This decision is expected to help communities across the West develop their own local sources of clean, affordable energy – creating jobs, reducing emissions, and investing in local economies!
In March, Clean Energy Action and its supporters submitted a petition, joining approximately 120 individuals and organizations led by Delta-Montrose to urge the Federal Energy Regulatory Commission (FERC) to protect rural access to clean, affordable energy.
On June 16th, FERC responded, rejecting Tri-State’s penalty because it would “undermine the Commission’s prior order in Delta-Montrose” by making the cost of accessing local clean energy prohibitively high.
In FERC’s previous Tri-State and Delta-Montrose decision (last year’s Delta-Montrose proceeding) the Commission ruled that Delta-Montrose was not only allowed but obligated to purchase electricity from qualifying local renewable energy facilities. In its decision, FERC relied on the 1978 Public Utilities Regulatory Policies Act (PURPA), which seeks to “encourage cogeneration and small power production” from renewables.
In turn, Tri-State responded by attempting to impose a penalty to recover revenues it claimed would be lost if rural communities began to rely on local sources of clean energy.
FERC ruled that the proposed lost revenue penalty “should be rejected” because it “undermine[s] the Commission’s prior order finding that, under PURPA, Delta-Montrose must purchase” energy from qualifying local facilities.
In doing so, the Commission has essentially reaffirmed and clarified last year’s decision that local access to clean energy should be prioritized and protected. This anxiously-awaited decision is widely seen as an important step forward for communities working to developing local sources of wind, solar, and geothermal!
Clean Energy Action has questioned the practice of making long-term continued investments in coal-fired power plants for years. These concerns are driven by several factors including carbon dioxide emissions which in many states make coal plants the largest source of greenhouse gas emissions, emission of pollutants like mercury and sulfur dioxide, increasingly unfavorable economics, and the uncertainty of future coal prices and supplies.
The price of coal has changed greatly over the last two decades. This volatility puts continued investments in coal-fired power plants at risk of becoming stranded assets – assets that have suffered from unanticipated or premature write-downs, devaluations or conversion to liabilities. Rather than adding pollution control equipment or other investments to keep coal plants online, regulators and utilities should consider making plans to phase out coal power.
Coal plants can’t operate without a stable supply of coal over their entire lifetime, which means that the long-term stability of coal prices and supplies are essential to the solvency of a coal plant investment. In 2013, CEA published a detailed analysis of historical coal prices in each U.S. state to gain insight into their stability. The study revealed that prices rose steadily over the preceding decade, thereby continually increasing costs for coal based utilities.
In light of the recent coal industry bankruptcies, we updated this report to include more recent data and found that instability in the coal industry was paralleled by decreasing coal prices and persistently rising production costs, resulting in dangerously low profit margins. Our analyses indicate that utility commissions, utilities, and political leaders should seriously consider the unpredictable nature of fossil fuel markets when making decisions about long-term energy investments. Our findings point to the long-term economic benefits of investing in “free fuel” renewable energy resources such as wind and solar that have stable and affordable prices.
Colorado Senate Committee Kills Bill that Would Strengthen Climate Plan
A bill to require Colorado’s Climate Plans to include specific, measureable goals, deadlines, and annual reports on the state’s progress in reducing emissions was killed in the Senate Agriculture, Natural Resources, and Energy Committee last month.
While state law requires Governor Hickenlooper to publish a “Climate Action Plan” annually, his 2015 Climate Plan took “action” out of both the plan’s title and its contents. Proposing no new initiatives, the plan is a step backward for emissions goals, climate initiatives, and renewable energy in Colorado.
With Colorado’s leaders dodging responsibility for reducing greenhouse gas (GHG) emissions, Clean Energy Action decided to take a closer look at these emissions and exactly how they’re generated.
Where do GHGs come from?
It is widely known that activities like burning coal to produce energy and burning gasoline to power cars release carbon emissions into the atmosphere. But to be effective at fighting climate change, both the relative and total impacts of all industries must be considered. For example, natural gas was once touted as a “bridge fuel” which could help the United Statestransition to a renewable energy future, but now many question whether this would generate less harmful emissions.
While the focus of most environmental groups is on reducing combustion of fossil fuels (for good reason—it makes up almost 85% of emissions), industries like agriculture and manufacturing also have significant impacts. In order to uphold the climate agreement adopted at the United Nations Framework Convention on Climate Change (UNFCCC), plans to mitigate climate change must prioritize the most impactful GHG sources but also make inroads into limiting carbon emissions from diverse sources.
GHG inventories, which estimate the amount of emissions generated by various GHG sources in a region, have been performed at the national level as well as in some states and cities to inform climate initiatives and set a baseline for measuring changes in emissions levels.
Although every region has unique emissions which reflect the prevalence of different GHG sources, here we look at inventories done in the City of Boulder and the State of Colorado in addition to the entire United States. The Boulder and Colorado emissions generally reflect national trends but vary slightly based on local economic activity. For example, Boulder has no contributions from industrial complexes because they are simply not present in the city. Natural gas mining and distribution systems contribute a large fraction of Colorado’s emissions because Colorado is one of the major natural gas-producing states in the country.
