by Michael Cain
It’s been a tough year for coal in the United States. I generally dislike the use of war-on-this and war-on-that. But if the intended meaning is “make it much more difficult and/or expensive to continue burning large quantities of coal to produce electricity,” then the phrase is accurate. Where most people who use it are wrong though, is just who it is that’s fighting the war. It’s the federal courts, and to a lesser degree some of the individual states. The EPA is just the tool through which the courts are acting. Well, also ghosts of Congresses past, who left us with various environmental protection statutes in their current form. Since the SCOTUS hammered the coal side of the fight twice this just-concluded term, it seems like a good time to write a little status report.
Just so everyone knows, I have a bias. My opinion is that coal is nasty dirty stuff and burning it in large quantities creates lots of problems. Burning it to generate electricity has two big advantages, though. First, it’s cheap, particularly when it can be mined from the surface; and if you don’t care about the by-products, the equipment for making electricity with it is also cheap. Second, there’s an awful lot of it. It’s the world’s most common fossil fuel. The world currently burns something over eight billion tons of the stuff each year. The US burns about a billion tons. In practice, the “war on coal” is about eliminating or reducing or properly managing the by-products, which makes the use of coal much more expensive. So far this year, the courts have hammered coal on three fronts: coal ash, noxious emissions like sulfur dioxide, and greenhouse gases (carbon dioxide specifically).
Not all the constituents of coal are combustible. Anywhere from 3% and up are not and are left behind as ash, and even 3% of a billion tons is a lot of ash. A bit more than 40% of coal ash is typically reused in various ways: some of it can replace Portland cement in the right circumstances, some it can be used as fill for roadbeds, etc. The remainder winds up in landfills or ash ponds. Ash ponds contain an ash/water slurry; the wet ash stays where it’s put rather than being blown away by the wind. Ash pond spills are becoming more common. The federal EPA has not regulated ash ponds in the past; in January this year the DC District Court accepted a consent decree between the EPA and several plaintiffs that requires the EPA to issue final findings on ash pond problems by December. The expectation is that the findings will lead to significant new regulation, and increased spending on both existing and future ash ponds. Things are also happening at the state level. The North Carolina Senate unanimously approved a bill last week that would require the closure of all coal ash ponds in the state over the next 15 years. NC’s not exactly one of your liberal Northeastern or Pacific Coast states.
Most of the visible pollutants that go up the flue at coal-fired plants have been eliminated. The picture up at the top of this post is the Intermountain generating station near Delta, Utah. The visible white stuff escaping from the stack is steam [1]. Not visible are things like mercury compounds, sulfur and nitrous oxides, and extremely small particles of soot. Those are all precursors to haze, smog, low-level ozone, and acid rain, as well as being direct eye, nose, throat and lung irritants. Some of these pollutants can travel significant distances in the open air. In April this year, a three-judge panel of the DC Circuit upheld a tougher rule for emissions of this type of pollutant (the MATS rule). Also in April, the SCOTUS approved the EPA’s Cross State Air Pollution Rule that will result in tighter controls on this type of emission. Approval of the cross-state rule has been a long time coming, as EPA rules that would regulate cross-state sources made multiple trips up and down the court system. The courts have always held that the EPA should regulate cross-state pollutants; the problem has been finding a technical approach that would satisfy the courts. In EPA v. EME Homerin April, the SCOTUS reversed the DC Circuit, and the CSAPR will now go into effect.
Finally, last week the Supreme Court issued its opinion in the case of Utility Air Regulatory Group v. EPA. This opinion confirmed the Court’s 2009 opinion in Massachusetts v. EPA that the EPA must regulate greenhouse gases. Massachusetts was a suit brought by several states against the Bush EPA, which had decided the carbon dioxide was not harmful. I think Utility is an odd opinion, cobbled together out of three different factions on the court (more about that in a moment). The opinion has three conclusions: (a) the EPA can and must regulate greenhouse gas emissions from stationary sources, (b) the EPA can only regulate greenhouse gas emissions from stationary sources if those sources would have been regulated for non-greenhouse emissions anyway, and (c) the somewhat controversial approach the EPA is taking to the regulation is acceptable. The last one seems to me to have been sort of an afterthought. OTOH, it’s likely that we’ll see a number of cases about it later when the states make the details of their individual plans known.
