- Regulators and market forces are ganging up on dirty fuel
- Cuomo pledges to make New York power coal-free by 2020
Coal already has plenty of enemies, from global climate negotiators to market forces. Add New York to the list.
Governor Andrew Cuomo vowed this week to shut down all the state’s coal-fired power plants by 2020. The Empire State isn’t the biggest to make such a commitment -- that would be California, where a mixture of legislation and lawsuits adds up to a timetable for phasing out coal. But Cuomo became the first governor to move out of the coal-generation business by administrative fiat.
“Regulation is working hand-in-glove with good old Adam Smithian economics to produce the right outcomes for our country,” Larry Kellerman, managing partner at Twenty First Century Utilities, a Washington-based energy investment firm, told a National Press Club panel in the capital. “King Coal is no longer King Coal.”
The once-dominant source of U.S. electricity is being edged out as a shale drilling boom makes domestic natural gas cheaper. It’s also more appealing to policy makers heeding calls for cleaner fuels. Last April was a turning point: For the first time, gas replaced coal as the biggest supplier of American power generators.
Environmental regulations have hastened coal’s decline. A suite of federal pollution mandates made coal facilities more costly to operate, and states must also comply with the Obama administration’s Clean Power Plan, which targets a 32 percent drop in the industry’s carbon dioxide emissions by 2030, from 2005 levels. That in turn is part of a bigger international commitment formalized at last month’s Paris climate talks.
On Friday, the administration announced a three-year pause in selling mining companies new rights to extract coal on federal land, now responsible for about 40 percent of U.S. production.
Because the pressure is coming from so many different directions, Cuomo’s pledge is “a bellwether of things to come,” said Mary Anne Hitt, director of the Sierra Club’s Beyond Coal campaign. Michael Bloomberg, the majority-owner of Bloomberg LP and former New York mayor, has pledged at least $50 million to the group’s anti-coal efforts.
In New York, Cuomo had already announced 2030 emissions targets that were more ambitious than the federal ones. Eight other states have released plans that envision coal-free futures, though some of them aren’t using the fuel to generate power anyway.
Anti-coal activists have focused on states with relatively little coal-fired power. Their next targets include Nevada and New Hampshire, which each have two coal-fired plants, and Connecticut, which has just one. In much of the eastern U.S., coal isn’t cost-effective any more, Kellerman said.
Plenty of states still defend coal. While New York seeks to get ahead of the curve on Obama’s emissions plan, 27 states have sued to block it. New Yorkers will pay a price -- specifically, about 15 percent more on their electricity bills -- for meeting the president’s goals, according to Laura Sheehan, a spokeswoman for the Washington-based American Coalition for Clean Coal Electricity. Cuomo’s initiative “adds salt into that wound,” she said.
“New York has a long history of being not in favor of energy development whether it would be fracking or any type of energy development that would make it easier on its constituents," Sheehan said. The Sierra Club says Cuomo’s plan will actually save money for New Yorkers who are paying for bailouts of coal-fired plants.
Some analysts and regulators have warned against betting too heavily on the U.S. gas boom, saying it hasn’t eliminated volatility. They cite a spike of more than 50 percent in natural-gas costs during a cold snap in 2014.
Concern about job-losses in coal-producing states has driven some of the opposition. The industry has other options if domestic demand continues to drop.
“You look around the rest of the world, at a growing population, there are a lot of countries that need coal,” Thomas Kuhn, president of the Edison Electric Institute, said at the press-club discussion. “We’re sending coal to some of those countries. I don’t think we should wish that coal is dead.”
It’s clearly in poor health, though. About 33,300 megawatts of coal-fired generation, enough to power some 27 million homes, has been retired in the past five years, according to the Energy Information Administration -- and about third of that was in the first seven months of 2015. The EIA predicts another 90,000 megawatts may be gone by 2040.
In Oregon, the threat of a statewide ballot initiative prompted an agreement with utilities this month to phase out coal-fired power by 2030. Massachusetts and Washington state have one coal plant apiece, and plan to shut them by 2017 and 2025 respectively. In Indiana, Duke Energy Corp. said Friday it will stop burning coal at its 280-megawatt Gallagher plant by the end of 2022.
New York has three remaining coal-burning plants. One is due to shut down by March 1. The other two are at Somerset in the west and Cayuga in the Finger Lakes region, and Riesling Power LLC, an affiliate of the Blackstone Group, won federal regulatory approval on Wednesday to buy them.
Cuomo wants both those plants closed or converted to burning gas by 2020, according to a 509-page policy document accompanying his speech. Blackstone spokesman Peter Rose in New York didn’t immediately comment.
Even the states committed to ending their own coal-burning power industry can still import coal-fired power generated outside their borders. About 6 percent of California’s power last year came from coal burned across state lines. New York is part of a chain of states from Illinois to Maine where power is bought and sold on wholesale markets, so banning coal generation doesn’t mean New Yorkers won’t be using it.
That’s the “next frontier” for anti-coal activists, Hitt said.