Yesterday the Obama Administration will unveil the final version of its “Clean Power Plan,” a regulatory framework under the Clean Air Act designed to reduce the United States’ greenhouse gases by 30% in the next fifteen years.
You will no doubt hear conservatives and pro-coal advocates howl about a “war on coal” and engage in economic fear-mongering with threats of power plant closures, blackouts, and utility spikes. But that is complete nonsense.
Every single time there is any effort to demand more energy efficiency and more socially healthy forms of energy generation, you will hear these doomsday scenarios. And every single time they will fail to materialize.
Yes, there will be coal burning electrical plants that will close in Ohio. However, there have been seven closures in the past few years with no negative impact on Ohio’s electrical market. The problem in Ohio is that we have an over-reliance on a network of aging, inefficient coal burning plants that are well past their prime. Many of these coal plants, thanks to the rise of more efficient, cleaner sources of energy have largely operated with skeletal crews as the plants are kept only on a standby status to handle peak energy demands that are being met with renewable and cleaner forms of energy (including, it should be noted, gas powered generation as a result of fracking.)
For example, back in April, FirstEnergy announced it was closing the last three of its coal burning plants along Lake Erie rather than modernize them to make them more efficient and less polluting. One of the plants was over 100 years old. All the employees at those plants were offered jobs at other plants:
The company said its Eastlake plant has operated only about 4,000 hours since September 2014, while Lake Shore and Ashtabula each operated for less than 1,000 hours.
At the same time, AEP announced that it was closing two Ohio based coal plants as part of closing seven nationwide. It also announced that two plants, in Kentucky and Virginia, were being converted from coal to gas:
The Picway plant is an outlier, the smallest and least-used in the group. It has been available at times of high demand but has not been used since mid-2013, AEP said (emphasis added.) The plant has no full-time staff members. The small crew that works there is officially part of the staff at the Conesville plant in Coshocton County.
None of these plant closures impacted the reliability of our electric grid, nor did our prices skyrocket as newer, cleaner forms of power generation was coming on line to meet the demand these older, out-of-date, inefficient coal plants. More often than not, a vast majority of those employees were simply transferred to the newer plants.
Under the proposed draft language of the Clean Power Plan, Ohio would have to reduce its carbon intensity (not exactly the same as emissions) by 27.7% . However, the Clean Power Plan uses 2005 data as its baseline. So Ohio would have to reduce it’s carbon intensity from its 2005 levels by that amount by 2030. But as the Cleveland Plain Dealer pointed out:
That sounds daunting, but the reductions are based on 2005 levels, and greenhouse gas emissions, primarily carbon dioxide, had already dropped by 10 percent nationally from that level as of last year, the EPA says. In Ohio, where utilities have been dialing back on their use of older coal burning plants — partly because of age and inefficiency, partly in response to other environmental rules — carbon dioxide emissions from coal-fired power went from 139.8 million tons in 2005 to 96.1 million tons in 2012, according to the U.S. Energy Information Administration.
So, Ohio’s already reduced actual emissions by over 31% from ’05 levels (again emissions are not exactly the same thing as intensity. However, a drop in emissions such as Ohio’s would no doubt lower its carbon intensity as well.)
How did Ohio do it? Enter Ted Strickland’s renewable energy portfolio. As Tim Kovach mentioned a year ago when the proposed draft of the Clean Power Plan was released, Strickland’s energy portfolio requires a cumulative energy efficiency standard of about 22% from the ’05 benchmarks in roughly the same time span. Indeed, the U.S. EPA specifically mentions the renewable energy portfolio, that was passed by a nearly unanimous bipartisan majority in 2008, as a step Ohio has already taken that brings it into compliance with the Clean Power Plan. It also mentions how Ohio has adopted energy efficient building code policies such as those implemented by Governor Strickland that resulted in 22 of the new Cincinnati Public School buildings to be LEED-certified sustainable buildings, making the district, and Ohio as a whole a national leader in environmentally sustainable schools.
