Despite campaign rhetoric, coal country readies for low-carbon future

When the campaign trail runs through coal country, the refrain is usually the same: Proposed coal-killing environmental rules must be stopped. But in coal-dependent states from Colorado to Georgia, regulators are quietly preparing for a low-carbon future.

Georgia, for example, is retiring a quarter of its coal plants, replacing them with inexpensive natural gas and some utility-scale solar plants. Wyoming last week began commercial operation of three natural gas-fired power plants to replace three coal-fired plants. Kentucky says it may already be more than halfway toward achieving its emissions-reduction targets. Colorado says that it is also pretty far along in complying with the Environmental Protection Agency’s Clean Power Plan, although some of its municipal utilities and rural electric cooperatives will have a more difficult time.

“One of the wisest things that EPA [Environmental Protection Agency] did was give time to the states so that they could comply,” says Colorado Public Utilities Commission Chairman Joshua Epel in an interview. “It gives regulators and others quite an appropriate planning horizon.... If EPA continues to provide flexibility, as it has been doing, Colorado as a whole will be in very good shape.”

The biggest resistance is coming from West Virginia officials. The state’s attorney general, joined by other coal producing states, is mounting the central legal challenge to the Clean Power Plan. It says that EPA does not have the authority to regulate emissions “beyond the fence” – or the designated boundaries – of a specific power plant. Thus, the whole notion that different industries can swap carbon credits among themselves and especially across state lines – a solution the federal plan envisions – just won’t fly, the suits says.

That’s easily countered, say EPA’s friends. The cap-and-trade program set up as part of the Clean Air Act of 1990 to trim sulfur dioxide emissions has survived  legal challenges.

Coal-country states like West Virginia are fighting so hard against the Clean Power Plan because in addition to relying on the carbon-rich fuel, their economies depend on mining it. And coal does not look to have much of a future under the federal plan.

“It is very unlikely that this rule will bring about much carbon capture and storage” that could ultimately be coal’s lifeline, says Rob Barnett, energy analyst with Bloomberg Government, in an interview. “It is increasingly difficult to operate coal fired power plants in the United States.”

While EPA opponents call this a war on coal, it might be more accurately described as a casualty of math. The Clean Power Plan calls for reductions of 30 percent by 2030. And because the burning of coal to make electricity is responsible for a third of all such emissions, it is the fattest target. States need to submit their blueprints by 2016 as to how they intend to accomplish that reduction.

They have a good deal of flexibility, because the proposal sets forth a series of “building blocks” that would allow the states to cobble together a solution. Utilities could swap out their oldest and dirtiest coal facilities for those that run on natural gas. (Coal plants with more modern equipment, such as scrubbers that deal with sulfur dioxide and nitrogen oxide, will survive.) They could also install energy efficiency technologies, as well as enter into cap-and-trade programs (West Virginia's lawsuit notwithstanding), such as the ones they have in California and among the Northeastern states.

The Clean Power Plan is now out for comment and a final rule is expected out in June 2015. No doubt it will get litigated. And the states themselves, by putting together their plans, will further shape the implementation of the rules.

“The whole goal-setting exercise represents something that can and likely will change from what has been proposed when EPA finalizes a rule,” says Tom Clark, executive assistant to the West Virginia Department of Environmental Protection, in an interview. “The state of West Virginia has endured and evolved for over 150 years and we are certain it will continue to do so, despite whatever the outcome of EPA’s regulatory initiative may be.”

Economics is a wild card. Many states have been replacing coal plants with natural gas because it's cheaper. If as expected natural gas prices remain comparable to coal for the foreseeable future, the more ingrained the regulations will become and the smaller King Coal’s role in the US energy market will become, even in coal country.