The fall of coal

lede_150412_martinson_coal_ap_1160.jpg

On a sweltering day in July 1979, President Jimmy Carter flew to Kentucky with a message: The nation’s energy future rested on coal.

Not only was coal cheap and abundant, Carter made clear as he donned a hard hat to tour the Cane Run power plant near Louisville — it could also exist side by side with protecting the environment. Cane Run was ecologically state-of-the-art, one of the first plants in the country equipped to scrub acid rain-causing chemicals from its exhaust, making it “a testimony to the technological genius of Americans,” the president said. And for a nation traumatized by soaring energy prices, where more than a fifth of the power supply still came from burning oil, coal could help free the U.S. from its dangerous reliance on the Middle East.

“I would rather burn a ton of Kentucky coal,” Carter said later that day in a high school gym, “than to see our nation become dependent by buying another barrel of OPEC oil.”

But five presidents later, coal’s future is closing at Cane Run: Louisville Gas & Electric is shutting down the plant’s three coal-fired boilers next month, replacing them with natural gas.

It’s a scene playing out around the country, as dozens of coal-burning plants prepare to close amid a barrage from cheap natural gas, green opposition and President Barack Obama’s environmental regulations. The biggest Obama environmental rule to take effect so far — an EPA measure to curb power plants’ mercury pollution — kicks in on Thursday. An even bigger set of limits on greenhouse gases is due this summer.

When power companies plan for the future nowadays, it’s a future heavy on natural gas and wind, with solar energy running a distant third. Coal is almost entirely absent from the mix of new plants scheduled to open in the coming decade.

(CHART: America’s changing power mix)

“Clearly the energy horizon has changed significantly,” said Louisville Gas & Electric retiree Chris Hermann, who was the young plant manager who led Carter’s tour 36 years ago. Back then, he said, the coal plant’s moment of White House limelight was “a big deal. … With the knowledge that we had and the place we were environmentally, we really thought this was leading edge.”

That pace is set to accelerate in the next eight years, when another 76 plants are projected to take more than 28,000 megawatts of coal power out of commission — stretching from Somerset, Massachusetts, to the only commercial coal plant in Washington state. (The U.S. power supply from all sources is about 1 million megawatts.)

Since 2008, coal has dropped from providing nearly half of the U.S. power market to about 39 percent.

(MAP: America’s coal-burning power plants)

Driving this trend: The Baby Boomer generation of coal-fired power plants built in the 1950s and ’60s is retiring, after decades of being excused from the most stringent pollution rules.

“Judgment Day is coming,” Bruce Nilles, who leads Sierra Club’s Beyond Coal campaign, said, adding that the mercury rule “has forced investment decisions at a bunch of old, very dirty coal plants. And a good number have decided it’s not worth investing in this old, dirty coal fleet.”

But it hasn’t been a smooth path, Nilles added. “Every rule EPA has issued, we had to sue them to issue,” he said.

Critics like Senate Majority Leader Mitch McConnell (R-Ky.) denounce Obama’s regulations as a “War on Coal,” pointing to the thousands of jobs that have vanished as the coal industry wanes. Coal supporters and some regulators also warn that the loss of so many power plants could lead to blackouts during times of peak demand, although reliability regulations are supposed to keep that from happening and the amount of new gas and wind power being planned would more than equal what’s shutting down.

“Maybe EPA and others think that this country can prosper and succeed without a strong continuing coal role,” said National Mining Association President Hal Quinn. “That’s a real bet.”

In part, the fate of coal reflects changing presidential priorities: Carter wanted to see the end of oil-fired power plants, and by and large he got his wish. Last year, just 1 percent of U.S. electricity came from petroleum. Now, Obama’s big domestic priority is tackling climate change, so carbon-heavy coal power is on the chopping block.

Coal power isn’t going away entirely — it’s still the No. 1 fuel for U.S. electricity and will remain a major source for decades to come. But its shrinking role is hard to miss.

Since 2012, when the EPA finished its mercury rule, at least 58 coal-burning power plants have partially or entirely shut down, according to data from the U.S. Energy Information Administration. That has taken more than 16,000 megawatts of capacity offline, enough to power roughly 16 million homes.

But federal regulations aren’t the only reasons coal plants close, said Christine Todd Whitman, who was EPA administrator during President George W. Bush’s first term.

