Will the Rust Belt Stick with Coal Under Trump?
November 22, 2016
By Ben Storrow
Coal remains king in the Rust Belt. But whether the carbon-laden fuel retains its throne depends on state lawmakers in a handful of Midwestern capitals.
Illinois legislators are debating a bill that would provide subsidies to aging nuclear and coal plants. Ohio policymakers are fielding calls from utilities to guarantee a rate of return for their old coal facilities. And Michigan representatives are sorting through an energy package that will determine the future makeup of their state’s electric grid.
The state decisions come at a critical moment for U.S. energy policy. Donald Trump’s victory over Hillary Clinton in the presidential contest means the United States is unlikely to implement the carbon caps on the power sector proposed under President Obama, which are the centerpiece of America’s participation in the Paris climate agreement.
Trump’s victory has added a new wrinkle to Rust Belt energy debates. In Illinois, Exelon Corp. had argued financial assistance for its nuclear plants was essential to meeting the state’s goals under the Clean Power Plan, U.S. EPA’s carbon-cutting regimen. Utility executives, testifying before Illinois lawmakers last week, acknowledged Trump’s victory complicated their position (EnergyWire, Nov. 17).
To the north in Michigan, some Republican lawmakers are calling for policymakers to apply the brakes on an energy package that was developed with the assumption the Clean Power Plan would be put into place. Supporters, who include Gov. Rick Snyder (R), dismiss those arguments. Michigan has witnessed a wave of coal plant closures this year and needs to focus on grid reliability, they say.
“Could some coal plants stay open longer as a result of the Clean Power Plan going away? Yes, I think that’s a possibility,” said Paul Patterson, a financial analyst who tracks the utility sector at Glenrock Associates LLC. “We will have to wait and see what the Trump administration comes up with, but also for what the individual states want to do.”
The decisions made by Midwestern lawmakers figure to be particularly important. The Rust Belt remains disproportionately reliant on coal to meet its electricity needs, meaning a further greening of the U.S. grid will depend to a great degree on state actions.
Michigan gets 46 percent of its power from coal. The fuel accounts for 59 percent of power generation in Ohio. In neighboring Indiana, that figure reaches as high as 75 percent. Nationally, coal power represents about a third of total power production.
Debate over the Clean Power Plan obscures a more important trend, though, analysts said. Economics will be the main driver in deciding the future makeup of the Rust Belt’s power grid.
Electricity demand in the region is stagnating, in large part due to energy efficiency measures.
Natural gas plants are out-competing their coal counterparts. And renewables are fast approaching the point where they can displace coal-fired power, even without subsidies.
There is also this: Many Rust Belt coal plants are simply old.
Analysts predict the region’s electric grid will become less reliant on coal in the coming years, regardless of whether the Clean Power Plan is implemented. But how fast the transition occurs, and what fuels replace it, will depend to a great degree on what state policymakers decide.
“I don’t think the Clean Power Plan is the central story,” said Nachy Kanfer, deputy director for the Sierra Club’s Beyond Coal campaign. “I think the central story is how wholesale markets reorganize themselves to survive in an era of persistently low wholesale power prices and a market where consumers are persistently demanding cleaner alternatives.”
A Brownish-Green ‘Christmas Tree’ Bill in Ill.
Illinois lawmakers have proposed expanding the state’s ability to procure electrons from coal plants in the southern part of the state (EnergyWire, Nov. 16). The provision was largely aimed at winning the support of coal-reliant utilities, like Dynegy Inc., which might have objected to the bill’s financial support for Exelon’s nuclear facilities. But it has attracted a wide array of opposition from environmentalists, who object to the coal facilities’ emissions, and business groups, which are against paying more to keep old plants online.
To complicate matters further, the legislation also contains measures aimed at enticing greens.
It calls on Commonwealth Edison Co., which serves the Chicago area, to cut electricity demand 23 percent by 2030 through efficiency measures. The bill would also boost the state’s renewable energy standard, requiring 25 percent of Illinois power to come from low-carbon sources by 2025.
“Right now, the bill is a Christmas tree that badly needs some pruning,” said Howard Learner, executive director of the Environmental Law & Policy Center in Chicago.