A lost cause
Trump’s moves to ease regulations and revive the coal industry are bringing little relief
HOMER CITY, Pa. — Every morning is filled with anxiety in this hardscrabble town so intertwined with the fortunes of its coal power plant that a drawing of the facility is emblazoned on the police force’s emblem.
Locals look out their windows to see whether there are clouds drifting from the massive smokestacks, indicating the hulking plant is still running. If they don’t see any, they wonder whether the owners have thrown in the towel for good.
“Everyone gets concerned when they wake up and don’t see smoke coming out,” said Rob Nymick, manager of the 1,700-resident borough that he says will be economically “crushed” if the plant goes dark.
As the Trump administration dismantles one of the world’s most aggressive programs to confront climate change, it is invoking the suffering of communities like this one, where the coal power plant that anchors the economy teeters on insolvency.
Yet as the administration declares an end to what it calls the “war on coal,” Homer City isn’t any less under siege.
The plant is an albatross to investors, and a source of increasing anxiety to the hundreds of Pennsylvanians who rely on it for their livelihood. It is likely to remain a loser financially no matter how far President Donald Trump rolls back regulations.
“I’m not sold on the fact that the war on coal is putting that power plant out of business,” said Nymick, pointing to competition from cheaper natural gas, solar and wind energy.
Other U.S. coal facilities are also finding no salvation in the elimination of the Obama-era Clean Power Plan, a move the Trump administration promised would reinvigorate them.
A fresh round of closures expected to cost at least 850 jobs was announced by Vistra Energy in Texas earlier this month, even as the administration launched its repeal of landmark regulations on greenhouse gas emissions.
“The Clean Power Plan is not what hurt coal,” said Michael Wara, a pro-
fessor of energy law at Stanford. “It is hard to hurt someone more when they were already mortally wounded.”
That’s put the administration in an awkward place. Officials strained to show that repeal of the Obama-era rules would boost the economy, using financial assumptions that many experts dispute — but even so the plan doesn’t do much for the sagging coal industry.
A coal revival would require more than a Clean Power Plan repeal. It would require a bailout, an even less popular option that the administration is also pushing. The Energy Department’s plan to force regional electricity grids to buy large amounts of coal, unveiled days before the Clean Power Plan repeal was made public, is getting a hostile reception. Oil and gas companies are joining solar and wind advocates to fight the move.
“The entire energy economics and energy law community thinks it is a crazy proposal,” Wara said of the subsidy plan.
It all leaves communities like Homer City in the lurch. At its peak, the Homer City Generating Station provided enough electricity to power 2 million homes daily on a power grid extending throughout the Northeast and deep into the Midwest. The plant generates hundreds of millions of dollars in economic activity each year.
Now it has emerged from its second bankruptcy, and many days it runs well below half-capacity. Layoffs are underway, and the consortium of bondholders saddled with the asset are scrambling to find someone to buy it. A plant valued at $1.8 billion two decades ago might not fetch a quarter of that now. The energy it produces can’t compete with cheaper, abundant natural gas and renewable power.
Coal broker David Osikowicz applauds the Trump administration’s enthusiasm for the industry, but even he questions what the demise of the Clean Power Plan will do to save it.
“When President Obama said five years ago that you can keep burning coal but you will go broke doing it, my instinct was to liquidate,” said Osikowicz, standing in his eerily quiet coal yard in Punxsutawney. “Unfortunately, I didn’t do that. Now reality has triumphed over wishful thinking.”
Like many others in coal country, Osikowicz believes mounting government regulations over the years sunk the region, creating burdens on coal that ultimately became insurmountable when the prices of natural gas plunged. But he also says Trump has over-promised.
“I think he meant well when he said we are going to bring back coal — we are going to bring back the steel mills in Pittsburgh,” Osikowicz said. “Do I think that is going to happen? No.”
His brother Mark, who works loading coal in the yard, is more optimistic. “We’ve had 24 years of presidents working against us,” he said. “It will take more than four years to bail us out.”
Now the workforce is down to a third of what it was at the coal yard and four nearby strip mines that David Osikowicz owns. The business that came from the Homer City plant, once accounting for half of all sales, is gone. The value of his capital investment has plummeted.
Osikowicz is left hoping the subsidy plan the administration is proposing will prevail. He argues, like Energy Secretary Rick Perry, that regulators have favored the expansion of natural gas at the cost of national security and electricity grid resiliency.
It’s a popular view in coal country but has little support outside it. There’s also a lot of skepticism elsewhere about the effects of repealing the Clean Power Plan.
“In order to justify this, they do serious violence to established economics,” Richard Revesz, dean emeritus at New York University School of Law, said of the repeal. “The level of contortions and the attacks on standard economic principles are unprecedented.”
Revesz runs through what he sees as the absurdities — and possible legal vulnerabilities — with the Trump administration plan:
First, it assumes no benefit from avoiding problems outside America’s borders when the U.S. pumps less greenhouse gas into the atmosphere — such as the humanitarian crises intensified by global warming that affect the U.S. economy and national security.
Second, the value it places on stopping warming in the U.S. is well below what most mainstream climate economists would say.
And third, the thousands of lives saved and chronic illnesses averted by exceeding national air quality standards are disregarded.
The Trump administration has its own view, alleging it was the Obama administration that cooked the books to justify the climate action in the first place.