The Biden administration is preparing for a spring offensive against coal plant pollution.
Over the next few months, EPA is expected to release six new rules that take aim at everything from carbon to coal ash, and the regulatory blitz is expected to trigger a string of new coal retirements as utilities eye the cost of keeping the black stuff on their books.
Even so, the upcoming changes won’t push U.S. coal into extinction — a fact that could make President Joe Biden’s 2030 climate goals harder to meet. U.S. coal power has proven exceptionally hard to kill, in spite of market conditions and environmental regulations that have stripped it of its dominance in 15 short years.
In 2007, coal was the source of half the electrons on the U.S. power grid. The U.S. Energy Information Administration said last week that coal accounted for 20 percent of U.S. electricity generation in 2022, lagging not only gas but renewables, when taken together. This year nuclear power is expected to overtake coal as well, as it drops into a dismal fourth place.
But most projections, including from EIA, see coal occupying a sliver of the market through the 2030s and beyond.
“Coal has been on its way out for the last decade or two,” said Brian Murray, interim director of the Nicholas Institute for Energy, Environment and Sustainability at Duke University. “And I don’t see that reversing. I just don’t know that I see it going to zero as quickly as seven years from now.”
Coal’s resilience could hinder Biden’s climate agenda. He has pledged that the U.S. power sector will shed 80 percent of its emissions by 2030 compared with 2005 levels and reach net zero five years later. It’s an ambitious target that underpins his broader commitment to address climate change — which he called an “existential threat” in last week’s State of the Union address.
But the power goal leaves only a brief window of time in which fossil fuels can play any role in the power grid, at least without carbon capture technology. And most analyses — such as this research from the University of California, Berkeley — reserve all of that space for gas. Coal’s survival beyond 2030 is not consistent with Biden’s emissions goals.
Failure would amount to another broken promise from the United States on global warming. The United Nations has called on rich nations to do away with unabated coal use this decade to keep the Paris Agreement’s temperature goals in play and give less-wealthy countries time to act.
And the United States has promised to deliver. U.S. climate envoy John Kerry declared at climate talks in Glasgow in 2021 that “by 2030 in the United States, we won’t have coal.”
The State Department declined to say what that projection was based on.
“[Former] Secretary Kerry fully supports the Biden-Harris Administration’s goal of a carbon pollution free power sector by 2035,” a State Department spokesperson told E&E News in an email.
But the United States almost certainly will have coal in 2030. Experts expect that challenges associated with bringing new power sources online will help keep some coal plants running, despite cost and climate considerations.
Market forces turn against coal
Coal’s fortunes took a turn for the worse around 2007, when the advent of hydraulic fracturing flooded the U.S. market with cheap natural gas. New coal plants were cancelled; existing ones were converted to gas or retired.
The cost of wind and solar power has dropped precipitously too over the past decade as industries matured and climate policies took effect. Prospects of a carbon-constrained future became a drag on coal investments and financing.
The last large new U.S. coal-fired power plant — Texas’ Sandy Creek Energy Station — came online a decade ago. EIA shows no others in the pipeline.
Market forces appear to be turning against existing coal operations as well.
The research firm Energy Innovation released a report last month that showed — with one exception — that it would be cheaper to shutter all 210 coal plants in the lower 48 states and replace them with new wind and solar in the same region, or even in the same town.
The single exception is Dry Fork Power Station in Wyoming, which came online in 2011 and offers a modest advantage.
As one explanation for the coal-to-renewable calculus, the Energy Innovation report pointed to the substantial incentives for wind, solar, batteries and new-builds in coal communities that were enacted last year as part of a $369 billion climate spending package known as the Inflation Reduction Act.
“New federal tax credits in the IRA make the economic case for replacing coal with clean energy unequivocal,” the report states.
Michael O’Boyle, director of electricity at Energy Innovation and one of the report’s authors, said the report compares the “going-forward” cost of old coal to the “all-in” cost of new renewables.
For coal, that means the likely cost to operate and maintain a given unit.
