The Trump administration's much-anticipated rule to replace the Obama-era Clean Power Plan may not be the long-term lifeline for coal that some hoped it would be, analysts say.
That concept was reinforced yesterday when an analysis showed the U.S. power sector methodically moving away from coal-fired generation, without any rule in place, to energy options such as solar and wind that do not produce carbon dioxide emissions.
The report from Ceres, Bank of America, power producers Entergy and Exelon, and the Natural Resources Defense Council breaks down the fuel mix for the 100 largest power producers in the nation.
"In 2017, for the first year ever, zero-carbon resources accounted for more electricity generation (35.4%) than either gas (32.1%) or coal (29.8%)," said the analysis, "Benchmarking Air Emissions of the 100 Largest Electric Power Producers in the United States." It's the 15th report from the group on the issue since 1997 and did not focus specifically on the Clean Power Plan replacement.
The analysis is one of several in recent months indirectly highlighting the challenge facing the Trump administration if it aims to boost coal, and alter the electricity mix, through regulation and other means. EPA has said it would release its Affordable Clean Energy rule by the end of the month, but some sources expect it as soon as tomorrow. While the Clean Power Plan set CO2 emissions reduction goals for states, ACE does not.
Under the rule, each state will require utility operators to improve the efficiency and performance of their plants by implementing reasonable and cost-effective heat rate improvement projects deemed to be the "best system of emission reduction."
ACE gives states a list of "candidate technologies" that can be used to establish standards of performance and be incorporated into their state plans.
One of the great unknowns about ACE is precisely how many coal plants will get a new lease on life from the rule, or if plants already on the chopping block will close anyway because of market factors.
According to U.S. Energy Information Administration data, the United States has 742 operating coal units of 1 megawatt or larger. Multiple units can make up a single coal plant.
Approximately 50 coal plants have shut down since President Trump was sworn in, and that trend is forecast to continue.
In its latest Short-Term Energy Outlook, EIA said it expects the share of U.S. total utility-scale electricity generation from coal will average 24% in 2019 and 23% in 2020, down from 27% in 2018.
Natural gas-fired generation is forecast to rise from 35% in 2018 to 37% in 2019 and to 38% in 2020, EIA said.
Still, the coal mining industry is optimistic that the rule will in many instances help extend the useful life of coal plants, and utilities that own such plants say they hope to avoid premature shutdowns that could be costly to their customers.
Coal backers say they hope ACE could help enhance coal plants' competitiveness, as they will be able to generate power more efficiently and thereby increase how often they produce electricity.
"While it is challenging to predict specific outcomes in terms of any impact on individual plants as a result of what we expect to be in the final rule, the flexibility that states have to set reasonable performance standards should help in avoiding additional premature retirements," said Michelle Bloodworth, president and CEO of the American Coalition for Clean Coal Electricity.
"The proposed, but never implemented, Clean Power Plan would have led to more coal retirements. So by comparison, we believe the ACE rule is clearly a positive step forward and provides a sensible method of regulating carbon dioxide emissions," Bloodworth said.
Kenny Stein, policy director at the Institute for Energy Research, said ACE could make "potentially significant" changes to EPA's New Source Review regime, lifting the need to make upgrades, which is "one of the biggest impediments to extending the life of coal power plants."
"The problem with forecasting near-term effects [of the rule] is that this is going to be litigated for years, and plants are going to continue to close during that time," Stein said.
"It is hard to say definitively, but on the whole, I don't see this having a huge impact on slowing the pace of coal-generation retirements," except for "smaller utilities, like co-ops or rural providers, because they are sometimes more concerned with keeping rates as low as possible," he added.
Andres Restrepo, a staff attorney with the Sierra Club, agreed.
The ACE rule "won't change the direction toward clean energy," he said, calling it "an attempt by the Trump administration to throw the industry some sort of bone."
"This is really about how much dirty coal plants are going to keep running," in spite of the trend foreseen in the Clean Power Plan that "the market itself is moving toward renewable energy," Restrepo said.
