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Capitalism’s War on Coal

A version of this appears at National Journal’s Energy Insiders blog.

In the history of capitalism, when an industry loses its edge to more nimble competition, it often turns to politicians on its payroll to convince its depleted workforce that their ills are the fault of politics rather than a failure to innovate. That’s the case of coal, where annual production is as high as it’s ever been, production has been steady over the last decade, but coal mining employment has dropped meteorically from its height in the 1920s. The mechanization of mining, and not the EPA, declared war on coal since the Roosevelt Administration. You didn’t see rallies in the 1980s by the typewriter industry attacking Bill Gates and Steve Jobs. Innovate or go home. Coal’s share of electricity production falling from 53% to 43% in the last two decades has a lot more to do with natural gas’ ascension than EPA regulation.

Some state officials and members of congress allege a “war on coal” by the EPA. But EPA’s rules not only follow the John Roberts’ Supreme Court mandate to regulate greenhouse gas emissions, but recognize that competing technologies have eclipsed coal in terms of efficiency. A new combined cycle natural gas plant features capital costs of $764 million and levelized generation costs of $50.24/MWh—that’s capital costs 75% cheaper than scrubbed pulverized coal and 43% less expensive levelized generation costs than coal. Coal was the workhorse of the power industry for so long because it was cheap and more efficient than its rivals, and because we didn’t care about or fully understand the environmental costs. But new coal is no longer competitive, and these EPA rules simply enshrine the Supreme Court mandate for coal to better account for its environmental costs.

Natural gas is problematic too. It’s imprudent policy to assume that gas will remain cheap, or even affordable for that matter. While we most likely have a few more years of moderately-priced natural gas, we will see a return to the Bad Old Days of natural gas price volatility as soon as emerging and proposed infrastructure changes accelerate. Natural gas’ emissions benefits are no match for zero-emission competitors, but today’s cheap gas prices are luring crucial support away from the long-term renewables solution, and the detrimental impact of fracking on water and emissions can’t be ignored.

Some utilities, with management styles enshrined with state utility commissions, lack the acumen to efficiently respond to changing market dynamics. They remain beholden to outdated supply chains that led them to believe that they must continue to stick with coal, economics be damned. Maximizing investment in a decentralized electricity structure has to be a significant part of policy going forward. Indeed, FERC Chairman Jon Wellinghoff promoted the idea of replacing centralized, baseload generation with small-scale, distributed renewable energy in an April 2009 interview. Solar PV costs are plummeting, from $3.80/watt in 2008 to $0.86/watt in mid-2012.

Economic transitions can be devastating to vulnerable populations and wreak havoc on hard-working communities. Politicians representing these areas can either manufacture political boogeymen, and promise an era that never can return again. Or they can talk about the benefits of a clean energy transition, where these communities become the center of wind and solar PV manufacturing and where every household and business has rooftop solar. Of course, honesty and facts are in short shrift with too many members of congress, so here come the boogeymen—and silly me thought Halloween was over.

Tyson Slocum is Director of Public Citizen’s Energy Program. Follow him on Twitter @TysonSlocum.