On this episode of The Unregulated Podcast Tom Pyle and Mike McKenna discuss the ongoing battle for Speaker of the House, America’s holiday spending habits, and the first headlines of 2023.
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Rumors of Coal’s Demise are Greatly Exaggerated
January 5, 2023 by Leave a Comment
Coal generation worldwide is expected to increase to a new record in 2022, driven by robust coal power growth in India and the European Union and by increases in China. In Europe, high natural gas prices led to fuel switching to coal in electricity generation. However, both natural gas and coal generation increased due to lower hydroelectric and nuclear power production, low wind speeds in some European countries and insufficient growth in wind and solar power. Many thought global coal generation would peak in 2018, but it has been increasing each year since its decline in 2019. Despite spending trillions of dollars subsidizing renewable energy sources such as wind and solar power, the world is nevertheless burning record amounts of coal to keep the lights on and to generate warmth.
While most of the world is increasing its coal generation, the United States continues with its coal decline, according to the International Energy Agency (IEA). In the United States, coal generation peaked in 2007 and started its decline during the Obama Administration as coal plants began to retire due to onerous regulations and low cost natural gas, which made coal uncompetitive. U.S. coal generation in 2021 was 45 percent of its 2007 peak level. IEA expects coal use in the United States to maintain its downward trajectory, despite its reserves which are the largest in the world.
Global Coal Demand
In 2022, fossil fuel prices rose substantially, with natural gas prices increasing the most, prompting a wave of fuel switching away from gas and pushing up demand for more price-competitive alternatives, including coal. Despite coal prices increasing, coal demand is expected to grow by 1.2 percent, reaching an all-time high and surpassing 8 billion metric tons for a new record. Coal used in electricity generation is expected to increase by just over 2 percent in 2022, while coal consumption by industry is expected to decline by over 1 percent, primarily driven by falling iron and steel production due to the economic crisis arising from large energy price increases. Russia’s invasion of Ukraine sharply altered the dynamics of coal trade, price levels, and supply and demand patterns. IEA expects global coal demand to plateau around the 2022 level of 8 billion metric tons through 2025.
Global Coal Consumption 2000-2025
China accounts for the majority of global coal consumption (53 percent). Droughts and heat waves this summer increased the demand for air conditioning and hence coal generation in China. In August, coal power generation in China increased by around 15 percent year-on-year to over 500 terawatt-hours. However, Covid-19 lockdowns lowered economic activity and offset somewhat the increase in coal generation from the summer’s air conditioning demand. China’s power sector accounts for one-third of global coal consumption. IEA expects coal consumption in China to average a growth rate of 0.7 percent a year to 2025 because of an expected increase in renewable power generation. Between 2022 and 2025, China’s renewable power generation is expected to increase by almost 1,000 terawatt hours–equivalent to the total power generation of Japan today.
In India, coal consumption has doubled since 2007 at an annual growth rate of 6 percent, and it is expected to continue to be the major growth area of global coal demand.
In Europe, lower hydroelectric generation due to weather conditions and technical problems in French nuclear power plants put additional strains on the European electricity system along with reduced supplies of natural gas from Russia. In response, some European countries increased their coal generation and extended the lifetimes of nuclear plants. Some coal plants that had closed down or been left in reserve were brought back on-line. Germany, for example, is operating with 10 gigawatts of coal capacity, increasing coal power generation in the European Union, which is expected to remain at higher levels for some time. IEA expects coal generation and demand in the European Union to return to a downward trajectory in 2024 in its forecast, but remain high in 2023.
Global Coal Production
China and India, besides being the world’s largest coal consumers, are also the world’s largest coal producers and the world’s top two coal importers. In response to price increases, supply shortages and growing demand, China and India increased domestic coal production after the summer of 2021. In March 2022, Chinese production reached a new monthly high, which is expected to increase to a new annual record, with expected growth of 8 percent for the year, reducing the need for imports and replenishing stocks.
In India, the government is increasing coal production to reduce imports. In 2021, coal production reached over 800 million metric tons for the first time. India’s coal production is expected to surpass 1 billion metric tons by 2025. Indonesia, the world’s third-largest producer, is also expected to expand production to reach a new high in 2022, with exports playing a more important role than domestic demand.
Conclusion
Global coal is not going away despite what environmentalists and politicians wish and display through their “green” policies. In fact, the renewables they are forcing onto electric grids worldwide are generally supplementing existing sources. China and India will remain the largest coal producers and consumers since the United States with its largest in the world coal reserves will be inundated with “green” policies to cause coal’s demise under Biden’s “all of government” approach to climate change, which he insists is “an existential threat.”
China is building coal plants around the world, with the latest in Afghanistan where they will be obtaining future riches from the country’s critical mineral supply needed for renewable technologies, electric vehicle batteries and weapons production. China dominates the supply chain of critical minerals through its worldwide investments and its processing capabilities. Clearly, while Europe got caught relying on Russian energy, Western countries will soon be dependent on another autocratic country—China.
*This article was adapted from content originally published by the Institute for Energy Research.