The Sierra Club's Beyond Coal campaign, with millions of dollars in funding by former New York City Mayor Michael Bloomberg, has been pursuing numerous strategies to convince utilities to close their coal plants.
'We are going to stay on our path'
The ACE rule debate comes a week after CEOs from the nation's investor-owned utilities gathered in Philadelphia for the annual meeting of the Edison Electric Institute.
Most of the panels touched on clean energy technology, and CEOs from Exelon, Duke Energy, Xcel Energy and others outlined their goals to sharply reduce their carbon emissions by up to 80% by 2050.
Tom Farrell, CEO of Dominion Energy, noted that since he joined the Richmond, Va.-based utility in 1995, the company's percentage of coal generation has fallen from 55% to 11%.
The ACE rule is not going to alter that trajectory, he said.
"We are going to stay on our path," he said.
Forty percent of the electricity sold to customers by the nation's rural electric cooperatives, meanwhile, comes from coal. The co-op industry has been supportive of the ACE rule because it says it gives flexibility to its members in how to address cutting carbon emissions.
The nation's nonprofit municipally owned utilities have been steadily backing away from coal, however.
Just 99 of the American Public Power Association's roughly 2,000 member utilities have an ownership stake in a coal plant. Ten years ago, that number was 121.
The energy transition continues in the heart of coal country despite challenges from some of the coal industry's most powerful allies.
One example is Vectren, a utility in southern Indiana that gets most of its energy from five coal-burning units.
Vectren, which was acquired by CenterPoint Energy earlier this year, announced a plan last year to retire more than 70% of its 1,000-MW coal fleet and replace the capacity with a $900 million natural gas plant by 2023.
Coal producers balked at the proposal, including the Indiana coal lobby and Sunrise Coal, which supplied nearly all the coal for Vectren's plants. Producers argued that the utility's 145,000 customers would fare better and pay lower rates if the plants remained online.
Sunrise Coal's parent company, Hallador Energy, hired former EPA Administrator Scott Pruitt as a lobbyist in an attempt to pass legislation establishing a moratorium on new power plants in Indiana and specifically the proposed Vectren gas plant.
Among the coal industry's arguments in the state was that Trump's rollback of environmental regulations and replacement of the Clean Power Plan with ACE would allow the utility to run the coal plants beyond 2023 without significant new investments to comply with environmental regulations.
While the company filed comments in support of the administration's narrower interpretation of its authority to regulate stationary sources under the Clean Air Act, officials said ACE would only increase regulatory uncertainty and — according to EPA's own analysis — would actually increase compliance costs.
"Replacement of the CPP with the ACE rule will not stem the tide of widespread industry transition away from dependence on coal to a more diversified and lower carbon fuel portfolio," Angila Retherford, the utility's vice president of environmental affairs and corporate sustainability, said in testimony to the Indiana Utility Regulatory Commission (IURC).
Ultimately, the coal industry scored a partial victory in April when the IURC denied Vectren's request to build the 850-MW gas plant. But the victory could be short-lived, as Vectren has given no indication that it will seek to keep the coal units running and recently issued a request for power supply proposals for up to 800 MW of capacity and energy starting in mid-2023.
A trend from Kansas to Arizona
Likewise, in Kansas, Kansas City Power & Light and Westar Energy accelerated the closure of six coal plants.
In 2017, a day after Trump declared his intention to pull the United States out of the Paris climate agreement, the utilities said that they planned to close six coal-fired units by the end of 2019 as part of its "commitment to a sustainable energy future." In fact, the companies shut the plants in December.
In Arizona, voters last year rejected a proposed increase in a renewable energy standard to 50% by 2030 for certain utilities. Pinnacle West Capital Corp., the parent of Arizona Public Service Co. (APS), spent millions of dollars opposing the plan.
Meanwhile, APS has announced a plan to increase solar and battery investments as its generation resource mix continues to evolve.
"APS already meets the 2030 goals of the Clean Power Plan and is well positioned to comply with the Affordable Clean Energy rules," the company said yesterday in a statement. "We were able to surpass these requirements through long-range planning focused on delivering increasingly clean power that remains affordable and reliable for customers."
