Coal industry criticizes Obama plan for new greenhouse gas regs

Coal industry groups were quick and critical in their June 25 comments on a new climate change policy unveiled that day by President Barack Obama.

Peabody Energy (NYSE: BTU), the nation’s largest coal producer, said in a June 25 statement that it at least likes the aid to clean coal technology proposed by Obama.

Peabody agrees with President Obama that greater use of clean coal is essential,” the coal producer stated. “We also support his proposals to increase deployment of higher-efficiency generation; expand research in carbon capture, use and storage technologies; and advance coal generation in poor nations.  We would go further and say that all nations need the clean, reliable, low-cost electricity that coal-fueled generation provides. Such elements are a key part of the Peabody Plan, and it is good to also see these in the President’s proposals. The Peabody Plan seeks to achieve universal energy access by 2050 in a way that puts people first and advances society’s important goals of energy security, economic growth and environmental solutions.”

Peabody added: “At the same time, any actions that would reduce coal-fueled generation harm Americans, who would feel the same pain at the plug that we all feel at the pump. The best economies in the world continue to turn to coal. Nations such as China and India are increasing coal use as hundreds of millions of people experience the dual benefits of electrification and urbanization. The U.S. is seeing a sharp rise in coal-fueled generation in 2013 as the most economic choice, with natural gas prices doubling from 2012 lows.”

The head of the Pennsylvania Coal Alliance (PCA) said June 25 that Obama needs some “major retooling” of his environmental strategy if he wants the United States to continue to be the world’s standard setter on clean energy solutions.

“In recent decades, the coal industry has made major strides in reducing pollution,” said John Pippy, CEO of the PCA. He noted that advances in technology have enabled new, coal-fueled power plants to be substantially more efficient, with the typical new plant producing 70% to 80% fewer conventional (non-CO2) emissions than the older plant it replaces.

Pippy said global coal usage trends will make it the world’s No. 1 energy source within the next three to four years.  He called the proposed Obama policy, which said would decimate coal usage, “shortsighted and destructive to the nation’s fragile economic recovery.” 

Pippy said a plan that applies only to the U.S. cannot constitute a solution to global greenhouse gas emissions and would amount to unilateral economic disarmament. He credited the President with recognizing the challenge by proposing an $8bn loan guarantee fund for “advanced fossil fuel energy,” but he cautioned that a real solution also will require a more reasonable standard aligned with the performance of the best currently available technology.

National Mining Association (NMA) President and CEO Hal Quinn, who represents the major U.S. coal producers, said about the Obama plan: “Americans are looking for jobs and economic security. Coal power plants generate more electricity and create and sustain more jobs than any other energy source. So policies that shut off coal energy damage the nation’s job and economic engine, while also raising costs to American consumers. New coal plants are best-in-class global leaders in generating efficient, clean, reliable and affordable electricity. Existing coal plants are being upgraded to be cleaner than ever before to supply reliable electricity that keeps our country growing and competitive. Our policies need to be aligned with our national interest so that coal continues to create jobs and keeps America competitive.”

Bill Raney, president of the West Virginia Coal Assn., said in a June 25 statement: “In today’s announcement, President Obama called America’s reliance on coal a ‘mistake,’ dismissing the accomplishments of generations of coal miners that have worked to make the United States the greatest country in the world. By announcing imminent restrictions on carbon emissions from power plants that exceed the capabilities of current technology, this administration will impose bureaucratic mandates with no regard for the people and communities of West Virginia that depend on coal and the inexpensive energy it creates for their very existence and survival. In his speech, President Obama dismissed critics of his policies as members of the ‘flat earth society.’ Make no mistake, this Administration’s new climate initiative will negatively impact West Virginia coal jobs, result in higher electric bills for consumers and businesses and lead to America’s economic disarmament via U.S. manufacturing jobs relocating to other nations.”

EEI isn’t nearly as critical as the coal industry

Edison Electric Institute (EEI) President Tom Kuhn, who represents utilities with coal-fired power plants, said the nation’s shareholder-owned electric companies will want to ensure that any new policies or regulations to curb carbon emissions from existing power plants “contain achievable compliance limits and deadlines, minimize costs to customers, and are consistent with the industry’s ongoing investments to transition to a cleaner generating fleet and enhanced electric grid. It is also critical that fuel diversity and support for clean energy technologies be maintained, not hindered.”

Kuhn emphasized that the nation’s electric companies continue to support the goals of the nation’s environmental laws and are working to ensure that they are fully met. Kuhn also stressed that the electric power industry has long understood the importance of addressing climate change and has been a leader in reducing criteria pollutants and greenhouse gas (GHG) emissions over the last two decades.

In 2012, U.S. power sector CO2 emissions were 15% below 2005 emission levels and were at their lowest levels since 1996, in large part due to more firing of cheap natural gas, which emits half the CO2 of coal. Emissions of SO2 and NOx have been cut by more than 75% since 1990, while electricity use grew by nearly 40% during this time. In addition, EPA’s new rule on mercury emissions will lead to a 90% reduction in emissions below 1990 levels.

The U.S. electric power industry today is faced with a range of critical environmental policy and regulatory issues that are impacting company strategic planning and decisionmaking, EEI noted. The electric generation fleet also is in the midst of a major transformation to a significantly cleaner fleet as a result of several factors. These include:

  • the closing of older coal plants;
  • the confluence of the Mercury and Air Toxics Standards (MATS) and other environmental regulations;
  • companies taking advantage of abundant supplies of low-cost, domestically produced natural gas to generate more electricity;
  • greater efficiency in electricity use;
  • slower economic growth;
  • the building of new nuclear power plants and increasing the capacity of existing ones; and
  • increased deployment of renewables.

“We look forward to working with the Administration as it further develops its climate plan and with other key stakeholders, including Congress and the states, which will play a critical role in helping to forge workable regulations,” Kuhn added.

Plan calls on EPA to write up rules for both new and existing power plants

The White House climate plan unveiled June 25 said that power plants are the largest concentrated source of emissions in the United States, together accounting for roughly one-third of all domestic greenhouse gas emissions. It notes that there is no federal rule to prevent power plants from releasing as much carbon pollution as they want, though EPA did unveil a proposed rule last year (that was never made final) that would cap CO2 emissions from new coal plants at the same level as new natural gas-fired plants.

Many states, local governments, and companies have taken steps to move to cleaner electricity sources. More than 35 states have renewable energy targets in place, and more than 25 have set energy efficiency targets, the plan noted.

President Obama is issuing a Presidential Memorandum directing the EPA to work expeditiously to complete carbon pollution standards for both new and existing power plants. This work will build on an earlier, successful effort to develop greenhouse gas and fuel economy standards for cars and trucks. In developing the standards, the President has asked the EPA to build on state leadership, provide flexibility, and take advantage of a wide range of energy sources and technologies.

In the coming weeks, the U.S. Department of Energy will issue a Federal Register notice announcing a draft of a solicitation that would make up to $8bn in (self-pay) loan guarantee authority available for a wide array of advanced fossil energy projects under its Section 1703 loan guarantee program. This solicitation is designed to support investments in innovative technologies that can cost-effectively meet financial and policy goals, including the avoidance, reduction, orsequestration of anthropogenic emissions of greenhouse gases. The proposed solicitation will cover a broad range of advanced fossil energy projects. DOE will take comment on the draft solicitation, with a plan to issue a final solicitation by the fall of 2013.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.