Europe Trades Dependency on Russian Gas for Chinese Solar Panels
January 4, 2023 by Leave a Comment
The European Union added 41.4 gigawatts of solar capacity in 2022, increasing 47 percent from the 28.1 gigawatts added in 2021. It was led by Germany with 7.9 gigawatts of solar capacity added and Spain with 7.5 gigawatts. Other European countries also added solar capacity in 2022 as follows: Poland (4.9 gigawatts), the Netherlands (4 gigawatts), France (2.7 gigawatts), Italy (2.6 gigawatts), Portugal (2.5 gigawatts), Denmark (1.5 gigawatts), Greece (1.4 gigawatts), and Sweden (1.1 gigawatts), rounding out the top 10 European buyers of solar power. It seems that Europe has not yet learned from the foibles incurred from its energy dependence on Russia, as it is now turning to China to buy solar panels–the largest solar panel producer in the world–as the continent continues with its energy transition to renewable generating technologies.
The increase in E.U.’s solar capacity is due to taxpayer-funded incentives for solar power. For example, Italy introduced its Superbonus 110% incentive scheme in 2020. Under the program, homeowners are entitled to a tax credit of up to 110 percent on the cost of upgrading their home, such as installing insulation systems, heat pumps and solar panels or replacing an old boiler, or undertaking other projects that reduce the risk of damage from seismic activity. People claim the subsidy by subtracting the costs of the projects from their tax returns over a five-year period, or pass the credit on to the building contractor, who subtracts it from its taxes or sells the credit to a bank, which in turn is refunded by the government. The extra 10 percent covers bank interest. So far, the Italian government has paid out about €21 billion ($22 billion) since launching the program in July 2020 as part of the country’s post-pandemic recovery strategy.
Poland took third place in solar capacity additions despite switching from net metering to net billing this past spring. The new provisions established that all new PV “micro-installations” up to 50 kilowatts had to operate under a new net billing system. The new net billing system replaced net metering that was in place since 2016. Under the old net metering rules, owners of PV systems with capacities up to 10 kilowatts could supply up to 80 percent of their power to the grid, and PV systems ranging from 10 kilowatts to 50 kilowatts were allowed to supply up to 70 percent of their electricity to the grid. Under the new net billing rules, a bill is prepared that includes the energy generated. The price is calculated according to a model related to the price of a kilowatt-hour during the “day-ahead trading.” The new net billing provisions also allow PV system owners who submitted correct grid-connection applications by March 31 to have access to the country’s rebate program, launched in July 2019, for the next 15 years.
E.U.’s Total Solar Capacity
The E.U.’s total solar power capacity increased by 25 percent, from 167.5 gigawatts in 2021 to 208.9 gigawatts in 2022. SolarPower Europe forecasts annual PV growth in Europe to be 53.6 gigawatts in 2023 and 85 gigawatts in 2026, with the E.U. solar market more than doubling within four years, reaching 484 gigawatts by 2026. There are five key areas for getting Europe ready for increasing solar power: expanding the pool of solar installers, maintaining regulatory stability, improving grid stability, streamlining administrative procedures, and strengthening European manufacturing.
E.U. Buys Solar Panels from China
As Europe pivots from Russian fossil fuels, the Chinese solar industry is expected to gain—potentially at the expense of E.U.’s energy security. Chinese solar panels have increased in popularity among European consumers in addition to electric blankets, hand warmers, candles and wood as they face a cold winter with less access to natural gas.
The E.U. depends on China for the bulk of its solar panels. Chinese customs data show a steep increase in its exports of solar panels to Europe with the value of solar panels sales to the E.U. more than doubling. Solar panel sales to the E.U. from January to August this year were over $16 billion compared to $7.2 billion over the same period last year.
According to the International Energy Agency, in 2021, China accounted for 75 percent of global solar panel production, compared to only 2.8 percent for Europe. And, China has an even greater market control on the components and materials required to make solar panels, such as solar cells, silicon wafers, and polysilicon. At one time Germany was the leader in solar panel production, but China with its cheap energy and “slave” labor overtook Germany in solar panel production in 2015. According to Clean Energy Wire, “the overall drop in employment has been mostly due to the collapse of Germany’s solar power industry over the past decade, as many companies were forced out of business thanks to cheaper competitors from China scooping up most of the market.”
From January to August, China’s solar PV exports reached $35.77 billion, exceeding the value of solar PV exports in all of 2021. The soaring demand stretched supplies and raised the prices of silicon, the raw material for PV products, to a high of 308 yuan ($42.41) per kilogram, the highest in a decade. China’s production capacity for silicon is expected to exceed 1.2 million tons at the end of this year, and to double to 2.4 million tons next year. Silicon products are largely made in Xinjiang, the world’s most important production base for polysilicon where Muslim Uyghurs are used as labor and coal-based electricity is generated at an extremely low cost of 3 cents per kilowatt hour.
Europe needs caution in rushing from Russia to China for energy. China, like Russia, uses economic relations for political goals. For instance, after Lithuania showed support for Taiwan, Chinese customs blocked Lithuanian goods and China led a corporate boycott of multinationals with ties to Lithuania. Similarly, in 2010, China cut off rare earth mineral exports to Japan (which are critical to renewable technologies and in which China dominates) because of a territorial dispute.
Conclusion
Europe is continuing with its transition to intermittent renewable energy by increasing its solar power capacity additions by almost 50 percent this year. Germany and Spain led the additions with each adding over 7 gigawatts of solar capacity. Germany was once a leader in solar panel manufacturing, but has been replaced by China because of China’s cheap energy and “slave” labor. Now that Europe has moved away from buying energy from one authoritarian government, Russia, it is turning to another, China, who dominates the solar market and its components. