By Steven Winberg, Net Negative CO2 Baseload Power, Inc.
As the United States goes down the energy transition road, the coal industry must decide if it wants to continue its slide to the bottom or secure its role in this energy transition. Coal-fired electricity generation plants are aging and electricity generators are leaving coal. If the coal industry wants a future, it must lead in the development of 21st century coal technology because no one else will.
Coal is America’s most abundant energy resource but has been on the environmental hit list for decades. The environmental community’s dogged persistence in demonizing this rich domestic energy resource has turned coal into a four-letter word across many sectors of the economy, including coal’s customers, Wall Street, insurance companies and many average Americans.
While coal has lost many battles (including those it never showed up to fight), the war on coal is not yet won and it is far from over. Recently, coal showed its value by quickly filling the global energy void when natural gas and oil got caught up in geopolitical challenges. However, these geopolitical challenges will eventually fade, and unless the coal industry steps up to reinvent itself, it will be, once again, pushed away. Central to this reinvention is a robust 21st century technology initiative focused on maintaining electricity affordability and reliability while also embracing a growing global desire to reduce greenhouse gas emissions.
As markets and policy-makers continue to place increased emphasis on reducing greenhouse gas emissions, the United States’ electricity infrastructure is in the midst of an expensive and rudderless transition that is compromising electricity grid reliability and causing severe economic impacts to electricity consumers. NERC’s recent reliability reports show that 70 percent of the U.S. electricity grid is at risk of disruption and some parts of the country’s grid are at risk even when there is not extreme weather. Just last month, the PJM Interconnection came out with a stark warning: “Resource retirements and load growth could potentially outpace new entry (at the current pace of new entry, resource adequacy risks could emerge by 2028-2030).” Added to these reliability concerns is electricity price inflation over 14 percent, which is more than double the rate of inflation. Clearly, this is unacceptable, and any transition must be implemented in a clear-eyed, pragmatic way that provides affordable, reliable, clean electricity for all.
While a transition is inevitable, it need not exclude coal. The expansion of intermittent renewable electricity generation and premature retirements of baseload coal, nuclear and even natural gas generation are placing electricity supply at increasing risk, and not just in California and Texas but, as NERC points out, across the country. We need only look to European energy prices and electricity shortages to get a glimpse of our future if the country stays on this course. The president’s 2035 goal of net-zero emissions from electricity generation and his 2050 goal of net-zero economy-wide emissions are unachievable, are driving up costs and are negatively impacting electricity reliability.
Consider this: The renewables community has been bragging that new renewables are less expensive than existing coal and natural gas electricity generation. If true, then why should taxpayers continue to subsidize renewables? The short answer is that renewables no longer need these subsidies. However, the recent passage of the Inflation Reduction Act (IRA) provides a massive $369 billion expenditure of taxpayer dollars, principally to drive the nation toward renewable energy. The IRA increased the renewable Production Tax Credit (PTC) to 2.75 cents/kWh plus created additional bonus credits boosting renewable subsidies to 3.3 cents/kWh but does not require intermittent wind and solar to have any storage or back-up electricity capability. So, if the sun and wind do not show up for work, as happens approximately two-thirds of the time, other standby sources of electricity have to make up the electricity shortfall. Keeping coal and gas plants on standby to backstop intermittent renewables, rather than operating at full utilization, imposes enormous hidden costs on electricity consumers.
So, IRA’s enhanced renewable tax credits will encourage more intermittent renewables, which will exacerbate our developing national electricity grid reliability challenges all at the expense of the taxpayer, the budget deficit and, ultimately, our national debt. Of course, this will also increase electricity costs. The net effect will be higher electricity prices and less reliability, a situation that damages all sectors of our economy and adds to the inflation woes that Americans are experiencing. Unfortunately, coal did not effectively engage in the political debate and came out an IRA loser. Another battle lost, but not the war.
To win the war, coal can’t just defend the status quo. Coal must demonstrate to policy-makers and stakeholders that it is part of an affordable, reliable, clean electricity system. Advanced technology is coal’s best point of leverage. Coal must advocate for pragmatic solutions that develop and commercialize 21st century technology across all sources of enery, including nuclear, renewables, hydro, geothermal and fossil fuels. Simultaneously, coal must push back against legislated and regulated solutions that seek to marginalize it.
What coal’s critics often ignore is high-efficiency coal plants that integrate carbon dioxide capture and storage (CCUS). When combined with biomass co-firing, these plants can generate reliable baseload electricity with net-negative CO2 emissions. This is not to say that every coal plant must adopt this solution, but rather that coal can do its part to address greenhouse gas concerns while buttressing electricity system reliability. What is needed are incentive-based federal programs (similar to those granted to renewables) to use the existing coal infrastructure, keep the transition cost low and protect coal communities and coal-state economies all while making a valuable contribution to CO2 emissions reductions.
Maximizing the use of existing generating assets, especially electricity transmission lines, will reduce the transition cost and benefit all electricity consumers. Further, technology leadership
can be a basis for the United States to export 21st century coal technologies to countries that have pledged to continue to use coal to grow their economies. Without a technology solution in place, global emission reduction goals are folly. Such exports would position the United States to strengthen its global leadership position on both clean energy technology and climate change solutions. If we choose not to adopt pragmatic solutions, the path that we are currently on requires not only a massive build-out of intermittent renewables but also a massive build-out of new, high voltage transmission lines crisscrossing the country, costing trillions of dollars and laying waste to much of our existing transmission network.
The coal industry and coal-producing and coal-using states need to seize the opportunity to protect coal, our nation’s largest energy resource. In short, coal needs to take control of its future. That future can be a slide to the bottom or a strong future well into the 21st century.
Some suggestions for a strong future for coal:
- Protect the existing coal fleet by upgrading these plants to improve efficiency and reduce CO2 emissions. By doing so, existing infrastructure can play an important role in keeping electricity affordable and reliable;
- Repair coal’s severely damaged image. Mining will continue in the United States whether it’s coal for electricity and steel
or mining for cobalt, lithium, copper, rare earth minerals and a host of other materials needed for even the most aggressive transitions to green energy; and - A sustained, fact-based education campaign is needed to convince stakeholders that coal can play an important role in a net-zero emission future where everyone has access to affordable, reliable, clean energy.
The IRA production and investment tax credits need to be restructured to be fuel-neutral with credits awarded based on a generating project’s carbon footprint and ability to reliably deliver electricity. CCUS-enabled fossil, renewable energy with storage, nuclear and other generating projects should be eligible for these tax credits.
The Department of Energy needs to establish a net-negative CO2 baseload power program to provide grants to power plant owners. The focus of these grants would be to assess the site-specific technical considerations and costs of implementing biomass co-firing and CCUS, which would convert these baseload electricity generators from CO2 emitters to net-negative CO2 baseload electricity generators. These assessments would include identifying what federal and state financial incentives may be required to support conversion.
Congress needs to recognize that while voters want clean energy, they are more concerned about affordable and reliable energy. Therefore, government agencies, like EPA, must be legislatively required to consider reliability when imposing more regulatory controls on electricity generation.
Coal industry, it’s time to get to work!
Steven Winberg is chairman and CEO, Net-Negative CO2 Baseload Power, Inc.
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