by Ted Nace
By 2030, we have to stop
emitting greenhouse gases from coal. That conclusion is most famously
associated with NASA’s climate chief James Hansen, but Hansen is not alone. In
a recent paper, nine other climate scientists—David Beerling, Robert Berner,
Pushker Kharecha, Valerie Masson-Delmotte, Mark Paganini, Maureen Raymo, Dana
Royer, Makiko Sato, and James Zachos—joined Hansen in identifying a 2030
phase-out as the “sine qua non” for avoiding dangerous climate change. The
scientists concluded:
Decision-makers
do not appreciate the gravity of the situation … Continued growth of greenhouse
gas emissions, for just another decade, practically eliminates the possibility
of near-term return of atmospheric composition beneath the tipping level for
catastrophic effects. The most difficult task, phase-out over the next 20-25
years of coal use that does not capture CO2, is Herculean, yet feasible when
compared with the efforts that went into World War II. The stakes, for all life
on the planet, surpass those of any previous crisis.
So what’s the best way to
accomplish the phase-out of coal? That question, with its use of the singular
“way,” may be wrongly phrased. One
mistake that activists tend to make is “marrying” a particular solution to a
problem. Not only does this result in unnecessary infighting, as factions line
up behind their favorite options, it also ignores the reality that changing the
world is always a messy endeavor, and tactics often work better in combination
than in isolation.
In researching my book Climate
Hope: On the Front Lines of the Fight Against Coal, I investigated why investor Warren Buffett decided to
cancel six new coal plants that his company PacifiCorp was planning to build as
recently as 2007. The answer turned out to be surprisingly complicated,
involving no less than 10 different causal factors working in combination,
including direct action protests, petition drives, renewable portfolio
standards, rising construction costs, competition from wind power, lawsuits,
the prospect of climate legislation, and more.
Across the country, the
Buffett story has been repeated again and again, as underdog grassroots
activists in state after state have taken on and defeated Big Coal and King
Kilowatt. As of late February, activists had derailed 97 of the 151 new plants that were in the pipeline in May 2007. Since 2001, according to the Sierra
Club, 126 coal plants have been stopped. In 2009, not a single new coal plant
broke ground. All this was accomplished even though the U.S. still lacks any
sort of comprehensive climate policy. Rather than one overarching tactic or
policy, the rush to build new coal plants was stopped by a broad, feisty
movement that inflicted a “death of a thousand cuts.”
Taking on the existing coal fleet
Now the movement against coal
is shifting its focus from blocking new plants to the second and harder part of
the task: phasing out the fleet of existing coal plants. In the Pacific
Northwest, the Sierra Club and others have targeted TransAlta’s Centralia plant. In the Southwest, Natural Capitalism Solutions this week released a
major economic study showing the economic benefits of shutting down the Navajo
Generating Station. Across the country, utilities including Xcel, Portland
General Electric, Red Hawk Energy, Georgia Power, Progress Energy, Public
Service Company of New Hampshire, DTE Energy, FirstEnergy, NRG Energy, and
Exelon have recently announced coal plant retirements or conversions, and TVA
may soon join the list. The 2030 deadline is a daunting challenge but not an
unrealistic one, since the coal fleet is the most antiquated part of America’s
energy infrastructure and alternatives abound. The median plant was built in
1966, making it older than most activists. Scores of plants pre-date the Korean
War. Almost 90 percent of existing coal-fired generating capacity dates from before
1985, which means that if we simply instituted a policy of retiring coal plants
at age 40, we’d be 90 percent of the way to the zero-coal goal by 2025.
On the CoalSwarm wiki,
traffic stats shows that climate change activists are becoming more and more
familiar with the details of the coal fleet. Of the 3,200 pages on the site,
the most frequently visited is “Existing U.S. Coal Plants,” which receives
hundreds of page views every day and links to individual pages on 679 separate
coal plants (1,445 coal-fired generators), including plants located on at least
65 college campuses. Each wiki page contains basic data, links to mines and
waste sites, and Google satellite imagery of a plant and its surrounding area.
At least 126 coal plants are located in the midst of residential areas (i.e.
with more than 10,000 people in a 3-mile radius), directly contradicting the image
of coal plants operating in isolated rural locations. These plants tend to be
of older vintage, and only 32 of them have sulfur scrubbers. The per capita
income in these high-impact communities is 14 percent below the national average; 44 percent
of the residents are persons of color. Apart from the climate benefits, phasing
out these plants will have major health benefits for 6.1 million people who
live within three miles of one of the plants, as well as the tens of millions
of other people affected by coal emissions.
In a groundbreaking 2004
study, the Clean Air Task Force put the annual health toll from power plant
particulates at 23,600 premature deaths (14 years lost per fatality), 38,200
nonfatal heart attacks, and 554,000 asthma attacks. That’s nearly 35 premature
deaths for each plant, a heavy price to pay for the 54 jobs provided by the
typical facility. It’s no wonder that studies of the “external costs” of
coal-fired power (i.e. the burden borne by society) invariably produce
startling results. An October report released by the Natural Research Council
placed the annual costs due to three types of pollutants from coal (not
including mercury emissions or climate change impacts) at $62 billion annually,
or about 3.2 cents per kilowatt hour generated by coal.
Throughout the 1990s, the
size of the coal fleet remained fairly stagnant at about 330 GW of capacity
(nameplate), with few plants built and few retired. During the past decade,
that stagnation continued, with retirements roughly equaling new plant construction.
From 2000 through 2009, about 8 GW of new coal plant capacity came online.
Meanwhile, from 2000 through 2007, 132 coal-fired generating units were retired
or converted to other fuels. Most of these were small, aging plants. The total
amount of capacity retired or converted to other fuels from 2000 to 2007 was
about 7 GW of capacity.
In its most recent survey,
the Energy Information Agency lists 54 generating units totaling about 4 GW of
capacity as scheduled for retirement or conversion in the period 2008 to 2014.
News sources report an additional 27 units totaling about 6 GW as scheduled or
under study for retirement or conversion to other fuels, mainly biomass and
natural gas. New additions are expected to exceed retirements and conversions,
with about 17 GW of new coal-fired generation capacity under construction, near
construction, or permitted, according to the latest NETL report.
To summarize: during the
entire period from 2000 to 2014, about 17 GW of capacity is expected to be
removed from the coal fleet and 25 GW of capacity is expected to be added, for
a net increase of 8 GW. While that may sound sizeable, it amounts to only a 2
to 3 percent increase in coal capacity during the entire 15-year period. Overall, the
fleet continues to age, and by 2016 over half the coal plants in the U.S. will
be more than 50 years old.
Coal’s share of the overall
electricity mix has been on the decline since 1987, when it hit an all-time
high of 57 percent. In 2004, coal’s share dropped below 50 percent for the first time in four
decades. In the most recently reported 12-month period (December 2008 –
November 2009), coal’s share in U.S. electricity generation dropped to 45 percent. The
decline in coal is mostly due to an increase in the share of electricity
generated by natural gas, especially in the Southeast, where coal prices are
relatively high and natural gas prices are relatively low. Going forward the 35
GW in new wind power capacity that has come online since 2000 (including over
18 GW in 2008 and 2009 alone) will further cut into coal’s share of the
electricity mix.
Scenarios such as Google’s
Clean Energy 2030 plan, the Union of Concerned Scientists’ Climate 2030 study,
and Scientific American’s Solar Grand Plan show that it is feasible to replace
coal with cleaner alternatives by 2030. What’s missing from such studies is the
specific policies to drive the transition. Merely having sufficient
alternatives isn’t enough. The reason is simple: amortized coal plants are
cheap to run, and generally they can stay in operation almost indefinitely.
It’s a fantasy to think that power companies will shut down existing coal
plants and replace them with alternatives, unless they are compelled to do so
or unless the current economic advantages of legacy plants change radically.
(Note: For an example of innovative thinking on making the economics work, see
the newly released report “Coal Plants in Transition: An Economic Case Study” [PDF].)
Frontal assault or death
of a thousand cuts?
So how do you get rid of a
bunch of old coal plants? For that matter, how do you get rid of any chunk of
old infrastructure that is standing in the way of progress? If it weren’t for
the vested interests at stake, the answer would be simple: a scheduled
phase-out administered by federal regulators. Legislatively, this could
probably be accomplished with a simple five-page bill that authorized the EPA
to create and implement a phase-out schedule for the legacy coal fleet. The
phase-out of CFCs and related compounds provides an analog. After scientists
discovered the Antarctic ozone hole in 1985, 24 countries agreed on the
Montreal Protocol in 1987 to phase out their use of CFCs. When subsequent
research showed the situation to be worse than previously thought, the pace of
the phase-out was accelerated. In the United States, production of CFCs and
most other ozone-harming compounds was ended on Jan. 1, 1996.
Note what wasn’t done. Though some excise taxes were imposed on
ozone-depleting compounds, market signals were not relied on. With the planet
itself at stake, policy makers saw the need for a more decisive approach: a
scheduled phase-out.
Outside the world of
environmental policy, an example of a staged phase-out of key infrastructure
can be found in the Base Realignment and Closure Program (BRAC), which
successfully shuttered over 350 military installations between 1989 and
1995. BRAC created mechanisms for
depoliticizing the process, for aiding the economies of impacted communities,
and for managing workforce transitions.
Recently, T. Boone Pickens and
Ted Turner proposed a “cash for clunkers” plan that would pay utilities, plant
by plant, for shutting down old coal facilities, starting with the “oldest,
least efficient and most polluting.” The beauty of the plan is that it would
aim directly at the legacy fleet and, if the “cash” side of the proposition
were attractive enough, might elicit the willing participation of utilities.
Moreover, given that the existing coal fleet is responsible for over 34 percent of
U.S. carbon dioxide emissions, a “cash for clunkers” program could provide a
straightforward way for the U.S. to meet the promises made at Copenhagen.
Is such a sensible solution
likely? Realistically, a coordinated phase-out of coal is not in the cards, at
least within the next few years. Instead, what’s likely to happen is a “death
of a thousand cuts” attack on the coal fleet via a swarm of activist pressure
points and institutional policy measures. It’s a messy solution, but what makes
it promising is the fact that most of the coal fleet is already well into middle
age. Like the rusting car that falls apart one fender, one muffler, one tail
light at a time, the idea is to make each coal clunker more trouble than it’s
worth, so that the operator eventually throws in the towel.
Nine “knives” that could pare down the coal fleet
Here, then, is a list of
measures—some existing, some proposed—that could play a role in whittling down
the coal fleet. None of these measures, considered in isolation, will have an
overwhelming impact; what’s important is their ability to work in concert
together.
Knife #1: Efficiency
measures. The numbers are staggering:
about 40 percent of U.S. electricity consumption is pure waste that could be
eliminated via tighter building and appliance standards, sensible retrofits,
etc. Since 45 percent of electricity generation comes from coal, efficiency alone
could largely do the job of displacing the coal fleet. In reality, it won’t be
that simple, because the complicated logic of utility “dispatch order” may
favor displacing natural gas instead. Nevertheless, weakening demand is the
necessary condition that makes other efforts to diminish the coal fleet
possible, and it’s far and away the cheapest.
Knife #2: Direct actions
and other protests. Protest makes
people uncomfortable. Mainstream environmentalists often fret that it alienates
“regular people.” But the fact of the matter, as documented by sociologist Jon
Agnone, is that protest produces results, though nobody knows exactly how or
why. Think of it as “movement caffeine”: a way of defining a moral edge, of
underlining the urgency of what’s at stake. Taken in isolation, protests
against power plants will not cause those power plants to be shut down. But
urgent, repeated, dramatic protest aimed at utilities, mines, railroads, ports,
banks, regulators, elected officials, and the media are indeed essential within
the overall mix of tactics. Note too that a mere two dozen executives control
70 percent of the coal-fired generating capacity in the U.S. So far, these “old white
guys” haven’t been the direct target of much campaigning or pressure. That
could change in the future.
Knife #3: Renewable
portfolio standards. At least 33
states accounting for 73 percent of U.S. electrical generating capacity have renewable
portfolio standards, with goals ranging from 8 percent by 2020 in Pennsylvania to 40 percent
by 2017 in Maine. Including the states that have no standards, the weighted
average of all these programs amounts to a requirement that 13 percent of all
generating capacity be from renewable sources at by around 2020. Assuming that
efficiency improvements keep overall demand growth to a minimum, renewable
portfolio standards currently in effect will result in as much as 72 GW of
renewable capacity and will undoubtedly serve to inhibit the building of new
coal capacity. In fact, some companies (e.g. PacifiCorp, Tampa Electric,
Sunflower Electric) have already cited the effect of renewable portfolio
standards in canceling new coal plants. As with efficiency improvements, the
effect on the existing coal fleet depends to some extent on the relative fuel
costs of natural gas versus coal, which have experienced rapid shifts in both
directions over the past two years. Significantly, renewable portfolio
standards are backed by increasingly effective lobbying groups like the RES
Alliance for Jobs, which includes wind, biofuels, and geothermal companies. A
recent study for the RES Alliance by Navigant Consulting looked at the effect
of a nationwide renewable portfolio standard of 25 percent in the year 2025. According
to the study, a 25 percent RPS would displace 2,000 GWh of electricity, a figure equal
to the entire yearly output of the current coal fleet. There are serious
problems with renewable portfolio standards: biofuels plants, for example, are
often worse polluters than coal plants. Nevertheless, state and federal
renewable portfolio standards may be the most effective single item in the
toolkit for phasing out coal.
Knife #4: Criteria
pollutant regulation. As regulation
under the Clean Air Act of “criteria pollutants” such as sulfur dioxide,
nitrous oxides, ozone, mercury, and particulates continues to tighten, utility
planners and state regulators have to choose between authorizing hundreds of
millions of dollars in pollution control retrofits, or shutting down aging
plants and investing in clean technologies. For example, in 2008 the EPA
released a list of scrubber retrofits expected at 56 coal-fired generating
units in 2010 and 20 coal-fired generating units in 2011. Since scrubbers
actually increase carbon dioxide emissions, many climate activists are regrouping
around a position of “don’t retrofit: shut it down.” So far, that position has
not been able to slow the momentum of retrofits. Last year’s showdown in New
Hampshire over the future of the 459 MW Merrimack Station highlighted the
charged politics of the issue. When the price tag for a scrubber retrofit for
the plant jumped from $250 million to $457 million, the ad hoc business
coalition 21st Century New Hampshire, along with groups such as the
Sierra Club, pressed the state to consider shutting the station down rather
than undertaking the retrofit. That effort was defeated by a combination of
power company and union lobbying; consequently, Merrimack Station, which
consists of a 42-year-old unit and a 50-year-old unit, is now likely to run for
several more decades. Meanwhile, in a similar fight in Oregon, a plan to
retrofit the 601 MW Boardman Plant was defeated in favor of a smaller retrofit
and a shut-down by 2020, though activists continue to push for an earlier date.
Look for the retrofits-versus-shutdown issue to be a major preoccupation for
groups like the Sierra Club during the coming decade. Since less than a third
of coal-fired generating capacity (101 GW out of 329 GW in 2005) currently is
equipped with sulfur scrubbers, even a partial victory for the “don’t retrofit:
shut it down” side of the issue could carve a big chunk out of the existing
coal fleet.
Knife #5: Coal waste
regulation. The problem of
unregulated coal waste at over 1,300 surface impoundments entered the national
consciousness in the the wake of the Tennessee mega-spill of December 2008. In
January 2009, an AP study found that 156 coal-fired power plants store ash in
surface ponds similar to one that ruptured at Kingston Fossil Plant. Currently,
groups like Earthjustice are pushing hard for coal waste to be designated a
hazardous pollutant. On Dec. 10, 2009, Ken Ladwig of the Electric Power
Research Institute told Congress that tighter regulation of coal combustion
by-products could result in the closure of 190 to 411 older coal-fired
generating units totaling 40 GW to 97 GW. Even if Ladwig is grandstanding,
there’s no question that fixing defective waste disposal systems at aging coal
plants will be expensive. When added to other costs such as scrubber retrofits
(see above) and rising coal costs (see below), the waste issue—and the
liability risks that go along with it—- may be one headache too many for a lot of
harried utility executives.
Knife #6: Holding industry
to its “clean coal” promises. Rather
than getting rid of coal plants, let’s simply retrofit plants for carbon
capture and storage (CCS)—that’s the message that groups like American
Coalition for Clean Coal Electricity have spent tens of millions of dollars
selling. So why not force utilities to live up to the rhetoric? One approach to
turning clean coal rhetoric into reality has been proposed by soon-to-depart
Sierra Club chief Carl Pope, who proposes that new plants meet strict carbon
emissions standards and that existing coal plants be required to meet the same
emissions standards once they reach the age of 50—or else be retired. Do regulators
have the nerve to require such a standard? In three states, Washington, Maine,
and California, the standard already exists, prohibiting utilities from
entering into electricity contracts for power from coal plants whose emissions
exceed 1,100 pounds of carbon dioxide per megawatt hour, a level that cannot be
met by coal plants that lack carbon capture. Note that California’s carbon
standards apply to existing plants when they receive capital upgrades, and
Washington’s standard applies to both new and renewed contracts for
electricity. Under the Bush administration, the EPA in July 2008 outlined an
approach that would require merely marginal improvements at existing
plants, such as enhancements to boiler efficiency. But what if the EPA
developed a more serious standard? For example, if EPA were to apply the 1,100-pounds-of-CO2-per-megawatt-hour standard to existing plants, what
would the effect be on the coal fleet? The answer is that most plants would
have to be phased out. Although researchers continue to investigate the CCS
retrofit option, there are some practical obstacles that stand in the way of
retrofitting most existing coal plants. First, because carbon capture requires
large amounts of energy, it imposes a heavy parasitic power burden on an
existing plant. To be able to shoulder this burden and still have a reasonable
amount of power left over, eligible plants need to be those that employ the
more efficient supercritical technology rather than the less efficient
subcritical technology. Currently, about 80 GW of the coal fleet employs
supercritical technology. A second criterion is that candidate plants be no
older than 20 or 25 years, so that enough lifetime remains for expensive CCS
retrofits to be worthwhile. That’s a serious obstacle, since most supercritical
plants in the United States were built between 1965 and 1980 and therefore are
already 30 to 45 years old. Only a handful of existing plants meet both criteria: supercritical technology and recent
vintage. As if those two obstacles weren’t enough, there are others, including
availability of water, sufficient vacant space to build the CCS facilities, and
proximity to geological formations suitable for carbon sequestration. The
upshot is that any CCS retrofits that may be mandated (e.g. by greenhouse gas
regulations) could not be economically undertaken by utilities. In effect,
holding utilities to the promise of “clean coal” amounts to a de facto shutdown
requirement, at least for the vast majority of existing plants.
Knife #7: Squeezing coal
supplies. In 2007, the National
Research Council released a report challenging the common assertion that the
United States has a 250-year supply of coal. The NRC study suggested that 100
years was a more reasonable estimate. Despite the downgrade, supplies of coal
appear to be adequate on a general basis. Nevertheless, in some regions,
especially the Southeast, coal supplies may become a factor. Also, close
examination of Wyoming’s Power River Basin by the U.S. Geological Survey
suggests that future coal supplies from that key region, which accounts for
about 40 percent of U.S. production, are more constrained than commonly assumed.