Regular readers may remember my thoughts about Chief Justice Roberts: he’s all about protecting large corporate interests, including protecting them from their own bad judgment. While Scalia delivered the opinion, I think it has Roberts’ fingerprints all over it. In effect, “This is the best deal I could get for you guys today; public opinion is moving against you; the deal I could get in a few years would likely be worse.” The Utility opinion is divided into several parts. The Court itself was divided into three factions of four, three, and two justices. Each faction had a different take on the law. Each piece of the opinion was approved by two factions. although in different combinations, and in some cases for different reasons. I would dearly love to have a transcript of the memos and conversations that led to the final product.
I mentioned Congresses past and the form of the current law. Here’s the statutory phrase that all three factions parsed nearly to death (emphasis mine):
…regulatory requirements must be applied to any stationary source that has the potential to emit two hundred fifty tons per year or more of any air pollutant.
All three factions agreed that Congress’ intent was that the language should be interpreted so that regulation of stationary sources applied to a few thousand sources at most, not to tens or hundreds of thousands of sources. This is a problem when this language is applied to greenhouse gases because facilities as small as a large hotel or a hospital may emit more than 250 tons of CO2 per year.
- The middle faction, consisting of Scalia, Roberts, and Kennedy, said that CO2 was a pollutant that should be regulated, but the second “any” must be read flexibly and the EPA could regulate sources only if they would have regulated them “anyway.” That means that the source would have been regulated because it had the potential to emit more than 250 tons of a traditional nasty like sulfur dioxide. This lets the little guys like hotels and hospitals off the hook.
- The liberal faction, consisting of Breyer, Ginsburg, Sotomayor, and Kagan, said in an opinion written by Breyer that since CO2 was clearly a pollutant as defined elsewhere in the statute, the first “any” must be read flexibly and the EPA could chose to regulate a subset of the sources (ie, the EPA’s proposal to regulate only sources emitting more than 10,000 tons of CO2 was okay). This would leave future decisions about the little guys in the EPA’s hands, and was the ruling of the DC Circuit.
- The conservative faction, consisting of Alito and Thomas, said the correct interpretation is that “any” means “any” in both appearances of the word, and since there were at least tens of thousands of sources emitting more than 250 tons of CO2 per year, it follows that CO2 isn’t a pollutant that can be regulated. Alito’s opinion states explicitly that he believes the Court was wrong in Massachusetts.
The results of the various court decisions are going to have very different effects on different states. Compare California and North Carolina, to pick two (not exactly at random). North Carolina has 43 coal ash ponds; California has none. North Carolina, despite being a much smaller state, generates more than 30 times as much electricity from coal as California; the MATS rule will require much more effort to meet in North Carolina. The CSAPR does not apply to California; but North Carolina power plants will be required to make reductions to improve air quality in downwind states. North Carolina has to reduce the CO2 intensity of its generating plants by more than the national average; California’s required reduction is much less than the average, and decisions that California has already made at the state level will probably be sufficient to meet the EPA requirements. North Carolina’s electricity rates are likely, it seems to me, to be noticeably higher in the future; California’s rates will remain high and perhaps go higher, but aren’t going to be driven by these decisions.
[1] Unless there’s a malfunction or some peculiar weather, the visible emissions from any coal-fired plant these days is steam. Photographers with a bigger ax than mine to grind are fond of taking power plant pictures on humid days when the steam looks much more like smoke, with low-hanging clouds, and underexposing the shot to make it all look darker and more evil.
