Trump’s Bailout for Coal Power May Undermine the Benefits of EVs

June 26, 2018

On June 1, 2018, the Trump Administration announced a new energy initiative which will lead to the public subsidization of coal and nuclear power plants. President Trump has ordered Energy Secretary Rick Perry to prepare immediate steps to prevent the retirement of coal and nuclear electricity generating facilities that have been pushed into obsolescence by less expensive, cleaner sources of power.

If implemented, the proposal would force operators of the nation’s regional power grids to buy power from struggling coal and nuclear power plants which would otherwise be mothballed due to the fact that these—usually much older and less energy efficient facilities—cannot produce power as cheaply as their more modern competitors.

Whether the financial support that President Trump envisions to bring this policy to reality originates with tax- or rate-payers, the new proposed policy to support the fast-fading coal and nuclear industries is a gross distortion of today’s energy market.

Should this proposal become a reality, it will have a significant, potentially dramatic adverse consequence, on the progress this nation has been making to reduce urban air pollution and emissions of greenhouse gases, particularly from the transportation sector.

The administration justifies this abandonment of three decades of U.S. energy reform and deregulation by saying that coal and nuclear power stations are less vulnerable to being crippled by cyber or actual sabotage because they can store fuel on site and are not reliant on pipelines to deliver fuel. Such links to fuel supply can be severed by malicious enemies, and thus, to increase the resilience of the power generation system and the nation’s security, the Trump Administration asserts that it will be necessary to keep older, dirtier and more costly power generation on line.

The debate over the economic, political and national security merits of this proposal can occur in other venues. Most relevant to readers of ACT News is the impact of this proposal on the pace, cost and environmental benefits of growing the market for alternative fuel and electric transportation technologies. This impact should be obvious to any stakeholder: should this proposal become a reality, it will have a significant, potentially dramatic adverse consequence, on the progress this nation has been making to reduce urban air pollution and emissions of greenhouse gases, particularly from the transportation sector.

Power Consumption Trends in the US

In the U.S., coal consumption for power generation has been falling precipitously for about a decade, while natural gas and renewables have been growing rapidly. Since 2008, electricity generated from coal has fallen more than 39%; from 1,986 gigawatt hours (GWhr) to 1,207 GWhr. During that same ten-year period, natural gas fired generation has increased 44% (from 882 GWhr to 1,272 GWhr) and non-conventional hydropower renewables has increased by 207% (from 126 GWhr to 387 GWhr).

The decrease in coal use coupled with the increase in the use of natural gas and renewable power has reduced CO2 emissions from power generation by an astounding 25% from 2007 to 2016.

In addition to the increased proportion of U.S. power coming from cleaner natural gas, solar and wind, the U.S. has improved its economic production while using less electrical energy – between 2008 and 2017 total utility scale power generation fell 3%, while real gross domestic product (GDP) grew 18.6%. As a result, the total criteria pollutant and greenhouse gas emissions from the U.S. power sector has fallen.

The decrease in coal use coupled with the increase in the use of natural gas and renewable power has reduced CO2 emissions from power generation by an astounding 25% from 2007 to 2016 (from 2,411 million metric tonnes (MMT) to 1,809 MMT). Power sector emissions of particulate matter, sulfur dioxide and nitrogen oxides have all declined between 55 to 65 percent between the years of 2002 to 2014, due in no small part to the displacement of coal by cleaner burning natural gas and sources of renewable electricity.

Source: Oak Ridge National Laboratory

A Shift in Power Generation Energy Sources

The primary reason for the drop in coal-fired power has been the emergence of unconventional natural gas production, also known as hydraulic fracturing. The technology to extract hydrocarbons from tight shale formations reversed a multi-decade trend of reduced oil and gas production in the U.S., and has led to a long period of low, stable natural gas prices.

At the same time, the cost of electricity generated from renewable sources, like solar panels and wind turbines, has dropped to historic lows, exceeding the cost of natural gas-generated power in most cases. It is these low prices that have dramatically increased energy efficiency in electric end-uses, which has in turn led to the decreased use of coal as a fuel for generating electricity.

Although lower cost is the most prevalent reason coal use has fallen, the other key factor that has contributed to coal’s demise is that it is so darn dirty and other sources of power generation are simply much cleaner.

Regulations to control the sulfur, black carbon, mercury and smog-forming NOx emissions from coal-fired power plants have, rightly so, added cost to coal-fired electricity. And it’s a good thing that these externalities of burning coal are now better reflected in the price of electricity from coal. Urban air is cleaner, fewer rivers and lakes are too acidic to support aquatic life, and fewer Americans are dying due to coal-related air pollution than any time in our history.

Source: US Energy Information Administration

The Importance of Clean Power for Clean Transportation

We need electrical power to be cleaner because we don’t, as a nation, want to go back to the way it was before the Clean Air Act brought our nation bluer skies and healthier air. We don’t want to relive the coal-induced air quality disasters that occurred in St. Louis (1939), Donora Pennsylvania (1948) and New York City (1966). Both India and China, with their 4 million annual deaths from air pollution, mostly related to unfettered coal use, are stark, cautionary reminders of a past that we don’t want—and can’t afford—to replicate.

Urban air is cleaner, fewer rivers and lakes are too acidic to support aquatic life, and fewer Americans are dying due to coal-related air pollution than any time in our history.

Unfortunately, this appears to be exactly what the Trump Administration is proposing with its policy to artificially prop up the coal and nuclear industries. And the impact will not only mean a dirtier power sector, but a dirtier transportation sector as well.

In addition to the obvious air quality and climate protection benefits due to the shift away from coal in power generation, one of the emerging enhancements from this trend is the growth in the use of electricity in the transportation sector. Air quality regulators, particularly here in California, are relying on the move from gasoline and diesel-powered vehicles to plug-in hybrid and battery electric vehicles to reduce exposure to harmful air pollutants and meet national ambient air quality standards for smog and soot.

This movement to electric transportation is important to meet climate protection targets as well. However, the environmental progress of a swing to electric transportation depends on a steady reduction in the use of dirtier sources of electricity and an uninterrupted increase in the proportion of power coming from zero emission renewable resources.

Any delay in the natural retirement of coal fired power plants will delay the air quality and climate protection benefits that electric vehicles are poised to deliver.

Not only would maintaining coal-fired power plants mean more pollution from power generation than if the market was allowed to function, but it also means that the transportation sector will not clean up as fast as it is currently poised to.

In February, Fitch Ratings sent a note to its investors projecting that reductions in the costs of batteries, as well as an increased effectiveness of marketing and public awareness campaigns, will, by 2025, lead to annual sales of 10 million electric vehicles worldwide. Bloomberg projects that EVs will capture nearly 60% of new car sales by 2040, while Energy Innovation predicts that EVs could make up 75% of light-duty vehicle sales by 2050.

As long as we continue to make progress reducing the use of coal in power generation and replacing those coal-produced electrons with electricity for cleaner sources, the projected transition to electric vehicles will make tremendous progress in urban air quality and global climate protection. Any delay in the natural retirement of coal fired power plants will delay the air quality and climate protection benefits that electric vehicles are poised to deliver. A delay is precisely what the Trump Administration’s plan to prop up the coal industry is going to deliver.