On December 19, the Obama Administration finalized the Stream Protection Rule (SPR), which puts new limits on coal mining near waterways, but conflicts with the Surface Mining Control and Reclamations Act, making the rule legally dubious. The SPR mandates states to require additional data gathering and monitoring at and around coal mine sites and imposes new financial assurance and reclamation requirements.[i] The rule would require companies to maintain a buffer zone that blocks coal mining within 100 feet of streams. The final rule will take effect on January 19, 2017–30 days after it is published in the Federal Register–unless Congress overturns it using the Congressional Review Act.
Despite the Department of the Interior arguing that the rule would cause job losses of only 300 or so in coal states, others predict as many as 78,000 coal mining jobs could be lost as a result of the Stream Protection Rule. States most affected by the new rule would be West Virginia, Ohio, Kentucky and Pennsylvania—states where coal miners are already suffering from mine closures and job losses.[ii]
The Office of Surface Mining Reclamation and Enforcement of the Department of the Interior estimates that the coal industry would incur annual compliance costs of $52 million above baseline costs that would be incurred in the absence of the rule– $45 million per year for surface coal mining operations and $7 million per year for underground mining. About 46 percent of the expected compliance costs reflect new regulatory requirements on coal mining operations in Appalachian states.[iii]
Obama’s War on Coal
The Stream Protection Rule is not the only rule that the Obama Administration has promulgated to harm the U.S. coal industry. In September, we discussed those rules and actions in a blog found here. They include the Clean Power Plan (CPP), the center piece of Obama’s Paris Agreement; the ozone rule; the Mercury and Air Toxics Standard (MATS); the Cross-State Air Pollution Rule (CSAPR); the moratorium on coal leasing; Coal Combustion Residuals (Coal Ash); the revocation of a coal mountain top mining permit; electrical conductivity guidance; regional haze; social cost of carbon; and the expansion of the definition of waters under the Clean Water Act.[iv]
And, not only were there the direct rules and actions against the coal industry, but the many subsidies afforded the renewable energy industry are designed to harm the finances of baseload power producers like coal as well as nuclear, such as the Production Tax Credit for wind power and the Investment Tax Credit for solar power and the American Recovery and Reinvestment Tax Act (ARRTA). The latter program offered renewable energy project developers cash payments in lieu of investment tax credits or production tax credits equivalent to 30 percent of the project’s total eligible cost basis in most cases.
How to Help the Coal Industry
Obviously, repealing many of these rules and regulations would help the coal industry from succumbing to further ruination. But some of these rules have already been fully implemented forcing many job losses, many coal plants into premature retirement, and many coal companies into bankruptcy. While plants have retired, new state-of-the art coal plants are not being built because the financing needed is not available to them. Rather, natural gas and renewable plants are being built in their stead as they are seen as producing fewer carbon dioxide emissions.
The trouble with investing entirely in wind, solar, and natural gas-fired power plants is that wind and solar are intermittent energy sources that only operate when the wind blows and the sun shines, leaving natural gas as the only reliable source of electricity generation. The North American Electric Reliability Corporation is warning that some regions of the country are already becoming too dependent on natural gas for electricity generation.[v] As great of a fuel as natural gas is, natural gas prices will rebound at some point as the demand for natural gas grows. The Energy Information Administration (EIA) predicts that natural gas prices in real terms will almost double by 2040—and be more than twice the price of coal.[vi]
Coal plants are necessary to secure our future electric power supply. Like China, we need to build clean coal-fired plants to ensure reliable electricity for our homes and businesses. China has 200 gigawatts of coal-fired capacity under construction and another 150 gigawatts in the permitting stage. It currently has over 900 gigawatts of coal-fired capacity–the equivalent of about 1,300 large coal-fired units.[vii] That compares to 272 gigawatts for the entire United States as about 40 gigawatts of U.S. coal-fired capacity have already been retired while President Obama has been in office.[viii]
China has policies to discourage some of this construction. But, because the policies contain exemptions for many provinces–for projects designed to export power from the west to the east and for combined heat and power projects–construction continues at a fast pace—one or two projects a week. The combination of low-cost financing and low coal prices that are half the level of five years ago make power projects attractive in China and provide employment for its population, helping the economy to grow.
More importantly, however, China is the world’s leading builder of more efficient, less polluting coal-fired power plants, having mastered the technology and driven down the cost. China is building coal plants that are more efficient using extremely hot steam and turning coal into gas. With greater efficiency, a power plant burns less coal and emits less carbon dioxide for each unit of electricity it generates.[ix] Over the next two years, China will spend tens of billions of dollars on these projects despite lower power demand. Last year, its investment in thermal power projects increased 20 percent.
Conclusion
President-Elect Trump promised to help the U.S. coal industry that faces falling demand and lost jobs under President Obama’s War on Coal. He can start by quickly overturning the regulations against coal that the Obama Administration put into effect that have yet to be fully implemented. But, he needs to do more. He needs to make coal a viable commodity for future generating plants by following China’s lead. The United States has more coal resources than any other country in the world that can supply power for centuries to come. It should be put to use.
[i] E&E News, Obama admin releases Stream Protection Rule, December 19, 2016, http://www.eenews.net/stories/1060047395
[ii] Kingsport Times News, Griffith vows to overturn Stream Protection Rule, says it would kill jobs, December 19, 2016, http://www.timesnews.net/Politics/2016/12/19/Griffith-vows-to-overturn-new-rule-preventing-coal-mining-debris-from-entering-streams-says-it-would-kill-jobs.html
[iii] Congressional Research Service, The Office of Surface Mining’s Proposed Stream Protection Rule: An Overview, February 1, 2016, http://nationalaglawcenter.org/wp-content/uploads/assets/crs/R44150.pdf
[iv] Institute for Energy Research, The Obama Administration Targets Coal Every Which Way It Can, September 19, 2016, https://www.instituteforenergyresearch.org/analysis/obama-administration-targets-coal-every-way-can/
[v] NERC, 2016 Long-Term Reliability Assessment, December 2016, http://www.nerc.com/pa/RAPA/ra/Reliability%20Assessments%20DL/2016%20Long-Term%20Reliability%20Assessment.pdf
[vi] Energy Information Administration, Annual Energy Outlook 2016, http://www.eia.gov/outlooks/aeo/data/browser/#/?id=14-AEO2016&cases=ref2016~ref_no_cpp&sourcekey=0
[vii] Greenpeace, China keeps building coal plants despite new overcapacity policy, July 13, 2016, http://energydesk.greenpeace.org/2016/07/13/china-keeps-building-coal-plants-despite-new-overcapacity-policy/
[viii] Energy Information Administration, Electric Power Monthly, Table 6.2C, http://www.eia.gov/electricity/monthly/pdf/epm.pdf
[ix] New York Times, China Outpaces U.S. in Cleaner Coal-Fired Plants, May 10, 2009, http://www.nytimes.com/2009/05/11/world/asia/11coal.html?_r=1&
