Study’s Findings Don’t Reflect the Regulatory Reality
WASHINGTON, DC (October 20, 2016)– A recent analysis by the Great Lakes Energy Institute (GLEI), of Case Western Reserve University, concludes the decline of the nation’s coal industry over the past eight years has been due to market forces and technology rather than the regulatory policies of the Obama Administration. “EPA rules have little to do with coal’s decline”, the analysis says. “Shale-gas competition has decimated coal.”
The American Coal Council found that GLEI’s analysis contains numerous flaws and omissions, and we disagree with GLEI’s conclusion. There is abundant evidence that coal’s decline is directly related to regulations promulgated during the two Obama terms – regulations which have significantly increased the cost of using coal for electricity generation, made it less competitive in the fuels marketplace, and resulted in the closure of a large number of coal plants. In addition to forcing the shutdown of existing coal plants through regulations such as the Mercury and Air Toxics Standards (MATS), the threat of EPA’s impending regulations for C02 has already shut out the building of new coal plants.
The MATS rule was issued by EPA in late 2011, with a compliance deadline of April 2015. Litigation opposing the rule wound its way through the court system and ultimately resulted in a Supreme Court ruling in June 2015 that MATS was unlawful, as EPA had not appropriately considered the costs of the rule. Without any prior court order to stay the rule’s deadline, the electric power sector was forced to implement compliance plans. These plans included decisions to prematurely shut coal plants, switch fuels, or add controls – and were largely made well before April 2015. For information on MATS compliance, GLEI had only to look as far as their nearby utility neighbors in Ohio which have been addressing the issue for some time.
American Electric Power’s website explains, “…by mid-2016, AEP will have retired approximately 6,500 megawatts (MW) of coal-fired generating capacity as part of AEP's plan for complying with the Mercury and Air Toxics Standards for existing power plants that were approved by the U.S. Environmental Protection Agency in December 2011.”
"Environmental regulations have had significant impacts on coal-fired generating plants nationwide in recent years," Stephanie Walton, a spokeswoman for Akron-based FirstEnergy Corp., said a recent interview with internet newspaper Cleveland.com. "In fact, since 2012, FirstEnergy has deactivated nine coal-fired power plants due to the compliance costs associated with the MATS Rule. Those nine plants represented approximately one quarter of the company's coal-fired fleet and more than 3,300 megawatts of generating capacity."
There are other problems with this study. Among them are the authors’ decision to exclude “extraordinary spikes” in the price of natural gas, skewing the results of the calculation of average gas prices. Additionally, the coal prices used are higher than market, off by a factor of up to nearly 30 percent.
It’s important also to point out that GLEI’s analysis only addresses EPA air quality rules, which are just one dimension of the regulatory policies so pointedly focused on coal. They have been accompanied by a host of other regulations affecting water and combustion by-products.
The reality is clear. While the abundance of natural gas in the marketplace has been a factor in the decline of coal, the principal driver has been the regulatory agenda of the Obama Administration.