Coal Use Continues to Decline in the U.S.

Three makes a trend, or so the saying goes. If that’s the case, events this week suggest the outlook for America’s coal industry is even bleaker than initially thought.

The first bit of bad news trickled out Monday, when PacifiCorp released a study showing that the majority of its 22 coal units are uneconomical. The utility, based in Portland, Ore., operates a six-state power system and is one of the country’s largest coal burners.

It was followed by a report released yesterday from the U.S. Energy Information Administration, which projected that U.S. coal consumption would hit a low this year not seen since 1979. The drop in consumption coincides with a near-record number of coal plant closures, which are on track to total roughly 14 gigawatts in 2018, or more than double 2017 levels.

The day was capped off by Xcel Energy Inc.

In an announcement alongside Colorado Gov.-elect Jared Polis (D), the Minneapolis-based power company said it intends to generate 100 percent of its electricity from carbon-free resources by 2050 and committed to slashing emissions 80 percent across its six-state system by 2030.

The announcement makes Xcel, another large coal consumer, the first major utility in America to commit to zeroing out its emissions.

“We’re accelerating our carbon reduction goals because we’re encouraged by advances in technology, motivated by customers who are asking for it and committed to working with partners to make it happen,” Xcel CEO Ben Fowke said in a statement.

If the news is bad for the coal industry, it represents a significant boost for climate hawks, who have struggled against the tide of the Trump administration’s rollbacks in Washington, D.C.

Xcel’s reported carbon emissions of 55 million tons in 2017 were greater than the energy-related emissions posted by 14 states in 2015, the last year for which federal figures are available.

Xcel has been one of the country’s leading carbon cutters in the power sector. Earlier this year, Colorado regulators approved a plan to retire two of the company’s coal units early and replace their power with renewables (Climatewire, May 7).

That the announcement was made alongside Polis was particularly notable. The Colorado congressman campaigned for governor on a pledge to move the state toward 100 percent renewable energy. Xcel is the largest utility in the state.

The move drew applause from environmentalists.

“Utilities have a critical role to play in reducing overall carbon emissions,” said Western Resource Advocates President Jon Goldin-Dubois. “Xcel Energy should be commended for its leadership in setting ambitious, achievable goals.”

PacifiCorp could soon follow suit. The report, released Monday as part of a public comment period before the release of the utility’s long-term plans next year, provides a pathway to closing several of the power company’s coal units early.

In one scenario, where the utility modeled outcomes based on system efficiency, PacifiCorp found that it could save consumers money by retiring 16 of its 22 coal units early. A scenario that assessed planning and risk concluded that retiring 13 coal units early would be a benefit to consumers.

“The study looked at the cost of continuing to operate these units versus other alternatives (renewables, natural gas, market purchases, etc.) and it reflects the continued cost pressure on coal generation driven by market forces and regulatory requirements,” PacifiCorp spokesman Bob Gravely wrote in an email.

The report’s recommendation centered on a scenario where four units would be retired in 2022. They include two units at the Naughton Plant and one unit at the Jim Bridger Plant, both in southwest Wyoming, along with one unit each at Colorado’s Hayden and Craig plants. PacifiCorp’s modeling shows the move could save ratepayers $317 million.

Questions remain. Gravely noted that a final decision on the plants’ fate won’t be made until the company files its Integrated Resource Plan next year with regulators in the six Western states where it operates.

And the company has said it needs to conduct further studies to ensure it can maintain system reliability even as it moves forward with retirements.

Environmentalists and consumer advocates said the report shows the need for PacifiCorp to reduce its dependence on coal, which accounts for almost two-thirds of its electricity production today.

“What we’ve seen is the results, and what we haven’t seen is what the company is going to do with those results yet,” said Bob Jenks, executive director of the Oregon Citizens’ Utility Board, a consumer group.

The debate over PacifiCorp’s coal plants comes as the utility gears up for a major increase in its renewable portfolio. The company’s plans call for building enough wind generation to power 400,000 homes by 2020 (Climatewire, May 4).

The climate stakes associated with PacifiCorp’s evolution are considerable. Carbon emissions associated with coal plants operated by the Berkshire Hathaway Energy subsidiary were roughly 38 million tons in 2017, according to EPA data reviewed by E&E News. That figure does not include four coal facilities where PacifiCorp owns a share of a plant, including Colstrip Generating Station in Montana and Craig Station in Colorado.

“If they’re uneconomic and contribute to the greenhouse gas problem, all the more reason to shut them down,” said Wendy Gerlitz, policy director at the NW Energy Coalition.

Jeremy Fischer, a senior technical and strategy adviser at the Sierra Club, framed the issue like this.

“PacifiCorp, more than any other utility in the country, sits closest to one of the largest coal basins in the country,” he said, referring to Wyoming’s Powder River Basin. “If coal units close to that basin aren’t able to operate reasonably or cost-effectively, that is indicative to where we are in the rest of the country.”

Indeed, EIA’s report confirms the sentiment. U.S. coal consumption is projected to fall to 691 million tons in 2018, a 4 percent decline from the prior year. The agency said it expects consumption to decline another 8 percent in 2019.

Roughly 55 GW of coal capacity has been retired since 2007, when the capacity of the entire U.S. coal fleet was 313 GW, EIA reported.

This year’s retirement total is exceeded only by 2015, when more than 14 GW of coal capacity was switched off. If PacifiCorp and Xcel’s moves are any indication, more coal facilities could be headed for the scrap heap in the years to come.

Reprinted from Climatewire with permission from E&E News. E&E provides daily coverage of essential energy and environmental news at www.eenews.net.



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