“You’ll find nine times out of 10 it is economics,” Whitman said. Then again, when a company announces a shutdown, it’s “better to say you’re closing down because the government made me do it.”

The industry is also feeling the effects of the fracking boom, which has flooded the market with inexpensive natural gas — a fossil fuel that also benefits from being less polluting than coal. Meanwhile, wind and solar power have become more competitive thanks to help from federal tax credits, although the wind credit expired last year.

“There is an enormous amount of change and innovation that is going on in the electric market,” said Paul Allen, senior vice president at the consulting firm MJ Bradley & Associates, who was a top environmental officer at Constellation Energy, a company heavy with natural gas and renewable power. He called it a “tectonic shift.”

Meanwhile, green groups like the Sierra Club have fought hard to hasten the shift. Those efforts got a big boost last week when former New York Mayor Michael Bloomberg announced that he and other donors would contribute as much as $60 million to the Sierra Club’s anti-coal campaign.

These trends reinforce each other: Increasingly strict air pollution rules make it more expensive to keep older coal plants running, lessening their competitive edge against gas, wind and solar. In turn, that helps environmentalists argue that the soundest economic strategy is to close the plants, not upgrade their pollution controls — especially with the EPA climate rules approaching.

That fight is “playing out literally in every public utility commission across the country… far outside the Beltway,” Nilles said. “Economic regulators are looking at the costs and saying, ‘Why would we invest in more coal?’”

He added: “Five years ago, we were in the unenviable position of saying, ‘Do the right thing; it’ll cost more.’ That is no longer the case.”

The approach worked in eastern Kentucky, where American Electric Power decided in 2013 that it would shut down its coal-burning Big Sandy plant rather than spend $1 billion on an anti-pollution upgrade. It’s heading toward success now in Oklahoma, where greens are pushing utilities to backtrack on plans to upgrade older coal plants, and in Iowa, where the power companies were once 70 percent coal-fired, Nilles said. “We’ve managed to get almost 10 coal boilers in Iowa shut down, largely replaced with wind power,” he said.

In Coweta County, Ga., the soon-to-close Yates Power Plant has found a new role as a backdrop for post-apocalyptic Hollywood drama — scenes were shot there for “The Walking Dead” and one of the “Hunger Games” movies. It’s one of 15 plants that Georgia Power plans to shut down in response to the EPA regulations.

When the agency’s mercury rule takes effect Thursday, 600 power plants nationwide must meet the tight new standards or close their doors, with the exception of about 175 plants that have gotten an additional year to comply. Those that keep operating will have to capture 90 percent of their mercury pollution while reducing acid gases, sulfur dioxide and soot.

The rule effectively “makes permanent” the trend toward natural gas, the mining association’s Quinn said.

One hope for the coal industry may lie in the courts. The Supreme Court heard a challenge to the mercury rule last month, and the EPA climate rules are expected to draw a throng of lawsuits.

The coal plants that are shutting down tend to be older, smaller and used less often than most of their peers — in many cases, they were plants that power companies use to meet peak demands, such as on the hottest days of summer. For now, coal is still the nation’s leading source of utility power, providing 39 percent of the mix last year compared with 27 percent from natural gas. (Wind and solar combined provided less than 5 percent.)

The EPA’s analysis of the mercury rule calls it an economic big win, saying the utilities’ projected $9.6 billion in annual costs will be more than outweighed by $37 billion to $90 billion in yearly benefit like reduced deaths, illnesses and lost work days. But for now, jobs are a big casualty of the industry’s shift from coal.

The electric power generation industry lost 5,800 jobs from January 2011 to June 2014, even considering the creation of 1,800 new jobs in renewable energy, according to federal data. (Those numbers don’t include jobs in construction, transmission or distribution.) While many of those losses stemmed from coal plant shutdowns, and the fact that natural gas plants require fewer employees, the Energy Department says 4,000 of the lost jobs were in nuclear power, which has its own troubles.

While those trends play out, Louisville got another presidential visit this month. On April 2, Obama toured Indatus Solutions, a technology company he praised for its “hip and cool” vibe and its role in “helping to prepare people of all ages for the higher-paying, in-demand jobs of the future.”

“What’s happening here is essential to America,” Obama said. But he wasn’t talking about coal.