A draft plan circulating in the Trump White House would make use of a 68-year-old grant of emergency powers to force electrical companies to buy more power from coal and nuclear plants. The plan, based on a scheme that Rick Perry already tried to launch through the Energy Department, would raise prices for power, increase pollution, and represent the largest intervention of the government into the energy sector since World War II.
Despite Donald Trump’s claims that he would arrest the decline of coal of coal power, power plants using coal closed at a record rate in 2017. Those plants closed in red states and blue, and many of them closed years earlier than had been predicted. The reason is simple enough: Coal costs too much. Natural gas, wind, and solar are all now cost-competitive with coal on a per megawatt basis, and much cheaper when the associated costs of coal—including long term disposal of ash—are added in. In addition, the necessary scale of coal plants makes them enormous investments that take decades to pay off. No one is willing to make a bet on coal under those circumstances. That’s why there is not a single new coal plant in development in the United States. The single plant that was supposed to represent the first “clean coal” facility in the U.S. was switched to natural gas last year before it even came on line.
To reverse this trend, Bloomberg reports that the Trump plan would employ Section 202 of the Federal Power Act as well as the Cold War-era Defense Production Act. The last time these powers were used was when Harry Truman temporarily nationalized the steel industry in 1952.
To save coal, Trump is using the pretense that other power sources are not “fuel secure.” This is a term created to generate an artificial sense of fragility for other power sources. To be fuel secure, a plant has to have 90 days of fuel “on hand.” Natural gas plants don’t meet this criteria, because they get their fuel via pipelines. Solar and wind don’t meet this requirement, because they don’t use fuel. Only nuclear and coal, where tens or hundreds of tons of material are stockpiled near the plant, meet the “fuel secure” definition. It’s a completely arbitrary, and genuinely nonsensical argument. In essence, it’s an argument that starts by looking at what is worst about a coal plant … then making it a requirement.
It’s a fake crisis, but it has some very real beneficiaries. Not coal miners. But coal mine owners, and in particular squirrel-whisperer Bob Murray, who, coincidentally, put a million dollars into Trump’s inauguration slush fund.
When Perry attempted to launch the coal plant bailout last year, it was shot down by regulators that Trump had appointed. In a unanimous decision, the regulators saw the plan as an attempt to interfere with competitive forces and directly manipulate the energy market. The regulators—four out of five of them appointed by Trump—saw no reason to halt the rapid replacement of aging coal plants, many of them decades over their projected lifespans, with newer, cleaner, and far cheaper natural gas, wind, and solar.
But the plan now going forward is that rejected plan on steroids. It would not only force the nation’s electric grid to maintain a high level of dependence on coal, it would also call for being a “Strategic Electric Generation Reserve,” that would appear to be a coal-based version of the national strategic petroleum reserve. Except that petroleum stockpiles don’t tend to degrade in place or spontaneously combust. Coal stockpiles do. Attempting to pile up a “strategic stockpile” of coal would have little benefit except as a way to have every American write a check to coal mine operators.
By invoking emergency powers and making coal power a “national security issue,” Trump not only secures an ongoing revenue stream to his supporters in the industry, he also protects both them and himself from many different lines of legal action. It would preclude suits based on most scientific evidence, and even the results of the reports that were generated by the Energy Department itself.
In addition to the Defense Production Act, the Trump plan would also layer coal in protection using the Energy Department’s section 202 authority. These rules allow the DOE to instruct operators in an emergency. They’ve been used—rarely—in the case of rerouting power and protecting the national grid in instances of large blackouts or power spikes on the system. The last time it was used was in 2001, when manipulation of the energy market disrupted both prices and service in California. But in this case, Section 202 would be used to address a “potential emergency,” one that only exists because of the way that Trump and Perry have defined “fuel secure.”
According to Bloomberg, energy providers have already scheduled another 16,200 megawatts of coal-powered plants to close this year. This would reduce the national demand for steam coal by over 17 million tons per year.
Though Trump has already intervened many times to help coal, by removing regulations that are designed to protect streams and rivers and preventing the implementation of regulations that would have capped carbon emissions, the new plan would be the largest step the government has taken into any market in decades. Estimated costs of building new energy sources on a per megawatt basis show that the reason coal has been in such a steep decline over the last decade has little to do with environmental regulations. Even in 2010, shale-bed fracking had created an abundance of natural gas, driving down costs. Planners looking at building new plants at that time could already see that it was going to be considerably cheaper to build natural gas plants.
Since that time, the cost of wind and photo-voltaic solar have marched steadily, rapidly downward, increasing their percentage of new power contributions, as well as planned installations for the future. If wind doesn’t appear to change that much over these seven years, it’s only because the cost of solar drops enormously. Wind costs are actually down by 60 percent in this short period.
Over that same period, the cost of new coal installations on a per megawatt basis has barely budged, and coal’s scaling issues mean that not only has it maintained a relatively high cost, it requires a very large initial investment. The price of natural gas generation also did not change greatly over this period, but it was already significantly below that of coal. Wind, solar, and natural gas are much more modular and easier to scale than coal, allowing power companies much more flexibility in bringing new capacity online.
NIA did not bother to estimate the cost of building new coal capacity in 2016 or 2017.