Love the post, but I want to quibble with your use of the word “cheap”. You can’t simply ignore the massive externality costs when accounting for coal’s cost. After all, my commute would be pretty cheap too if I hot-wired my neighbor’s car every day, or jumped the subway faregates, but we probably wouldn’t call it that–more like “criminal”. The same standard should apply to burning coal in quantity. Putting that much mercury and soot in the atmosphere is an aggressive act, and we can’t simply ignore the costs because they’re borne by society.Report
Actually, I’d call those ways of getting to work “cheap”, on an individual level. It’s hardly the most salient characteristic, but it’s true. And coal is quite cheap if you don’t pay for externalities. Of course, the concept of an “externality” is, fundamentally, a difference between the net cost to you and the net cost to society.Report
You can’t simply ignore the massive externality costs…
Absolutely. Hence the “if you don’t care about the by-products…”.Report
Is there a reason that the fourth possibility was excluded (other than that it would require sig. government action?) That is, interpreting both “any”s as meaning “any” and regulating accordingly? This part:
Man, I always mess up the blockquotes. This is the part I meant: “The conservative faction, consisting of Alito and Thomas, said the correct interpretation is that “any” means “any” in both appearances of the word, and since there were at least tens of thousands of sources emitting more than 250 tons of CO2 per year, it follows that CO2 isn’t a pollutant that can be regulated.”Report
Yeah. The only sense I can make of that is, “Surely, Congress didn’t intend that.”Report
What Road Scholar said. All nine justices agreed that whatever Congress did mean, it didn’t mean anything that involved regulating tens of thousands or hundreds of thousands of stationary sources.Report
Regular readers may remember my thoughts about Chief Justice Roberts: he’s all about protecting large corporate interests,
Nobody seemed to understand at the time that umpires work for the owners.Report
I just want to endorse this post.Report
Ditto, it’s stellar.Report
Hey, Steller!Report
Thank-you, Michael. Excellent commentary and summation.Report
I’m delighted coal is losing this war.
I live in a beautiful place. Mountain streams and lakes abound; we are rich with water here in Western Maine. Our major industry is tourism, and it’s based on our natural resources.
Every single Maine lake and stream has a fish warning; don’t eat more then 1 or 2 a month, don’t eat any if your under 12, pregnant, or have an impaired immune system. This is 100% because of mercury contamination from acid rain, most of it from coal-burning plants in the Ohio Valley. Burning coal there harms my community, here; their pollution soils my nest.
One of the biggest hangups about getting coal out of the energy system is the job loss in coal-mining areas. Which peeves me to no end. Industries die all the time; they shift location. The tens of thousands of jobs in textiles that used to exist in Maine and Mass. are long since gone. The shoe industry is gone with the exception of New Balance. Paper makes more product now then it ever has, using a labor force 1/10 the size due to automation. Most furniture parts are now made in China, which has a thriving wood-processing industry that used to be here. I feel sorry for the people who’s lives are so economically disrupted, but that’s part of how free markets work. If we had a more liberal government that didn’t view people needing help as moochers, we could do a lot to help those people in West Virginia and eastern Kentucky.
And just to add: Ed Muskie may have been one of the greatest senators this nation’s ever seen. The Clean Air and Water acts are two of the best pieces of legislation we’ve ever passed, despite their controversies; because the world we were creating before was a very nasty place. Let’s hope they’re enough to hold us through until we’re able to finally confront the problems of carbon pollution in a global manner. The flip side of the coin of a global economy is a global environment. We have reached the point where recognizing that Earth’s carrying capacity is limited has become critical. The war on coal is just a skirmish.Report
Here here Zic. Nova Scotia suffered the same problems that your area does, for the same reasons with the added fury of the pollution coming from another country.
I say scrap em all and put up nuclear plants in their place. Problem solved, plus it’d be cool!Report
We can’t refuse to implement benign regulations due to listing jobs, but jobs lost to regulations are not a good example of what “free markets” do.
I’m always torn on environmental regulations that help but come at the expense of economic efficiency, though jobs themselves are only a small part of the picture.Report
Another way of conceptualizing (environmental) externalities: environmental damage is an economic efficiency cost, more often than not, if we take a slightly broader meaning of “the economy” than “money, its movements, and directly correlated movements”.Report
This exactly, @guy
Also, the process of being clean creates new jobs, jobs that make things better.
And there is the physical costs of health care. Nearly every kid I know has asthma. That’s an incredible load of lost opportunity for those children.
