Stop the Bleeding. Preserve the Coal Fleet.
With almost 600 coal plants shut down since 2010, we are racing towards a grid reliability crisis of our own making. Millions of Americans are at risk of electricity price spikes from a loss of energy diversity.
Cheap natural gas, in conjunction with a regulatory onslaught on the coal industry, has reduced coal’s share of our electricity mix to 30 percent — down from 50 percent little more than a decade ago. The loss of coal plants, long the foundation of our electricity system, is coming at a high cost. It has already resulted in the loss oftens of thousands of jobs and hundreds of millions of dollars in revenue for state and local governments. Our growing reliance on natural gas is beginning to stress the grid even further.
Make no mistake, low-cost natural gas has been a blessing for the nation. It has helped reduce utility bills, create jobs in gas-producing states, and improve the competitiveness of our manufacturing sector. But natural gas demand continues to grow while efforts to block new gas production and new natural gas pipelines grow in tandem. Environmental activists waving a keep-it-in-the-ground banner have succeeded in influencing mainstream politics with disastrous consequences for energy policy. Massachusetts is case in point.
The Bay Statehas shuttered its coal fleet, resulting in a disproportionate reliance on natural gas to meet both its electricity and heating needs. On bitterly cold winter days mayhem has ensued. While the U.S. is now the world’s largest natural gas producer. Massachusetts, particularly the Boston area, has at times been home to the most expensive natural gas in the world this winter.
Gas demand has far exceeded the capacity of the region’s pipeline network to get it where it’s needed. Pipeline companies have tried building new capacity to meet the demand of the regions’ utilities. But environmental activists and their allies in the state legislature have blocked it.
Pipelines are now being challenged by activists in nearly every state they’re proposed. The Keystone XL obstruction model has become a playbook for extremists who clearly don’t care about grid reliability or consumer costs. Just ask Boston ratepayers.
But for those of us that do care, the current trends are deeply concerning. We should certainly fight to expand our gas infrastructure and take steps to push back against activist obstruction. But we would also be wise to preserve our existing coal fleet.
Congress can do its part by approving a measure that would provide a 30 percent tax credit for operating a coal plant for up to five years. Such a bill, sponsored by Rep. Larry Buschon (R-IN), is pending in the House. Providing a tax credit for coal plants will help make the electric grid more reliable and hold down the cost of electricity production by preserving energy diversity. This, in turn, will result in lower energy costs and a more competitive position for U.S. manufactured goods in world markets.
Although the short-term picture for coal is challenging, the long-term picture is cause for optimism. The U.S. has the world’s largest coal reserves — and our coal fleet is cleaner than ever. Coal should not be seen asa problem to be fixed but rather part of the solution to our nation’s current energy challenges.
Matthew Kandrach is president of Consumer Action for a Strong Economy (CASE), a free-market oriented consumer advocacy organization.