At the national level, the primary GHG sources are:
The combustion of fossil fuels for the generation of power and heat and combustion of fuel for transportation. Together these make up almost 85% of U.S. GHG emissions and additional GHG emissions occur during the extraction, production, and transportation of fossil fuels. Currently, inventories predict that these contribute somewhere between 3%-10% of total emissions but the scientific community has raised concerns that actual emission rates from these activities are much higher.
The agricultural industry. Agriculture produces about 7.5% of national GHG emissions, mostly through the release of nitrous oxide from fertilizers and methane generated by enteric fermentation in cattle.
Industrial complexes. Non-energy-related industrial activities like processing raw materials to make iron, steel, and cement generate over 6% of U.S. pollutants.
Waste management. A small percent of GHGs are released during transportation, combustion, and decay of waste materials.
.How can surveys be improved?
Better reporting: The system of reporting responsibility for GHG emissions by adding up the emissions of the sources in a region has been criticized because it does not account for the impact of outsourced industrial activities. Many argue that consumption-based inventories which follow the purchases made by consumers to calculate the total carbon footprint of a population are more accurate tools for determining the effectiveness of climate mitigation policies and responsibility for GHG emissions than production-based accounting. For example, if you buy a product that was manufactured in China in a factory powered by burning coal and then shipped to the United States, current GHG inventories would show that China, not the United States, was responsible for the emissions associated with the manufacturing of your product. However, a consumption-based inventory would attribute all of the emissions associated with the production and transportation of the item to the region of the consumer that purchased it.
More frequent inventories: The data used in the most recent U.S. GHG survey was collected in 2013 and inventories at the state and local levels were performed even less recently. Energy markets have shifted drastically in the last few years, so these inventories are already obsolete. For example, natural gas production has gone up significantly compared to coal production since the data was collected and thus emissions due to natural gas are almost certainly underrepresented in this report.
Better measurements: Currently, the quantities of raw materials consumed in a region are reported by local companies and multiplied by combustion efficiencies published by the EPA to determine the total emissions of the region. This top-down method of calculating emissions from numbers reported by individual companies has several significant sources of error including reporting errors and deficits, inaccurate combustion efficiencies, and inability to calculate emissions generated during the extraction and transportation of fossil fuels. The most accurate means of quantifying emissions is to directly measure the pollutants at a site. This ground-up approach is currently too expensive to implement on a large scale but may soon be feasible.
While the UNFCCC requires that countries report their GHG emissions annually, it allows them to report data that is two years old which can lead to outdated emissions data at the national level. In the United States, there is no federal legislation requiring states to perform GHG inventories so little or no information is available on the emissions in many states. For example, Colorado’s most recent GHG inventory was performed to fulfill an executive order by Governor Ritter in 2013 but it used data from 2010 which is now decidedly outdated. Legislation requiring GHG inventories to be performed regularly at both state and national levels would help environmental advocates understand the importance of various GHG sources.
While ground-up measurements and consumption-based reporting are currently expensive and infeasible, they remain the gold standard for assessing emissions. We should continue to work toward developing the technology and global cooperation required to implement them.
Although current GHG inventories aren’t perfect, they provide valuable insights into the relative importance of various GHG emitters at the local, state and national level. They provide information that should guide environmental initiatives to maximize their impact.
1) Protect the soil, water and endangered wild life of northwest Colorado. Do not expand the ColoWyo Mine into over 2000 acres of previously undisturbed land that drains into the Yampa River. This land, only 30 miles from Dinosaur National Monument, is largely prime sage grouse habitat.
2) Keep the coal in the ground. Do not permit an additional 240 million metric tons of carbon and other toxic emissions to be released into the atmosphere. When this coal is burned over the next twenty years, it will threaten our health, air, water and climate.
3) Transition Colorado into a sustainable, clean energy future fueled by wind and sun. Let’s move forward with 21st century sources of energy that don’t pollute and save ratepayers on their bills. It is time to push for a just transition away from coal, one that supports communities as they face the inevitable loss of jobs and regional economic instability that will follow when last century’s ColoWyo mine is depleted.
After years of pressure from a coalition of groups including Clean Energy Action, the Obama administration initiated two critical reforms to the nation’s coal program, placing a moratorium on new federal coal leases and increasing scrutiny over Wyoming’s “self-bonding” policy.
A review of the 32-year-old federal coal leasing program is long overdue as lack of reform has failed to address climate change and has cost taxpayers billions of dollars.
While state and federal regulators ignored repeated warnings to take a hard look at “self-bonding” policies, the formerly second and third largest U.S. coal companies have gone bankrupt, potentially leaving hundreds of millions in mine reclamation costs to taxpayers.
Geologic facts underlie coal companies’ increasing production costs and financial insolvency, underscoring both supply concerns and the opportunity to take advantage of cleaner and more cost-effective sources of renewable energy.
Coal Reforms from the Rockies
How long does it take for a message to get from the Rocky Mountains to the halls of power in D.C.? In mid-January, after years of pressure from a broad coalition of environmentalists and landowner advocacy groups, the Obama administration took two critical steps to reform the nation’s coal leasing and mine reclamation policies.