For renewables, that means the total capital cost of building new wind or solar near the retiring plant on a site that the National Renewable Energy Laboratory has identified as having potential. Costs include financing, operations, maintenance and transmission lines linking the new project to the nearest substation.
EPA regulation plays no role in the analysis — something O’Boyle said made its findings “conservative.” Upgrades that utilities have already made to their fleet — and which regulators may have approved and ratepayers may be paying off — are dismissed as sunk costs.
“We assume that that does not bear on the question of whether it makes sense to shut down the coal plant economically,” O’Boyle said.
EPA’s coming onslaught of new rules isn’t considered either — though it’s likely to add to coal’s woes.
EPA is expected to advance six rules this spring and summer that could levy new costs on coal-fired units. These include two actions teeing up tougher rules for mercury and air toxics, a final rule for pollution that crosses state lines, a final rule for coal plant waste that gets into groundwater and a proposal for legacy combustion residuals. The two power plant carbon rules for new and existing units are set to be proposed in April, according to the administration’s most recent regulatory agenda.
That said, O’Boyle noted that barriers to the speedy ramp-up of renewables aren’t part of the analysis, either — such as the costs and pitfalls of adding new projects to the power grid. Interconnection bottlenecks have grown in recent years, and they’ve had the effect of sidelining renewable power and keeping coal in play, he said.
“You can’t tear down the old things until you build the new,” he said.
‘It all comes back to economics’
EIA’s Annual Energy Outlook for 2022 was published before the Inflation Reduction Act passed, but it still shows coal’s share of the U.S. power grid dwindling to less than 10 percent in 2030 — though some coal will linger for two decades beyond that.
The agency’s 2023 outlook will factor in the climate bill. But Murray said the bigger story for coal retirements is likely to be EPA regulation.
“The IRA is replacing future gas plant expansion with more wind and more solar, and not necessarily quickening the pace of coal retirements,” he said.
But EPA’s rules could have that potential, he said.
EPA spokesperson Khanya Brann wrote in an email to E&E News that the agency’s “comprehensive approach” to coal plant rules would “provide regulatory certainty and a long-term planning horizon” and allow “states, grid operators, and power companies to make informed investment and planning decisions.”
They also could persuade utilities that the combined cost of addressing carbon, mercury, smog and wastewater at coal plants isn’t worth it.
“I mean, it all comes back to economics, honestly,” said Ben King, associate director of the Rhodium Group. “You know, at some point, you stop deciding to invest in a plant that you have to keep putting more and more money into just to keep it running, and it’s increasingly uneconomic in the market.”
Utilities might worry that — after laying out capital to comply with the latest round of rules — they might not run coal plants enough to recover the cost, or face another round of rules in a few years’ time, he said.
Rhodium Group’s economic modeling does suggest the Inflation Reduction Act would drive some coal plants to retire and be replaced by renewables, King said.
Rhodium estimates the law could cause between 30 gigawatts and 60 gigawatts to be taken offline on top of 60 GW of retirements that already were expected by 2030, he said. Coal still would make up between 3 percent and 8 percent of U.S. power by the close of this decade before new EPA rules are factored in.
Concerns about grid reliability
Some in the power sector say that dealing a body blow to coal this decade could undermine grid reliability — particularly in the face of new demand stemming from the electrification of sectors like transportation.
“I mean, does anyone at the EPA think about reliability when they’re talking about making new rules? We all know the answer to that,” quipped Jim Matheson, a former Democratic congressman who now heads the National Rural Electric Cooperative Association, at a recent conference.
Rich Nolan, president of the National Mining Association, told E&E News that he was particularly concerned about EPA’s upcoming rule for pollution that crosses state lines, which the agency itself has estimated could prompt 23,000 MW of coal-fired power to retire by 2025.
Nolan said the “regulatory wave that’s coming” could wipe out “well-functioning coal plants” and hurt grid resilience in certain parts of the country.
He rejected the argument that more renewable power from a diverse set of sources could shore up the grid.
“Certainly in an ideal world if everything was wired up, and we had engineers and a permitting process that wasn’t broken and electricity transmission lines were strung up all over the world, yeah, they may be correct,” he said. “However, that’s not reality. And that’s not where we are today.”