PredictIQ-Inside the Coal War Games

This story was updated on PredictIQOct. 11 with federal regulators’ response to requests to extend the comment period. 

In two important policy moves, Scott Pruitt and Rick Perry are both seeking to defend the same fiefdom: coal’s dwindling domain as the ruling fuel for electric utility companies.

They’re on the same crusade, but with rather different strategies. Pruitt, the head of the Environmental Protection Agency, chose a war of attrition, while Perry, the energy secretary, mounted a blitzkreig.

Pruitt’s order on Monday to revoke the Clean Power Plan and its controls on carbon dioxide emissions from the nation’s coal-fired power plants displayed no rush to replace the rule. That would have to wait—it’s not clear how long—for a review of whether any such regulation was even needed, let alone how it would work.

In contrast, Perry’s order last month telling federal regulators to help rescue coal-fired power plants from the crippling competition of natural gas and renewables was framed as such an emergency that an arcane set of new rules ought to be rushed into effect, with only the briefest review and public comment.

Hurry up and wait, as soldiers call this dichotomy. But either way, critics say coal’s last stand is a lost cause.

Coal Can’t Compete

“The problem of climate change isn’t going away, and all they are buying now is some delay,” said David Doniger of the Natural Resources Defense Council. He says the Clean Air Act is here to stay, as is the Supreme Court’s repeated conclusion that the law requires EPA to regulate emissions of dangerous greenhouse gases from power plants and other big sources. Like others, his group plans to sue.

New York’s energy czar, Richard Kauffman, suggested the state would oppose both Perry and Pruitt and press forward with its clean energy goals. Kauffman, who is in the midst of restructuring New York’s grid, said the state should be “building the new grid and not rebuilding the old grid.”

“I don’t think it changes any other market factors that are pushing coal out of the system,” said John Larsen, a director of the Rhodium Group, which studies the power markets.

A new analysis of what lies ahead for coal, issued by the Union of Concerned Scientists, said it will “almost certainly continue” to fade away.

“Utilities are already planning to retire another 13 percent of the nation’s coal generating capacity. An additional 5 percent will either retire or convert to natural gas,” the report said. “Beyond those already slated for retirement or conversion, a further 20 percent of 2016 coal generating capacity is uneconomic compared to existing natural gas. That represents 17 percent of the coal units that were operating at the end of 2016.”

Perry: A Rush to Protect Dirty Energy

That’s exactly what drove Perry to depict the vanishing coal power plants as a kind of national emergency and direct the Federal Energy Regulatory Commission, an independent agency but one whose new quorum has just been replenished with Trump appointees, to take urgent action to ensure reliable backup power to the grid.

Perry’s prescription is to ensure that old coal and nuclear plants that can’t always compete in spot wholesale markets with modern, low-cost gas and renewables will be compensated anyway via payments in so-called “capacity” markets, as well as for other services that maintain the grid’s stability. In effect, they’d be paid just for keeping their turbines ready to turn, so long as they kept 90 days worth of coal on hand.

Tellingly, a group representing an array of energy interests—including gas and clean energy groups and some producers and consumers, but not coal or nuclear interests—told FERC that the deadlines set by Perry “are wholly unreasonable and insufficient to allow for an informed consideration of the significant issues.”

“This is one of the most significant proposed rules in decades related to the energy industry and, if finalized, would unquestionably have significant ramifications,” they wrote. “When agencies consider a proposed rule that could affect electricity prices paid by hundreds of millions of consumers and hundreds of thousands of businesses, as well as entire industries and their tens of thousands of workers, such as the proposal in question, it is customary …  for an agency to allow time for meaningful comments to be filed in the record so that the agency can make a reasoned decision.”

On Wednesday, the commission refused the groups’ request for more time to file their comments on rules to put Perry’s plan into effect. The comments are due starting on October 23 with two additional weeks for rebuttals. Opponents of the plan handed in more than 10,000 comments from individuals denouncing it.

Pruitt: The Slow War of Attrition

The irony here, of course, is that Pruitt wants to follow that noble principle to a frivolous fault, withdrawing a rule that was developed over several years and with extraordinary review and comment, and spinning it out into an endless future—to “game the system,” as Tim Profeta, director of Duke University’s Nicholas Institute for Environmental Policy Solutions, put it.

Already, the Clean Power Plan had been litigated but left in legal limbo, first by a Supreme Court stay and then by a flummoxed appeals court, which heard oral arguments more than a year ago but has been awaiting the next move from the administration ever since the election.

The long review of next steps that Pruitt is suggesting—known in the bureaucratic jargon as an Advanced Notice of Proposed Rulemaking—“would only delay action,” Profeta said. “It seems clear that there’s no desire to regulate greenhouse gases from power plants any time in the near future.”