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IEEFA Update: The Truths Not Everybody Wants to Hear

July 21, 2017
Karl Cates

Wyoming doesn’t have much of a wind-energy workforce. But isn’t that a good problem to have? It means that as the state’s budding wind industry is creating jobs, bringing new money is coming into a struggling region, and offering some much-need diversification to a longtime one- or two-note economy.

What it doesn’t mean is that those jobs will go wanting because they’re not in big cities.

“The same thing happens in the oil and gas industry,” Rod Godby, director of the Center for Energy Economics and Public Policy at the University of Wyoming explains to the Casper Star-Tribune. “Look at the middle of nowhere, places like Wamsutter (a tiny town in the center of a large gas field, 100 miles west of Medicine Bow). No offense to those places, but there are techs that have to be out in those fields that live in the area or nearby … Prior to getting their jobs, Wamsutter wasn’t at the top of their list.”

In a frank exchange published last year by the Jackson Hole Center for Global Affairs, Godby offered the kind of informed perspective that sometimes goes unheard:

The Wyoming coal industry will rebound.
Disagree. While it will still be significant, and in Wyoming large for some time, the recent challenges that coal has faced are indicative of long term challenges that will not be going away. Specifically, new technologies in natural gas production, and ongoing climate concerns, coupled with the cost of capturing technologies that might mitigate climate concerns all mean that coal will be very challenged in the marketplace going forward.

Wind power should be part of Wyoming’s future.
Strongly agree. We have a great opportunity in this area.

Carbon capture and storage (CCS) technologies should be part of Wyoming’s future.
Neutral … CCS is very expensive and with natural gas at current prices and prices expected, it is very difficult to justify that kind of expenditure.

That last bit is especially interesting because while Godby concedes he is a proponent of CCS (he lays out his thinking in the full text of the material above)—which is the coal industry’s great long-shot hope at recovery—he also acknowledges how unlikely it is that it will ever materialize as a commercially viable technology.

INDEED CCS, WHICH IN THEORY WOULD PRODUCE ELECTRICITY FIRED BY “CLEAN COAL,” IS ON THE ROPES, as IEEFA’s Gerard Wynn writes in a commentary he yesterday on how two of Europe’s biggest utilities are giving up on it.

In the U.S., the death knell last month on Southern Company’s “clean coal” project at the Kemper power plant in Mississippi (“fiasco, debacle, calamity, misadventure” as IEEFA’s David Schlissel put it), echoed back around this week to Duke Energy’s Edwardsport project, which has floundered similarly with billions of dollars in cost overruns and interminable construction delays.

An E&E news article published yesterday categorizes Edwardsport as “a cautionary tale for utilities that want to set out to build the next central station mega-project in a fast-evolving energy landscape where energy efficiency and renewables have often proved cheaper.”

Cautionary tales aren’t always heeded, and the article goes on to note that CCS proponents are now pushing for public subsidies for a project that is already heavily ratepayer-subsidized. The coal industry benefits already from massive public-funded support—tax credits, infrastructure projects, taxpayer-funded cleanup costs—a fact that gives the lie to the line about how renewables are on the rise only because of the subsidies they receive.

High-powered executives from interlocking industries are openly talking truthfully now about what’s going on. “Fossil fuels are dead” is a phrase that was uttered verbatim the other day by the CEO of the freight rail company CSX, which has depended significantly on coal-business revenues for a long time. “Our customers want solar,” the president of Duke Energy Ohio and Kentucky said this month.  “Coal is dead,” the global head of BlackRock‘s infrastructure investment group said in June.

Meantime, U.S. coal production in recent weeks is on the decline again, as chronicled in a second-quarter update ($) published this week by SNL. That follows a first-quarter bounce that got lots of headlines, although they often neglected to note that U.S. coal production has been down so long that any improvement looks like up.

Karl Cates is IEEFA’s director of media relations.


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IEEFA Update: Failed ‘Clean Coal’ Experiments Have Wasted Billions of Dollars

Karl Cates

Former IEEFA Transition Policy Analyst Karl Cates has been an editor for Bloomberg LP, an editor for the New York Times, and a consultant to the Treasury Department-sanctioned community development financial institution (CDFI) industry.

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