plants off-line is simply a recognition by the TVA that the economics of operating an out-of-date fleet built in the 1950s are no longer viable. These are many of the same plants that were exampled in the Harvard study that I mentioned earlier that pose real health risks to people living nearby to the tune of $27 billion annually. Not only that, but the plants were degrading air quality in Great Smoky Mountains National Park. In Wyoming, we’ve seen similar air quality challenges from energy development that have damaged visual resources in the Wyoming Range, the Bridger-Teton National Forest, and Grand Teton National Park. The TVA has committed to a new integrated resource plan that offers a strategic direction focusing on a diverse mix of electricity generation sources, including nuclear power, renewable energy, natural gas, and energy efficiency, as well as traditional coal and hydroelectric power.
Bill McCollum: We set out a vision for the next 10 years which includes keeping our rights affordable, our reliability high and being very responsible in the way that we generate and deliver our electricity and that we also are shifting our portfolio to a different mix of sources which will be cleaner and more appropriate for the future.
Rep. Joe Barton: TVA is just kind of accepting the reality that some of the older coal plants, they’re not very efficient, need to be shut down.
Monica Trauzzi: As coal plants shut down, what impact do the closures have on the U.S. economy?
Richard Garrett: The U.S. economy has always been the most robust, innovative, and resilient in the world. With the right mix of market forces and policy we will see new job creation, reductions in health costs, and improved energy security that will prepare us for an even better future. While coal has been reliable–and can prove to be so again with the right kinds of technologies–it shouldn’t be our only answer. We will thrive through energy diversification just as we do as a result of environmental diversity. The fact is that while the TVA is shuttering plants, they are also committing to a mix of new technologies and energy sources that will surely contribute to this kind of diversity. Why should we, as a nation, put all of our eggs in one basket?
Sen. John Barrasso: With coal being the most available, affordable, reliable and secure source of energy we have in our country, anything we can do to continue to use coal in a responsible way I think is going to be better for our economy long-term.
Rep. Joe Barton: I think that America has got the world’s greatest economy because we’ve had a free-market energy policy and a cornerstone of that policy has been the use of coal and it’s a strategic asset and an economic asset and I think one that can continue to be used in a way that benefits the economic prosperity for every American.
Bill McCollum: Coal prices have spiked. They’ve come back down and moderated a bit now, but foreign demand for coal is much higher than it used to be and that has put pressure on market prices. So we’ve seen roughly a doubling in some of the coal prices and there doesn’t appear to be a let up in the foreign demand for coal. So I think the economics of coal have shifted somewhat from the way they were traditionally viewed decades ago.
Jeff Holmstead: If all we do is succeed in increasing the energy costs here, we’re not going to do anything to deal with climate change because the Chinese and the Indians and the Indonesians and around the world, they have not only I think a political imperative, but a moral imperative to provide power for billions of people. And until we can-until someone can help them provide that power in a way that doesn’t involve the combustion of coal, people will continue to use coal all over the world, regardless of how many coal-fired power plants Sierra Clubs manages to shut down in the United States.
Sen. John Barrasso: For me coal is freedom.
Richard Garrett: Coal is not freedom. If we continue to rely on coal, in the ways that we have for the last 100 years or more, we will continue to create more health, environmental, and economic problems. That is not freedom. We need to make coal a resource that no longer forces us to conform or adapt to its problems and instead commit ourselves, as President Obama has envisioned, to making it one part (an important one) of a diverse, safe, and clean energy portfolio.