On Trump's Watch, FERC Deals a Death Blow to U.S. Coal Industry

President Trump rolled into the Oval Office with an emotional appeal to coal miners, their families, their communities, and all who allied their interests with the survival of the U.S. coal industry. Those promises rang hollow all throughout the president's first year in office. His second year is off to a devastating start with no relief in sight.

The latest blow came from the Federal Energy Regulatory Commission. On Monday, the agency unanimously decided not to accommodate the Energy Department's request to protect aging coal power plants. The denial stings all the more because the five-member commission is dominated by Trump appointees, four votes to one.

A long, slow death for the U.S. coal industry

To be clear, U.S. coal jobs have been at risk ever since the trend toward mechanization began to accelerate in the 1920s. Pick-and-shovel labor has been largely replaced by machines and other labor-saving practices like mountaintop coal removal. Other internal pressures are also at play. The recently announced closure of Pennsylvania's 4 West Mine demonstrates why some mines can't compete with others, even in the same area.

As for external forces, the U.S. coal industry dominated power generation in the U.S. for decades, but the rise of hydropower and nuclear energy demonstrated that coal does not have a monopoly on large, centralized power plants.

The real trouble arose when the Bush administration created a loophole in federal water safety regulations. That allowed the shale gas boom to take off. As coal power plants aged out, the ranks of natural gas powered plants swelled.

Renewable energy and energy efficiency both made considerable progress during the Obama administration. That also helped to tamp down demand for new power plants.

Together, these three trends -- natural gas, renewables and energy efficiency -- combined in a perfect storm for coal power generation.

Efforts to improve grid resiliency are reinforcing the trend away from coal. For example, after the "polar vortex" episodes of 2014, grid operators in New England opted to rely on dual fuel gas-oil generators rather than build new coal or nuclear power plants.

Though not an environmentally optimal solution, the strategy proved effective. The plants withstood the recent "cyclone bomb" storm and below-normal cold snap of the past week.

The advent of low cost natural gas and renewables also exposed critical public health risks and environmental hazards in local communities from the coal power generation sector, over air pollution and ash disposal issues.

Finally, the public consensus on global warming is beginning to coalesce around the facts, driving demand for clean power at the consumer end.

President Obama's much-demonized Clean Power Plan has played little if any role in this energy mix sea change. Its announcement in 2015 helped policymakers lay plans for a low carbon future, but it never went into effect. The Clean Power Plan was hung up in court shortly after its announcement, and it is currently in limbo.

Trump dangles a lifeline for coal -- then yanks it

Monday's FERC decision came about after the Energy Department requested a new rate structure purported to ensure grid reliability by favoring plants that have a 90 day supply of fuel in storage. While this sounds good in theory, it's actually an offhand effort to prop up coal and nuclear energy since these two forms of energy are the only two that meet the 90 day guidelines. Sun and wind don't count, and neither does natural gas, since it would be dangerous to keep a 90-day supply on hand.

It was never clear how serious Energy Secretary Rick Perry was about the reliability proposal. He seemed well aware that it was a political hot potato, because it would force consumers to pay higher rates for electricity even when less expensive alternatives are available.

In addition, the proposal was a stark contrast to the Energy Department's ongoing programs. With the enthusiastic backing of Perry, the sprawling agency has been promoting wind, solar and other renewables non-stop all year -- and that includes a major grid initiative aimed at loosening coal's grip on U.S. power generation.

It's also worth noting that although FERC is an independent commission, it operates under the purview of the Energy Department.

The death blow was a mercifully quick, as described in the commission's official announcement:

The Federal Energy Regulatory Commission (FERC) today terminated the proceeding it initiated (Docket No. RM18-1-000) to consider the Department of Energy’s September 29 proposal on grid reliability and resilience pricing.

Ouch!

In the same announcement, FERC essentially put the Energy Department in the timeout corner by directing commissioners to seek input from grid operators directly:

Today’s action directs operators of the regional wholesale power markets to provide information as to whether FERC and the markets need to take additional action on resilience of the bulk power system. The goals of this proceeding are to develop a common understanding among the Commission, industry and others of what resilience of the bulk power system means and requires; to understand how each regional transmission organization and independent system operator assesses resilience in its geographic footprint...

That order does not spell relief for coal. U.S. grid operators have been essential stakeholders in the Energy Department's ongoing grid modernization initiatives. They are already embedded in the clean energy transition and they are not likely to switch gears.

In fact, the FERC order will provide grid operators with a high profile platform to advocate for renewable energy, energy storage, smart technology and other features of the grid of the future.

With friends like these...

By all appearances, the FERC decision was a relief to experts at the Department of Energy, and even to Trump's own Energy Secretary.

Within hours of the FERC decision, Perry was right back at the real business of grid modernization. On Monday, the Energy Department's National Renewable Energy Laboratory launched a major new electrification study front-loaded in favor of clean power.

Perry, of course, was appointed to his position by President Trump, and the FERC vote also came from Trump appointees.

With friends like these...

Photo: via US Department of Energy.