Coal industry’s fight with EPA is a red herring

The Supreme Court’s stay against enforcement of the EPA’s Clean Power Plan comes as a potential setback to the Obama administration’s initiative to curb pollution from coal-fired power plants. The court, by putting a hold on the new rules, is responding sympathetically for the moment to opponents who argue that the EPA is being too tough on the coal-fired utility industry and that Obama is waging a “war on coal.”

The fact is that the assault on the Clean Power Plan—all the noise about how Washington has it in for coal—is a red herring. The coal industry is in deep trouble, to be sure, but not for reasons that have anything to do with the president or the EPA.

{mosads}Our research shows that many thousands of megawatts of existing coal-fired electric generation plants in the U.S. have come under substantial economic and financial stress from fierce market forces that show no signs of abating. Many coal-fired plant have closed, many more are scheduled to be closed, others are at risk of retirement simply because they are outdated, old and expensive.

Here are just a few of the headwinds facing the coal-fired electricity industry:

– A steep and sustained decline in natural gas prices that started in late 2008, driven by the large and growing supply of shale gas and a subsequent decline in the cost of generating power at natural gas-fired power plants.

– Increased competition from wind and solar industries, where installation has soared in recent years because of declining costs and thanks in part to support from federal and state programs.

– Ever-increasing coal-generation costs driven by rising operational and maintenance expenses that require more capital expenditures that offer little return because most coal-fired plants have aged past the point of efficient upkeep.

– Flat or relatively flat growth in electric usage, a trend that took root during the Great Recession of 2008-2009 and that has gained momentum with the deployment of energy-efficiency programs and distributed, on-site renewable resources.

All of these circumstances are independent of the Clean Power Plan and all have combined to undercut the viability of coal-fired plants and the profitability of the companies that own them. 

Blocking the Clean Power Plan isn’t going to change any of this. Energy markets are shifting regardless. Resistance to change—disguised in the case before the Supreme Court as a constitutional argument against the EPA—is really just another wrinkle in an increasingly desperate survival struggle.

The stay the justices granted against enforcement stands to be no more than a procedural blip in the coal industry’s long campaign to stop environmental regulation. It’s part of a larger course of action that has historically failed, and it’s one that comes too late anyway.

It makes no sense to continue squandering time and resources on pointless acrimony. The markets have spoken, and the new energy economy is leaving the old one behind.

Schlissel is director of resource planning analysis at the Institute for Energy Economics and Financial Analysis. Sanzillo is the institute’s director of finance.


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