Not to mention the environmental problems with mountain top removal and health problems for miners caused by shaft miningReport
Investing in the environment is a good way to ensure the future of humanity.
One of the biggest problems climate change supporters face is that it is easy to ignore climate change because the real damage won’t be felt until we are long gone from this world.Report
@saul-degraw
Here in Maine (and much of New England) there’s are state-based tax incentive programs for tree growth. Each state will vary, Maine requires 10 acres minimum with some sort of forest-based income from it every 10 years. Landowners get a significant property tax reduction; the difference is paid to the towns by the state. A good half of Maine is in tree growth.
I’d like to see programs like this expanded to include a carbon sequestering tax break — don’t cut the trees, let them grow and grab carbon. The Northeastern Forest absorbs more carbon every day then is produced on the Eastern Seaboard. Giving land owners incentive to grow trees benefits us; and there may be some good sense in letting landowners profit by just leaving their forests be instead of heavily working them.Report
Re Zic/s comment: At some point a forest absorbs less and less carbon, since trees start dieing off and rotting. I believe the statistics show that virgin forests are not as efficent in absorbing Carbon Dioxide as forests with some cutting. Now what you would do is either use the wood in building (which postpones the release of the carbon for a number of years), or bury the wood, so that it rots more slowly underground.Report
@lyle there’s a lot of research into that; a growing forest is actively absorbing carbon, there’s no doubt. I don’t think there’s much risk that the industrial forest here will ever stop being industrial; but it will probably be better if the demand was decreased, and more long-term sequestration happened. The hunger for paper and building supplies does not abate. I’m also seeing a growing demand for wood pellets for home heating; pellet systems are incredibly clean, and the resource is local. This is one such local business:
http://www.maineenergysystems.com/Report
Jobs lost due to syraight competition from natural gas aren’t list due to the “War On Coal.”
As for externalities, it depends on which ones we’re counting. Reducing externalities is one of the reasons to put the thumb on the scale, but I confess that I have become incredibly skeptical of our ability to address externalized costs.Report
That was to Nob’s comment below (and a bit to Guy’s above).Report
Pricing negative externalities isn’t easy, but the alternative is to simply absorb those negative costs as a whole society, which IMO works out to essentially creating an unofficial subsidy for the industries causing them.Report
I’m not suggesting we should never try to tax externalities. Just that in common dialogue it mostly seems to be tacked on as a justification to an already supported policy notion.
Honestly, when an effort is really made to distribute costs appropriatly rather than to justify interventionfor its own sake, I can be quite supportive of the efforts.Report
I’m not suggesting we should never try to tax externalities. Just that in common dialogue it mostly seems to be tacked on as a justification to an already supported policy notion.
It’s an ‘already supported policy notion’ because eastern states took it to court, all the way to the Supreme Court, multiple times and won. It’s not tacked on, it’s the reason we have the policy. It’s a policy because the EPA felt they had mandate from the Clean Air Act to regulate carbon pollution, and also won that battle in the Supreme Court. Legal battles over those externalities is part of what forced the change; natural gas provided an alternative.
And I’m pretty sure within 20 or so years, we’ll be having similar battles of the water problems from natural gas extraction, it’s only a bridge fuel imo.Report
I think we mostly have the policy because we want cleaner air and rain and want that apart from the economic externalities of pollution.Report
No @trumwill , we have the policies because a whole lot of people fought for them because they wanted cleaner water and air.
These were hard-won policies, and at least when it comes to down-wind communities, it was a decades-long battle.Report
That does not at all conflict with what I just said.Report
Thing is, I think the “existing policy preferences” stem from the results of years or even decades of uninterrupted negative externalities from some industries. So if there is an element of retributive regulation, it’s based on a foundation of free loading on the externalities side by industry to an extent that’s hard to measure outside of things like mortality statistics.Report
Nob, I may not have been as clear on this as I thought (the hazards of participating on the road on a phone), but I am referring specifically to economic externalities. I don’t mean that a preference for clean water is trivial or that the pollution of water isn’t material. Quite the opposite. Those are beyond the realm of economic externalities because the losers cannot be made while by assessing the externality. We don’t want them to pay for the harm, we want the harm to stop. In the environmental laws we pass we don’t want polluters to pay for the economic damage of polluting the rivers, we want them to stop polluting. The economic harm is secondary.Report
@will-truman
I’m not suggesting we should never try to tax externalities. Just that in common dialogue it mostly seems to be tacked on as a justification to an already supported policy notion.
