The Market Has Chosen Against Coal, but the Trump Administration Isn’t Listening

For months, the Trump administration has beaten the drum for “saving coal,” with Energy Secretary Rick Perry as lead percussionist.

Perry and the president have floated numerous plans, including proposals to favor coal in the name of grid reliability and to keep coal-fired power plants running in the name of national security. The former was rejected by the Federal Energy Regulatory Commission in January 2018, and the latter was “shelved” by the White House after it gained little traction.

Now, just when it seemed the music had stopped, Perry is beating the coal drum again, citing a potential “triple whammy” of extreme cold weather, power grid cyberattacks and physical attacks on gas pipelines. This triad of threats, Perry claims, is ample reason for federal intervention to keep aging — and often failing — coal and nuclear plants running.

Perry ignored the possibilities of similar threats to nuclear plants, coal trains, tracks and bridges. We need to prepare for any of those four events, which could place severe pressure on the grid, endangering power to millions. But Perry’s insistence that coal is indispensable simply doesn’t hold water.

Even worse, it overlooks a major shift in utility preferences toward power sources other than coal. The market has already spoken loudly: Using public policy to try to revive dying coal simply won’t work.

The truth is that coal is no longer a premier resource for American power generation. More than half of the operating coal mines in the United States have closed since 2008, and coal consumption last year was expected to be the lowest in nearly four decades. The future is even darker, with coal expected to generate just 21 percent of total electricity by 2035, down from just under 30 percent today.

Driving this free fall is a number of market factors, none of which is more important than American natural gas. Production has now reached record highs, rising by 11 percent from 2017, the biggest jump ever recorded.

The United States in September 2018 exported more natural gas by pipeline than it imported by pipeline for the first time in 20 years, a trend experts expect will continue. A major effect of this abundance of natural gas? Coal has hemorrhaged market share as major utilities have looked to bolster their bottom lines with less-expensive, highly reliable natural gas.

For example, PacifiCorp, which operates one of the largest privately held transmission systems in the United States, reported in late 2018 that 13 of its 22 coal units had become more expensive than alternative options. Closing those units and replacing lost megawatts with cheaper alternatives would save the company, as well as customers, hundreds of millions of dollars.

The list of other utilities pursuing similar paths is growing. Indiana’s third-largest utility, NIPSCO, has said it will replace lost megawatts from coal with renewables including wind, solar and battery storage within 10 years. Similarly, NV Energy has purchased natural gas plants and additional solar to replace capacity from coal closures.

Portland General Electric plans to buy extra hydropower for five years following its coal closures and assess the market afterward. Following suit, Xcel Energy anticipates closing its Colorado coal plants to chase a 100 percent renewable portfolio by 2050, moving toward battery storage and natural gas as a state strategy to save customers $2.5 billion through 2040.

In other words, the market keeps speaking clearly on coal. Pro-coal voices like Perry may not be listening, but utilities are.

Utilities are responding by running from coal and toward natural gas, an approach that will cause natural gas use to rise from 30 to 37 percent by 2035. They also recognize that increased natural gas use helps satisfy public policy goals related to climate change, resulting not just in lower costs but also reduced emissions.

When utilities and the energy marketplace speak, our leaders should listen. But that means they’ll need to stop the same tired drumbeat to save coal and instead pay attention to what the electric utility sector has been telling us through action for years.

Government shouldn’t use public policy to force utilities and their U.S. citizen customers to buy a costly product they no longer want. That message must sink in so we can have a serious discussion about America’s energy future.


Jack Rafuse, a former White House energy adviser in the Nixon administration and a former Unocal employee, is principal of the Rafuse Organization, an independent consultancy on energy, trade and security issues.

Morning Consult welcomes op-ed submissions on policy, politics and business strategy in our coverage areas. Updated submission guidelines can be found here.

Morning Consult