A recent survey by the Midcontinent Independent System Operator and the Organization of MISO States of market participants illustrates the extent of possible change in that region.
A presentation slide on the resource mix shows coal falling from 76% in 2005 to 33% in 2024. Natural gas and other gases climb in that time from 7% to 42%. The 2024 scenario also includes a mix of some nuclear, wind and solar, as well as other sources, including demand response and behind-the-meter generation. It reflects capacity, including expected capacity credits for wind and solar.
It's not clear how the ACE rule would affect the outlook among MISO participants for 2024.
"Each individual entity in MISO might respond to that proposed rule differently, and maybe some of them are farther along in evaluating that rule than others," Ryan Westphal, manager of resource adequacy at MISO, said in an interview. "And we didn't explicitly ask that question in our annual survey."
But Westphal also said: "Our resource mix at MISO is changing pretty dramatically."
Economic drivers in the South
In the Southeast, many power producers have stated goals that will take them to a low- or no-carbon fleet over time. The region is home to six of the top 10 electric power producers in the country.
Broadly, economics are driving that decision, and utility executives in Georgia have stated as much recently (Energywire, May 13). Natural gas and renewables have become the cheapest resources to build and operate. The region relies heavily on nuclear power, as well.
The GOP-dominated region is known for railing against broad, sweeping rules from Washington. The states pride themselves on operating independently and not under a "one size fits all" mandate.
That was the stated reason for a sharp rebuke of the Obama administration's Clean Power Plan. As in other regions, the major electric companies have a different justification to overlook Trump's ACE rule: They are doing the work already.
Tennessee and Alabama are recent examples.
The Tennessee Valley Authority's announcement of plans to close an aging coal plant in Kentucky caught the attention of Trump, who took to Twitter to urge the utility to consider all factors before making a final decision (Greenwire, Feb. 14).
But that's exactly what the federal agency did. An economic and environmental review was among the steps TVA took before saying it would close that plant in Kentucky and one in Tennessee.
The board agreed with TVA's executives despite mounting political pressure to do otherwise that week.
Southern Co.'s Alabama Power unit then followed suit, saying $300 million in upgrades was too much to keep a 100-year-old coal plant running (Energywire, Feb. 21).
Even though the reason was an economic one, the utility went as far as to blame the closure on Obama-era environmental rules.
Other shifts toward cleaner electricity sources are coming from lawmakers or state utility regulators. The Mississippi Public Service Commission agreed last week to create a long-term planning framework for the state's regulated electric companies that would require them to consider all generation sources before adding capacity (Energywire, June 17).
In South Carolina, the Legislature passed a sweeping energy reform bill that calls for all forms of energy to compete in long-term planning. Separately, the long-term energy plans of Dominion Energy's South Carolina electric utility focus on renewable energy and energy efficiency. Electricity generation above 75 MW must be chosen through a competitive bidding process that includes all sources of fuel.
The energy profiles of the electric cooperatives tell a different story, however. Many still rely heavily on coal and can be a reason why a state's CO2 emission profile is high.
That is the case in Florida, where NextEra Energy gets just 2% of its electricity from coal. NextEra operates the state's largest regulated electric company, Florida Power & Light Co., which has been dominated by natural gas for more than a decade. Its sister company, NextEra Energy Resources, is the world's largest wind and solar developer.
But Florida still ranks among the top CO2 emitters, in part because of other electric companies that have a significant amount of coal generation in their fleet. This includes the Seminole Electric Cooperative and Jacksonville's municipal electric company.
"It's encouraging to see so many of the largest power producers in the U.S. pivot toward lower-carbon and zero-carbon solutions," said Dan Bakal, senior director of electric power at Ceres. "Yet we must increase corporate ambition and find solutions to transform the power sector at a scope and scale that matches the climate crisis," he said.
The ACE rule is "not going to change that fact that utilities and power plant owners are increasingly using coal plants less and less," Restrepo said.
"In our judgment, that train has already left the station. But the train needs to go faster."
Reporters Kelsey Brugger, Edward Klump, Rod Kuckro, Jeff Tomich and Kristi Swartz contributed.