Trump Restoring Free-Market Balance to U.S. Energy Industry

Canceling overwrought Clean Power Plan allows coal a chance to compete on fair footing

by Terry Jarrett | Updated 11 Apr 2017 at 5:22 AM

The United States is home to almost 320 million people, and it takes a lot to keep them supplied each day with sufficient, affordable electricity. Americans have become accustomed to this abundant electricity, though, and at affordable prices. But all of this demand necessitates an awful lot off of reliable power generation. And so, a key consideration for policymakers is how to ensure the ongoing security and reliability of America’s power grid.

President Trump likely had some of these concerns in mind when he recently chose to halt the Obama administration’s Clean Power Plan (CPP). It was a move that upset many Beltway pundits. But it was also a prudent move when one considers the ever-growing power needs of America’s homes and businesses.

The CPP would have prematurely forced 25 percent of America’s coal generation capacity off the electric grid.

The basic premise of the CPP was to reduce power plant carbon dioxide emissions to a point 32 percent below 2005 levels. The direct consequence of this effort would have been the dismantling of much of America’s coal-fired power generation. The goal, of course, was to address global warming. But the plan would have served as merely a token climate gesture since it was only projected to achieve a theoretical 0.018 degrees Celsius reduction in global temperatures by 2100 (along with a less than 1 percent cut in global CO2 emissions).

The costs to the nation would have been staggering, though. The CPP would have prematurely forced 25 percent of America’s coal generation capacity off the electric grid. That’s enough generating capacity to power 24 million homes. Overall, the wholesale price of electricity in the United States in 2020 would have risen to more than a third higher than in 2012—for an average annual household increase of $680. And, according to Energy Ventures Analysis, this would have meant overall utility costs rising an extra $214 billion by 2030.

To accomplish such a massive transformation of America’s power grid, utilities would have needed to invest $64 billion in the construction of new power lines and power plants—costs that would have been passed along to consumers. The U.S. Chamber of Commerce has estimated the CPP would have cost $51 billion in annual GDP, along with 224,000 jobs per year.

What’s noteworthy is that many of the coal plants slated for retirement under the CPP are currently running at peak capacity to meet everyday demand. But the “renewable” power expected to replace them has yet to prove as reliable as coal in terms of scalability for electricity generation. Simply put, wind and solar remain frustratingly intermittent — since the sun doesn’t always shine and the wind doesn’t always blow — and they still require backup generation from coal and gas plants. President Trump’s decision to end the CPP means that coal can now compete on a level playing field with both natural gas and subsidized renewables — but without having to struggle against federal regulations, too.

Coal plants certainly can compete, though, since today’s fleet is 90 percent cleaner than 30 years ago. That’s because utility companies have invested billions and billions of dollars in high-tech environmental controls to trap emissions of sulfur, mercury, and particulate matter. And so, modern coal plants have become very efficient, essentially emitting only water vapor and carbon dioxide as they churn 24/7 to keep the lights on in homes, schools, and hospitals. And thanks to developments like supercritical and ultra-supercritical boilers, along with combined cycle systems, they can also achieve far greater thermal efficiencies, resulting in lower CO2 emissions.

The effort to limit CO2 under the CPP would have posed serious economic disruptions, however. Thus, President Trump’s decision to end the CPP shouldn’t be viewed as simply a handout for the coal industry. Rather, the president has removed unreasonable regulatory impediments to an industry that continues to support an affordable supply of energy for the nation. Going forward, coal power will simply have to compete on its own environmental and economic merits.

President Trump isn’t trying to restore coal to its glory days. But he’s taking a prudent approach in trying to revitalize coal enough so that it can remain a valuable contributor to the nation’s energy mix.

Terry M. Jarrett is an energy attorney and consultant who has served on both the National Association of Regulatory Utility Commissioners and the Missouri Public Service Commission.

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