Perry can’t dig coal out of its hole
The thermal coal industry is doomed, no matter how many subsidies Energy Secretary Rick Perry throws at it.
President Donald Trump has promised to inject new life into coal country, where corporations have laid off thousands and written off millions in bankruptcies. Trump has trashed environmental regulations to make it easier to keep coal plants open and polluting.
Earlier this year, Perry proposed a subsidy that would force consumers to pay more for electricity from coal-fired power plants as a way to keep demand up.
The economics of burning coal for electricity, though, will eventually overwhelm Trump’s and Perry’s efforts and lead to more layoffs and bankruptcies, according to Moody’s Analytics, a financial analysis firm.
“In the U.S., some coalfired generation may have gained additional time due to the proposed U.S. withdrawal from the Paris Agreement and revision of the Clean Power Plan,” the analysis said. “However, these actions will not materially derail decarbonization trends.”
Coal’s end times are not only in the U.S. At least 54 percent of coal-burning power plants in Europe are losing money today, and 97 percent will lose money in 2030, according to Carbon Tracker, an independent think tank specializing in fossil fuel financial analysis.
“We find that falling
renewable energy costs, air pollution regulations and rising carbon prices will continue to undermine the economics of coal power in the EU, potentially making generation assets unusable by 2030,” Carbon Tracker’s analysis concluded.
Coal’s primary problem, of course, is natural gas. Natural gas plants are cheaper to operate, and the fuel is inexpensive and plentiful, according to the U.S. Energy Information Administration.
Building a coal-fired power plant is more expensive than building wind or solar power generation, and soon existing coal plants will be more expensive to operate, Carbon Tracker reported.
“The operating cost of coal could be higher than the LCOE (levelized cost of energy) of onshore wind by 2024 and solar PV (photovoltaic) by 2027, while battery storage and demand response increasingly provide auxiliary services and peak shaving,” the analysis said.
This dismal future for coal is exactly why miners of coal used in power plants, and the owners of those plants, are twisting Trump’s and Perry’s arms to grant them special payments. Their excuse is that coal plants should be paid for their reliability.
The decision whether to make such a payment falls to the independent Federal Energy Regulatory Commission, which has already missed Perry’s deadline of Dec. 11 to implement his subsidy program. The new chairman said FERC needs time to review industry and public comments on Perry’s giveaway, which could be worth hundreds of millions of dollars.
Hopefully, the agency will take the time to read the industry comments closely, because the vast majority of electric power companies vocally object to Perry’s coal subsidy. Smart, competitive companies are ready to adapt to a future where the economics of coal no longer make sense, and they want nothing to do with Trump administration crony capitalism that delivers on ill-conceived political promises.