Southwest Virginia got a wake-up call recently.
It came in the form of the driest of prose, namely the annual filings that utilities have to make each year with the state regulators. These filings — one by Dominion Resources, the other by Appalachian Power — spell out in tedious detail where their power comes from now and where the utilities expect it to come from in 15 years.
The numbers may vary but, the reports said the same thing: Each utility expects to burn less coal, and deploy more wind and solar energy.
For anyone who has followed utilities, this is not any particular surprise. However, if you voted for Donald Trump and expected him to bring back coal, as he promised, this is not the news you were expecting. Wasn’t Trump going to do away with all those environmental regulations and bring back coal?
He may do the former — he already has in some cases — but he can’t do the latter, because that’s beyond his control.
The most important words this week about the economy of southwest Virginia may have come in a formal statement from Paul Koonce, the CEO of the Dominion Generation Group, who said: “Dominion will continue moving toward cleaner power sources with lower emissions, whether the Clean Power Plan lives or dies.”
Let’s stop and think about what that says. This is not coming from some tree-hugging, anti-coal environmental crusader. This is the coldeyed, bottom-line oriented CEO of the state’s largest utility — the same utility that is eagerly pushing a natural gas pipeline to pump a different kind of fossil fuel across the state. The same utility that some on the left see as so inherently evil they refuse to accept its campaign contributions.
Yet look what he’s saying: He’s declaring that Dominion will seek to lower carbon emissions “whether the Clean Power Plan lives or dies.”
In other words, the Trump administration could do away with the Clean Power Plan tomorrow — it’s currently under “review” — and Dominion still wouldn’t burn more coal. Instead, it will continue to reduce its reliance on coal. It intends to retire two of its coal-fired units in Chesterfield County in 2022. To replace that generation capacity, it’s planning to add solar and wind energy and — to the chagrin of environmental groups — more natural gas.
At Appalachian Power, the plan is the same: It also expects to reduce its reliance on coal and increase the amount of energy it gets from renewables. Appalachian will remain a coal-burning utility but the downward trend for coal is clear. Today, about 77 percent of Appalachian’s energy comes from coal, just over 4 percent from wind – with solar practically zero. By 2031, Appalachian expects coal to be just under 70 percent, with wind up to 14.5 percent and solar inching up to 3.2 percent (with natural gas about 10 percent and other forms of energy making up the remainder).
Environmentalists look at these numbers and complain that utilities aren’t moving fast enough to renewables. They are especially upset that Dominion wants to pipe in more natural gas via the proposed Atlantic Coast Pipeline. Those are questions for another day. Our point here today is to focus on the future of coal. Dominion says the utility intends to move away from coal “whether the Clean Power Plan lives or dies.” Meanwhile, in West Virginia, the governor there asked Appalachian to burn more coal and the response from the Appalachian president was, and this is a direct quote: “That’s not going to happen.”
This has profound implications for southwest Virginia — and coalproducing regions elsewhere. We’ve said this before but it bears repeating: Coal is not coming back.. We don’t say that with any particular glee the way some might. We simply say it as a matter of fact. It is one that we all need to understand clearly so that we can turn our attention to building a post-coal economy. Let’s face it: In many places in southwest Virginia, that post-coal economy is already here, whether we want it to be or not. Between 1988 and last year, the number of coal miners in the state has dropped from 11,106 to just 2,483.
That number may jiggle upwards some. If manufacturing rebounds, the demand for metallurgical coal used in steel-making will come up. If China imports more coal, the demand for the steam coal used to generate electricity will come up, too. But those are temporary blips against a long-term downward trend, and it’s the long-term we need to be concerned with.
Why won’t coal come back the way it once was?
Part of the answer is above. Utilities are retiring coal plants — and aren’t building new ones, and will continue to do so “whether the Clean Power Plan lives or dies.” That’s because utilities can’t just flick a switch and say “OK, today we’re burning more coal.” Utilities have to make decisions about generation capacity on a time horizon that stretches out for decades. Dominion points out that there is “great uncertainty about the future of environmental regulations and how they will impact power plants.” Given that uncertainty, what investor wants to risk money on a coal plant that some future administration might effectively outlaw?
Meanwhile, natural gas is cheaper — and, as Dominion points out, so is solar now. Then there’s this: Appalachian says that customers (and potential customers) are demanding cleaner energy — so it doesn’t really matter what government does or does not regulate, the free market is pushing the company away from coal. If not even Appalachian and Dominion think changing environmental regulations will cause the utilities to return to coal, what will?
It should be clear: Coal counties have to prepare for a future without coal — and not just the coal counties, either. Witness the recent announcement that Freight Car America plans to “halt” production in Roanoke, costing 364 jobs. That’s directly related to the collapse of coal.
No one is served by snarky comments such as the recent statement from Virginia Republican Chairman John Whitbeck who observed that the two candidates for the Democratic nomination were in “a race to see who can be the most anti-coal.” Whether Ralph Northam and Tom Perriello are “anti-coal” is, at this point, irrelevant. The point is that even being “pro-coal” isn’t going to bring back coal jobs. Don’t take our word for that; just look at the filings from Dominion and Appalachian. We’d all be better served by politicians who can talk honestly about how to build a new economy, rather than serve up empty slogans.