Decision makers in D.C. may seem a far cry from Colorado yet these two decisions trace their origins to our state. Colorado groups including Clean Energy Action helped to initiate both reform campaigns, repeatedly warning state and federal regulators that, in addition to the devastating effects of climate change, the fiscal costs of inaction could rise to hundreds of millions – if not billions – of dollars.
In both reform efforts, Clean Energy Action played a catalytic role. In 2007, Clean Energy Action began to draw the attention of allied groups to legal frameworks for keeping carbon in the ground by opposing new federal coal leases. As early as 2012, Clean Energy Action began urging state and federal regulators to scrutinize “self-bonding” programs that allow coal companies, including some now in bankruptcy, to ensure reclamation obligations by passing financial stress tests.
Review of Reagan-Era Coal Leasing
On January 15th, the Obama administration announced a moratorium on new leases of coal mined from public lands. The Department of the Interior will begin a sweeping review of federal coal leasing, modernizing a program that hasn’t been updated in over 30 years.
In 1984, when the last review concluded, few understood the threat of global warming. Now, in 2016, it is clear that burning coal has a significant impact on climate change and federal coal, in the words of Interior Secretary Jewell, “contributes roughly 10% of U.S. greenhouse gas emissions.”
On January 22nd, prompted by a citizen’s complaint filed by the Powder River Basin Resource Council and the Western Organization of Resource Councils, the Department of the Interior gave the state of Wyoming 10 days (plus a short extension) to certify that the state’s mine clean up program satisfied federal reclamation laws. These laws require mining companies to provide adequate financial assurances that they will be sufficiently solvent to return mines to a usable or natural condition once mining at a site has ceased.
Wyoming’s “self-bonding” program has allowed coal companies to ensure future mining clean up costs on the strength of their balance sheets alone. This has become a risky proposition as the nation’s formerly second and third largest coal companies, Arch Coal and Alpha Natural Resources, have filed for bankruptcy. Their insolvency threatens to leave mines, including one larger than the City of San Francisco, scarring the Wyoming prairie.
In order for companies to continue mining operations, Wyoming’s self-bonding program requires companies to demonstrate a “history of financial solvency” that appears to be at odds with Arch and Alpha’s Chapter 11 bankruptcies. Disturbingly, the nation’s largest coal producer, Peabody Energy, also faces potential bankruptcy, having lost 99% of its market value since 2011.
The Full Cost of Coal
While the administration’s actions to address coal leasing and self-bonding are laudable, it is hard not to imagine how different things could have been had this administration or previous administrations addressed these issues. According to a 2012 study from the Institute for Energy Economics and Financial Analysis that called for a moratorium on new coal leases, 22 of 26 coal sales since 1991 had only a single company bidding on publicly-owned coal. As a result of lack of competition, taxpayers lost out on billions of dollars in tax revenue.
The full cost of coal must reflect public health impacts from air pollution that damages the brains of our children, and the hearts and lungs of our families, as well as the disturbance of our lives and livelihoods from increased natural disasters and a changing climate. Placing a price on federal coal that promises a “fair return to taxpayers” must include a strong accounting of coal’s external impacts.
Who’s left on the hook?
The collapse of faulty self-bonding programs represents further potential losses for the public. States’ failures to heed repeated warnings may leave taxpayers on the hook for the unpaid reclamation liabilities of bankrupt coal companies.
In Wyoming, the state has struck a deal with bankrupt Alpha Natural to allow the company to continue mining while securing only $61 million of Alpha’s $411 million in reclamation obligations. The math isn’t pretty – that’s less than 15 cents on the dollar.
In Colorado, $100 million of future reclamation work is self-bonded. The state has given assurances that it is “moving away from self-bonding” but has not yet offered details on how quickly.
Coal & Renewables: Very Different Prospects
As coal’s role in society is re-evaluated, state and federal regulators would do well to heed warnings that they have thus far been quick to write off. In particular, regulators need to understand that beyond the threat coal poses to our health and environment, intractable geologic facts underlie the insolvency of our largest coal producers.
When any substance is mined, the easiest deposits are extracted first. Succeeding layers are more and more difficult to access, with more and more rock and soil to remove. Because of this inexorable logic, Powder River Basin coal productivity declined 25% between 2002 and 2013. From 2002 to the end of 2015, Powder River Basin coal prices have risen 72%. Consequently, increasingly expensive coal is increasingly unable to compete with renewables and natural gas.
The coal industry’s unprecedented rate of insolvency should concern the regulators who oversee fuel resource planning decisions, customer rates and reliability. Coal still provides 30% of the nation’s power and nearly double that in Colorado. Yet the prospects for mining coal profitably appear terribly bleak.
In contrast, wind and solar are more cost-effective than ever. Recently renewed federal tax credits for wind and solar offer an opportunity to phase out coal power and replace it with more cost-effective sources of energy that do not contribute to air pollution and climate change. Combined with the falling cost of energy storage, a renewable-powered grid becomes a viable possibility. Let’s hope that this time the message gets through more quickly.
Accelerating the transition from fossil fuels to a clean energy economy