Coal Is Back

Although I’m sure some readers will consider the title of this column hyperbole, coal is back. It’s back in the public discourse, and that’s largely due to the Trump administration.

President Trump was an outspoken advocate for the coal industry during the presidential campaign. In his “America-First Energy Plan,” he specifically said, “We’re going to save the coal industry.” While it’s still early in his first term, the rhetoric seems to be carrying over into his presidency, and that has a lot of people with ties to the coal industry breathing a sigh of relief.

Pruitt and Perry Seem Supportive

Speaking on the Fox Business morning show Varney & Co., Environmental Protection Agency (EPA) Administrator Scott Pruitt said, “We need to have an all-the-above strategy… utility companies across this country need fuel diversity… you need solid hydrocarbons on-site that you can store, so when peak demand rises, you’ve got solid hydrocarbons to draw on.”

But coal doesn’t just offer fuel diversity, it’s also important from a national security perspective. During the same television interview, Pruitt asked rhetorically, “What would happen if we had an attack on our infrastructure when you’ve converted to natural gas almost exclusively and you don’t have coal there as a safeguard to preserve the grid?”

The EPA isn’t the only government agency focusing its attention on coal. U.S. Energy Secretary Rick Perry ordered his department to initiate a 60-day study that began on April 19 to explore critical issues central to protecting the long-term reliability of the electric grid.

In a memo to his chief of staff directing the study, Perry wrote, “Baseload power is necessary to a well-functioning electric grid. We are blessed as a nation to have an abundance of domestic energy resources, such as coal, natural gas, nuclear, and hydroelectric, all of which provide affordable baseload power and contribute to a stable, reliable, and resilient grid.” But Perry suggested in the memo that the manner in which baseload power is dispatched and compensated may not be fair and that the diminishing diversity of the generation mix could jeopardize the nation’s economy and national security.

The study—intended to analyze the problems, and provide concrete policy recommendations and solutions—is expected to focus on the evolution of wholesale electricity markets; whether markets are adequately compensating attributes that stregthen grid resilience, such as on-site fuel supply; and the extent to which continued regulatory burdens, mandates, and tax and subsidy policies are responsible for premature baseload plant retirements.

It’s easy to see that coal-fired generation is—or has been—deeply affected by each of those issues. As such, it’s also easy to conclude that any recommendations developed as a result of the study are likely to offer some benefits for the coal industry.

Optimism Exists Outside of the Government

The Federal Energy Regulatory Commission (FERC) has also been evaluating the current market structure. On May 1–2, FERC held a technical conference “to discuss certain matters affecting wholesale energy and capacity markets operated by the Eastern Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs).”

Paul Bailey, president and CEO of the American Coalition for Clean Coal Electricity, a coal advocacy group, participated in the conference and spoke before the commission. He highlighted coal’s ability to provide grid reliability and resilience as a key advantage of the fuel source. Specific benefits he cited include on-site fuel storage, firm fuel contracts, an established track record, in-place infrastructure, and 24/7 availability. I interviewed Bailey several days after the conference and asked how his message had been received.

“We thought we were successful because what we were trying to do is remind everyone of the need for baseload electricity. We think coal has many advantages over other sources of baseload electricity. We didn’t spend a lot of time talking, but we think we got that message across,” Bailey told me.

Bailey was optimistic about the future. He mentioned the unwinding of regulations, including the Clean Power Plan, New Source Performance Standards, and Effluent Limitations Guidelines, as a reason for hope. He also suggested that Pruitt’s comments on Fox Business allude to something even grander.

“We have Pruitt’s statement the other day, which was really an energy policy statement. That’s one of the more interesting things about it—it was not an environmental statement as much as it was an energy policy statement,” Bailey said.

One power industry leader I spoke to sees, if not a bright future, at least a stable one for coal. In an exclusive interview with POWER on April 24, Paul McElhinney, president and CEO of GE’s Power Services, suggested that coal-fired generation would remain vital throughout the world for many years to come.

“Our view is that coal and steam will continue—for 20 years and beyond—to be significant drivers of power generation capability across the globe,” McElhinney said.

That being the case, GE’s Power Services is focusing its business on helping customers stay competitive and comply with potential carbon reduction requirements by improving efficiency and reducing emissions.

“You can find a 30- to 40-year-old coal plant where some of the applications being written on Predix can have a marked improvement on overall plant performance,” McElhinney said. “We have technology today that we believe can deliver double-digit reductions in emissions for customers,” he added.

Even under a pro-coal administration, enhancing efficiency and cutting emissions aren’t bad things. ■

—Aaron Larson is POWER’s executive editor.