I think we mostly have the policy because we want cleaner air and rain and want that apart from the economic externalities of pollution.
Those are economic externalities of pollution. I think you’re trying to split an invisible hair.Report
James, the distinction I am looking for is between whether we are upset over the fact that they are doing it or upset that they are not bearing the financial cost of doing it.
If internalizing the externalized financial burden of the activity wouldn’t be sufficient, then it’s not about the imposition of financial cost.Report
@trumwill I think my objection here is reducing the externalities to financial burdens. This feels very after-the-fact to me. It’s like saying it’s okay to cause the asthma, as long as the cost of burning the fuel covers the medical payments. I most specifically want an end to burning coal because of the direct harm I see it doing to the ecosystem where I live; and that includes people.
Nobody wants to spend a life not able to climb a mountain in springtime because of asthma attacks; not able to ever pursue serious athletics, playing the saxophone. . . the externalities have a deep human cost. I won’t even begin to discuss other things I think are significant externalities, like the aggregated mercury in fish and it’s impact on loon populations. And I’d argue the right to eat fresh brook trout matters; that fishing clean water for food is a most traditional and sacred human activity.Report
I’ve apparently done a pretty poor job of expressing myself here. I agree that the focus on economic costs is after the fact and that was very much what I was trying to get at.
There is nothing wrong and much noble about wanting to address health consequences of pollution by reducing pollution. Sometimes I agree and sometimes I don’t but it’s certainly valid reasoning. I was referring to discussions that turn toward specifically towards dollars and cents.
Saving lives and improving health through environmental regulation is often a great way to spend money, so long as we agree that’s what we’re doing. Often I see pushback that because of (financial) externalities we’re not actually spending more money. That’s where I get skeptical. Sometimes we are, but I think the assessments are usually tacked on to support an existing argument for environment, life, and health.Report
Is it really just a regulatory thing, though?
While the cost of coal has remained relatively constant the cost of natural gas per million BTUs has gone down dramatically in the last 10 years. There’s been brief spikes up and down with natural gas, but on the whole gas has gotten to the point where, if you factor in externalities, is actually cheaper than coal to operate in many areas.
And since we’re talking about overall economic cost, ignoring the externalities isn’t really an option. Coal has cheap marginal and fixed costs, but has enormous externality costs that must be paid in some form. Just because it doesn’t always show up on the electricity bill doesn’t mean it’s not any more expensive.Report
I’m reporting live from the actual frontline of the War On Coal, West Virginia, where I’m currently in a trench, and bullets are literally flying everywhere, mostly by people angry that my state’s stupid insistence on wedding itself to a single extraction industry more than 100 years might not end up paying off literally forever, which of course assumes that it ever paid off at all, which it probably didn’t. Signing off. Tell my wife I loved her.Report
I suspect that if you went to Wyoming and eastern Montana you would find the same point of view.Wyoming bet big on coal with the first clean air act and power river coal (lower sulfur than eastern coal). Wyoming both exports coal and exports power from power plants. They have also been mining coal along the UP line since 1869. Now of course Wyoming does have the possibility of exporting wind energy.Report
Wyoming will almost certainly be a big wind energy exporter within a few years. The Phil Anschutz wind farms and the TransWest Express HVDC transmission line to carry that power to the southern tip of Nevada are into the final permitting phases. The business plan for both is to sell large amounts of power into the SoCal market.