On the other hand, Rob Portman, while an avid kayak enthusiast, has a 20% lifetime rating by the League of Conservation Voters and was already introducing a budget amendment allowing states to opt out of the Clean Power Plan back in March before the Clean Power Plan rules had been finalized. (Ted Strickland has a 77% lifetime rating, in case you were wondering.)
Here’s the facts. In 2010, coal was responsible for generating 84% of Ohio’s electricity. Last year, that number is down to 67%. The marketplace itself is placing a premium on increasing efficiency and diversifying our electric market. In the 1990s, FirstEnergy was THE leading utility pushing Republicans in the Statehouse to deregulate the electric market because it calculated that with coal’s large share of the market, it would be the cheapest form of electricity on the wholesale market, so FirstEnergy would financially benefit better under a deregulated market. But then the deregulated market does what most markets do: allow diversification and innovation to create competition.
Renewable energies became more economically feasible and the price of natural gas plummeted thanks to the surge in supplies (yes, because of fracking). Now, coal is struggling to compete with the wholesale price marketplace. Government regulation isn’t waging a war on coal. Coal is simply losing market share as it struggles to compete with more efficient and affordable forms of energy. So, now coal energy companies are waging war on efficiency.
Part of the reason that FirstEnergy and AEP announced the plant closures when they did in 2012 (other than it helped fuel the anti-Obama “War on Coal” meme) was because PJM Interconnection, the non-profit manager of the high-voltage grid in Ohio, was holding its annual auction for the utilities to supply the wholesale electric market. By taking those aging, inefficient and hardly used plants off, FirstEnergy could justify raising its price in its bid for its remaining plants to supply the grid. But then environmentalists took FirstEnergy to PUCO and successfully got PUCO to order FirstEnergy to lower its bid since it failed to account for the decrease in demand caused by Strickland’s efficiency standards in the renewable energy portfolio law that would lower prices.
FirstEnergy naturally just turned around and lobbied the Republican General Assembly and Governor John Kasich to freeze the renewable energy standards so it could justify not including the change in demand instead. Oh, and they also sued PJM to legally challenge factoring in energy efficiency in determining wholesale electricity prices at all. Both AEP and FirstEnergy have gone before PUCO to ask it to allow them to create guaranteed funding streams for their aging coal plants to protect them from losing revenue to gas and other forms of energy generation. FirstEnergy has even publicly stated it would like Ohio to re-regulate the wholesale electric market because it cannot economically compete with natural gas. These companies aren’t exactly acting like Adam Smith disciples.
Utility companies like FirstEnergy bet big that it could squeeze out more profits from consumers if Ohio deregulated its wholesale market and it cuts costs by not modernizing, innovating, or diversifying its energy portfolio. When the wholesale market price dropped due to increased efficiency and a drop in natural gas prices and the growth of renewables that created real competition, utilities like FirstEnergy found out that they couldn’t compete anymore.
So now they’re pushing back against policies that favor energy efficiency and reward energy companies willing to take risks and innovate, modernize and diversify our energy portfolio. Coal isn’t pushing to get government out of the way of the invisible hand of the market. Instead, they are asking the government to tighten its grip for them before even more of coal’s marketshare slips through their fingers. That’s why they wanted the renewable energy and efficiency standards frozen. That’s why Governor Kasich continues to push to raise taxes on natural gas drilling. That’s why they’ll scream bloody murder over the Clean Power Act, which is an incredibly flexible plan that makes both economic and public health sense.
If only Rob Portman cared more about protecting Ohio’s blue and green collar workers from unfair trade tactics permitted in those trade deals he loves so much he doesn’t even have to look at them to support them than he does protecting Bob Murray’s bank account, maybe then he wouldn’t be an endangered freshman Senator next year.
Rob Portman can throw up pictures of his kayaking outings to say he’s truly an environmentalist. But he can only occasionally talk the talk.
With Strickland and his record of promoting innovation in creating the next generation in the energy industry, Ted is the only candidate with a record of walking the walk.
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