Meanwhile, the EIA reports that production in both the Interior and Appalachian
regions is declining. As resistance to mountaintop-removal mining practices
continues to intensify, that decline will only steepen. By themselves, coal
supply issues are unlikely to shutter any existing plants; however, higher coal
prices will augment the effectiveness of other shut-down measures, especially
if they alter the “dispatch order” such that gas-fired generation moves ahead
of coal-fired generation. In fact, a recent report by the EIA concludes that rising coal prices and falling natural gas prices
have already caused a shift in generation patterns in the South and to a lesser
extent along the South Atlantic states.
Knife
#8: Carbon taxes. Carbon taxes are
likely to be a much more effective measure for stopping new coal plants than
for phasing out existing ones. Since new coal plants are expensive, even a
modest tax on carbon dioxide would serve to tip the balance toward competing
generation options such as wind. But for existing plants, a study for the
American Public Power Association shows that carbon taxes of less than about $50 per
ton of carbon dioxide won’t do the trick. Under $50 per ton, it will still be
more economical for utilities to simply pay the tax and continue running
existing coal plants than to dispatch sequestering-coal or natural-gas units. It’s not until the tax reaches $80
per ton that production from existing
coal plants finally takes a nose dive, falling by 85 percent in 2030. Still,
that doesn’t mean carbon taxes are meaningless in tackling the legacy coal
fleet. Applying the principle that combinations of measures may work where
individual measures fail, a smaller carbon tax could combine with other factors
like expensive scrubber retrofits and expensive coal waste reengineering to
drive more plants into the “not worth the hassle” column.
Knife #9: Cap-and-trade,
cap-and-dividend. Even before the
legislation was weakened in the summer of 2009, an EPA analysis of the
Waxman-Markey climate bill (ACES) showed that the legislation would have only a
minimal effect on the legacy coal fleet. According to the analysis, passage of
Waxman-Markey would cause 22 GW of the existing coal fleet to be retired
by 2015 (in addition to 5 GW predicted to be retired in the absence of the
legislation). From 2015 through 2025, Waxman-Markey would force no further
retirements. Waxman-Markey would also block EPA from regulating greenhouse
gases, removing a potentially useful tool for closing coal plants. Another
federal cap-and-trade bill, the Cantwell/Collins CLEAR Act, has been analyzed
by World Resources Institute, but the analysis failed to provide any specific
conclusions about the effect of the bill on the existing coal fleet. As for the
three regional cap-and-trade programs currently under development (the
Northeast’s RGGI, the Midwest’s MGGA, and the West’s WCI), only the RGGI has a
track record of fees for carbon dioxide. At the current level of about $2 per
ton, those fees are not sizeable enough to result in the closure of legacy coal
plants. As with carbon taxes, cap-and-trade laws could tip the economics away
from coal and might prove useful in combination with other measures. But that
principle only applies if the cap-and-trade regulation does not preempt other
measures—e.g. the preemption of EPA greenhouse gas regulation by ACES.
Conclusion
When added together, are the
measures outlined above sufficient to phase out coal? Not yet. But the process
is just beginning. As Bill Gates once observed, “We always overestimate the
change that will occur in the next two years and underestimate the change that
will occur in the next ten.” The anti-coal movement is still gaining strength,
and it has an important ally in the renewables industry. Increasingly these
companies, along with the tens of thousands of people they employ, will recognize that
40- and 50-year-old coal plants are blocking their growth, and they’ll add their
weight to the pressure to retire more plants.
Assemble any group of
anti-coal activists, and you’ll soon hear more and more ideas for ways to shut
down dirty old coal plants. An important principle to guide this discussion is
that in a messy war of attrition, a host of small measures can add up to
victory. As Gandhi said, “Whatever you do will be insignificant, but it’s very
important that you do it.”
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