Wyoming will almost certainly also sell some amount of wind power to Colorado as well, which has a 30% renewable by 2020 mandate (for investor-owned utilities). Due to some fairly unique circumstances in Colorado, Xcel Energy (by far the largest utility) recently reported that it can buy wind power from new wind farms in the state for less than the cost to build and operate new NG-fired plants. Wyoming wind power will probably be even cheaper.Report
And my thanks to the editorial staff for adding the nice musical touch at the end of the piece.Report
What happens when the coal that used to power electric plants here under varying but generally improving environmental coda gets exported to China instead, with virtually No environmental restrictions?Report
Is the answer that it leads to even worse pollution than Chinese cities already have? Pollution even they are getting concerned about.Report
You get a different equilibrium for coal production.
People are buying less of it here means lower aggregate demand.
If demand is rising in China, then that’s higher aggregate demand with everything else being equal.
Granted, as demand goes down, price goes down, and China might buy more of it, but they’re also paying to ship it over there (and coal isn’t quite so energy dense that there’s much of a net win there, particularly if you’re also enforcing stricter controls on bunker fuel).
Most of the externalities of coal will be dumped on China, since most of the effects are localized.
But coal production, itself, will only go up if:
Increase in Coal Demand (China) + Increase in Coal Demand (China, with America not buying coal) is greater than Increase in Coal Demand (China) + Demand in Coal (America).
And, hum, further, overall pollution will go up if the amount of pollution due to lower regulatory enforcement in China Pc(China) is greater than the amount of pollution due to the status quo, or
Pt(a) = Pc (Increase in Coal Demand (China) + Pc (Increase in Coal Demand (China, with America not buying coal) )
Pt(b) = Pc (Increase in Coal Demand (China) + Pa (Demand for coal (America))
And that, of course, is further offset by the pollution in China, because as pollution gets worse there, there’s a greater incentive to cut back on it (see: Los Angeles, 1973).
But the answer to that question is probably, “Well, who knows?”Report
Whether that can happen is a really interesting question. The bottleneck for expanding exports in that direction is the capacity of the West Coast ports’ coal-handling terminals. West Coast port cities’ responses to expansion permitting requests appear to me to range from dragging their feet to flat-out opposition. For example, handling, say, 10 million tons of coal annually produces a lot of dust, much of which “escapes” from the terminal (or rail cars feeding it). Cities are raising issues of air pollution (fine particulates), water pollution (leaching of heavy metals in runoff water), blockage of storm sewers as the dense coal dust accumulates down there, etc, etc. My guess is that there will be little expansion of the current exports to the west — but that’s just a guess.
Another example of the “war” being waged by a handful of states, not the feds.Report
Found this: https://www.bimco.org/Reports/Market_Analysis/2013/0626_UScoal.aspx
I met lots of mainland Chinese in Taiwan taking a “fesh air” vacation. I wasn’t very impresses with Taipei’s air but apparently it is orders of magnitude better than home. Sad that. I’d post air pollution links but don’t want to get locked in moderation. You’ve all seen it I’m sureReport
The Chinese are beginning to get unhappy (at an official level- at the local level they’ve been upset for a good long while) about their air quality. I expect they’re going to turn more and more to non coal resources long before they start buying millions of tons of the stuff from the other side of the world.Report
With the world’s third largest amount of proven coal reserves, I doubt China’s going to start importing coal anytime soon.Report
China blew past Japan in 2013 to become the largest coal importer in the world, at 267 million tons.Report
I stand corrected. I’m rather inclined, though, to agree with Patrick.Report
Although at 3.8 billon tons of coal burned last years imports are only 7% on usage. Whatever that might mean.Report
Here is a link to an interesting piece in Bloomberg : http://www.bloomberg.com/news/2014-07-01/renewables-to-get-most-of-7-7-trillion-power-investments.html
It suggests that the rate of CO2 emissions will peak by 2030, and that by then fossil fuel will be 46% of electric generation from 64% today. The article suggests that solar will be fully cost competitive by 2020.with solar and wind going to 16% of power from 4% today. Coal plants will fade in the US and Europe, and growing only in Asia.
Note that of the 7.7 trillion to be spent by 2030 5.5 will be on renewables. It is interesting that this comes from Bloomberg, not exactly a left wing outlet.Report