A future for America's 'very, very good coal'

The following is the final installment in a three-part series examining the factors inhibiting the addition of coal-fired generation capacity in the U.S. This story looks at the politics of coal and what might be needed to get a new power plant built. The first installment explored what is considered "state of the art" technology for coal generation and the challenges facing developers, while the second story addressed the policies that have boosted coal in China and the market conditions currently disadvantaging new capacity running on that fuel in the U.S.

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Thousands of people march down Pennsylvania Avenue in Washington, D.C., in April 2017 to protest inaction on climate change and the administration's approach to fossil fuel regulation.

Source: Annalee Armstrong/S&P Global Market Intelligence

With Donald Trump in the White House and a Republican majority in Congress, the political environment on the surface would appear to be ripe for a new fleet of coal-fired power plants to find support.

But if a proposed coal-fired power plant were to beat the odds stacked against it by market conditions and technological hurdles, it still could face a steep climb in an America that is becoming increasingly aware of the environmental impacts of power generation.

"You've got a lot of people in the country who believe that climate change is real. A lot of people in the financial community believe it's real," said David Schlissel of the Institute for Energy Economics and Financial Analysis. "Politically, it would be suicidal. At least you'd get a tax break if you gave your money away to charity."

Looking beyond the political rhetoric, however, what policy steps and regulatory changes would need to be made to support investment in new coal capacity?

Explaining that he is unaware of any plans for new facilities in active development right now, James Wood with West Virginia University, director of the U.S.-China Clean Energy Research Center's Advanced Coal Technology Consortium, said he thinks many years could go by before another coal power plant is constructed in the U.S.

"I'd say in order for one to be built, you would need to have a solicitation out today," Wood said. "Because between the time that you find a site and begin the permitting process, do the construction, [and] start it up, it's going to be a decade."

According to data from S&P Global Market Intelligence, just 17 MW of coal-fired generation is slated to be added in the U.S. in 2018. That small addition results from a coal-fired generator under construction at the University of Alaska. Officials in Alaska told the Anchorage Daily News in September 2017 that the new plant was a compromise for the future of the aging facility as the region struggles to secure a power source other than coal. Meanwhile, plans by Sunflower Electric Power Corp. to add 895 MW to the Holcomb coal-fired power plant in Kansas remain up in the air as one partner in the project, Tri-State Generation and Transmission Association Inc., said in September 2017 that it doubted the expansion ever would come to fruition.

So if someone wanted to get a new coal-fired plant built, what would it take? According to Wood, a tough conversation on how coal and other resources are valued in power markets, along with related policy shifts, would be a good place to start.

"If you stand back and put on a private sector hat, you see that there have been a lot of advantages given to renewable power," Wood said, pointing out that those advantages usually are in the form of tax credits. "If that's public policy, then I would think we want to be fairly considering the value of things like having a pile of fuel stored on the ground for 60 or 90 days, so that if something were to happen, you could get a power plant online."

An attempt by Energy Secretary Rick Perry to establish such a policy was rejected recently by the Federal Energy Regulatory Commission. That grid resilience plan, which proposed incentives for generators in certain markets that maintain a 90-day fuel supply, was widely panned by stakeholders across the power industry. Perry's proposal did not speak specifically to new coal plants, but rather was meant primarily to address retirements of existing facilities. And though Wood did not endorse, or even refer to, Perry's plan in particular, he predicted that coal's future is bleak absent such a policy.

The regulations

Wood and other experts believe clarity on the environmental requirements applicable to coal-fired generators also would help potential investors prepare for a new era of coal capacity.

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Sen. Joe Manchin, D-W.Va., right, speaks to Energy Secretary Rick Perry, left, during a tour of the Longview power plant in West Virginia in July 2017.

Source: S&P Global Market Intelligence

A new coal-fired power plant would face regulation at both federal and state levels. Christopher James, principal of the Regulatory Assistance Project — which bills itself as an independent, nonpartisan organization focused on the transition to a clean, reliable and efficient energy future — said emissions requirements established by the states, many of which are turning toward clean energy mandates, could be even tougher than U.S. Environmental Protection Agency regulations.

