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Renewables Win the Debate Over Coal

Energy

I'm here to debate (along with Jody Freeman, the Archibald Cox Professor of Law at Harvard) a couple of coal advocates from Texas on the topic, "Has EPA Gone Too Far," with its Clean Power Plan (CPP).

Our opponents are Charles McConnell, who was assistant secretary for Fossil Energy in the first Obama Administration, and Michael Nasi, who leads the pro-coal Balanced Energy for Texas Coalition, comprised of coal companies, railroads, and coal-invested utilities and co-ops.

Intelligence Squared, which hosts the debate uses Oxford Union rules, which means the side which changes the most minds wins. Since most of the audience will probably start out supporting the Clean Power Plan—we're actually the underdog—we won't have as many people to move to our side as McConnell and Nasi.

Based on their previous articles and testimony, we expect the focus to be on cost, somehow replacing coal with clean energy is going to vastly increase consumer energy bills. But we feel well prepared—a day earlier, the nation's most coal dependent regional grid operator, PJM, has said that for a swathe of states from Virginia to Illinois, including the Appalachian coal belt, complying with the new cleaner electricity rules will have no impact on reliability and a minuscule 1-3.3 percent impact on power prices by 2030.

Perhaps because of the PJM release, McConnell and Nasi steer away from the economic arguments. McConnell focusses instead on the true (but irrelevant) fact that the CPP by itself does not rely on carbon capture and sequestration as a means of cleaning up coal plants globally (although any utility that chose to use CCS would get full credit for the carbon abatement that resulted). Nasi trots out the legal arguments against the very flexibility and affordability that the Environmental Protection Agency (EPA) has built into the regulations, arguing that in doing so EPA has stretched its authority under the Clean Air Act, which Nasi Claims actually requires its clean-up rules to be power plant by power plant, rather than treating an entire state's power sector as the benchmark for measuring emissions.

These are the core legal arguments the coal lobby will make before the DC Circuit Court of Appeals on Sept. 27 and they are revealing.

The coal lobby doesn't oppose EPA's clean power regulations because they cost too much; it opposes them because they are too economically attractive. They fear these rules will accelerate the shift away from coal that is already sweeping the U.S. power sector. Reliance on coal is down from 50 percent in 2005 to 32 percent this year. As a result, we have already gone half way towards the Clean Power Plan's emission reduction goals for 2030. And during that period of time what has happened to the price of wholesale electricity? It has dropped 10 percent. To reliability? It has remained steady.

And the infamous Obama Administration War on Coal? It's now the junior partner in an alliance with market forces, which are responsible for the fact that coal generation has dropped so far without the CPP even going into effect.

In Colorado, seven of XCEL's 10 coal fired power plants cost more just to operate than the cost of replacing them with brand new wind farms. Consumers in Colorado would have lower bills if they just paid XCEL to shut down its plants and substitute renewables. In Indiana, NIPSCO has conceded to state regulators that from a consumer perspective, shutting down all of its plants would be the cheapest option, even though the Clean Power Plan would allow half of them to remain open. In Pennsylvania a few years ago, GE Finance bought the huge Homer City Power Station at a fire-sale price and then poured $750 million in retrofitting it with scrubbers. The Sierra Club warned GE that the move was a loser. Three years later the plant is hemorrhaging money, back on the market—and likely to go again for fire sale prices. GE, an otherwise smart company, will take this bath.

But Texas, with the nation's biggest coal fleet is the most revealing of all—although neither Nasi nor McConnell is eager to tell the story tonight. Consumer organizations in Texas estimate that market forces alone will lead the state to such heavy reliance on renewables and gas that it will be 88 percent of the way to its Clean Power Plan goal. In fact, it looks like they are too cautious.

The big news in power circles in Texas this summer is that the owners of seven coal plants are suing the counties in which those plants are located for massive, up 85 percent, reductions in their assessed value for tax purposes. Why? Because they can no longer come close to competing on the Texas power market. The newest of these plants, Sandy Spring, recently won a huge jury award in such a case after arguing that it costs $.06 to generate a kWh of electricity from its plant, while the going power rate in Texas—a price set by wind, solar and gas—is only $0.03.

In his closing argument to the jury, the lawyer for Sandy Springs, summed up a coal plant operator's view of the future:

"You've heard a lot about this coal plant being new, with a lot of pollution control equipment, but it's still going to be a coal plant. It's never going to be a gas plant, a wind turbine or a solar plant. Clean energy and natural gas are the future. This plant is never going to be."

I use those as the closing remarks of my debate as well.

To my surprise, we move more of the audience our way than our opponents. McConnell and Nasi start with 18 percent support and end with 23 percent. We, as I expected, start with far more supporters, 59 percent, but end with 72 percent. For the on-line audience, the results are even stronger. Support for the CPP grows from 49 percent to 63 percent. Opposition shrinks, from 42 percent to 35 percent.

It's nice to win this debate. But it's even nicer to have the market in my camp.

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