James believes that few state lawmakers and utility commissioners would be interested in seeing a new coal plant built amid growing public pressure to develop cleaner sources of power. Coal states such as Ohio or West Virginia may be more receptive, he said, noting that the latter in 2006 approved the state-of-the-art Longview coal-fired power plant, which was completed in 2011.

"On a whole, the state of West Virginia really, to this day, points to Longview as something they're very proud of," said Longview Power LLC COO Steve Nelson. "It's a cutting-edge facility that is significantly cleaner and more effective than the legacy plants."

At the federal level, the EPA regulates pollution from the power sector. James said a new coal-fired unit would need to obtain a permit under the New Source Review process, which likely would require complex modeling to show the extent to which the facility would impact attainment with any of the National Ambient Air Quality Standards, or NAAQS.

Under NAAQS, power plants are regulated for particulate matter, ozone, sulfur dioxide and nitrogen oxide. For a plant located in an area that already is exceeding a NAAQS threshold, James said, the developer would need to demonstrate compliance with the lowest achievable emissions rate and procure offsets for any emissions increases.

And that is just on the air quality side, James continued, noting that power plants also are subject to cooling water intake, effluent and coal ash rules.

As for greenhouse gas emissions, the jury quite literally still is out on the EPA's carbon pollution standards for new fossil fuel power plants, which would require new coal-fired facilities to include carbon capture technology. That rule currently is under review by the Trump administration, and a court separately is addressing a legal challenge that is being held in abeyance pending the review.

The future regulation of carbon from new power plants therefore remains uncertain, but predictable, stable rules are what the industry would need as a signal that new coal would be welcome, according to Nelson.

"What Longview has done is ... demonstrated that a coal unit can meet regulatory requirements. But we're still in this state of flux around what is the regulation and how is it going to be going forward, especially with CO2," Nelson said.

A 'more mature discussion'

While many experts, including Schlissel, James and Wood, look at the continuing retirement of coal plants as a sign of the fuel's uncertain future in powering America, Nelson sees the trend as opening a window for new coal.

"Those old coal units are less efficient. They're less clean. They're not as reliable," Nelson said. "If we can get more old coal out, a new coal unit starts to make a lot more sense."

On the technology side, Wood thinks the Department of Energy's research programs need to be updated, and he supports former Energy Secretary Ernest Moniz's proposal to refocus the government's research spending on clearly defined outcomes.

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"We ought to have some outcomes that we expect, that we rely on, that we analyze, and that we make judgments about, before we continue to fund programs willy nilly, or just continue to fund programs year after year," Wood said. Difficult decisions must be made earlier in the process when something does not work or when a better solution is identified elsewhere, he added.

Nelson and his team have been eager to share Longview's success, and they would love to see similar facilities manufactured in the U.S. rather than in China, as was the case with the West Virginia facility. For that to happen, however, Nelson said manufacturers would need predictable and favorable regulatory requirements, automated processes and "a fair amount of domestic demand." Although Trump has touted American energy dominance and the use of U.S.-made materials for projects such as pipelines, Nelson said he has not seen signals from the administration of a specific desire to promote U.S. manufacturing of coal-fired power plants.

Wood, for his part, worries that innovation and research is being ceded to China when the U.S. could build better, more efficient power plants at home.

So with the future so muddled with regulations, economics and politics, why do experts such as Wood and Nelson still support research into new coal-fired generation technologies?

"The political climate across this country doesn't really understand the difference between a Longview ... and legacy coal plants, and they probably should," Nelson said. "We're really, truly going to need some coal and nuclear."

Nelson therefore said he is eager to see a "much more mature discussion" about the future of coal, and Wood believes that the U.S. should be burning its own coal rather than shipping it elsewhere and allowing other countries to achieve clean-coal generation technology breakthroughs.

"We have an enormous amount of coal, and, by the way, it happens to be very, very good coal. We shouldn't be exporting everything we have out of the U.S.," Wood said. "It doesn't make a lot of sense to me to take the ... coal that we have in West Virginia and pack it into rail cars and send it over to China."

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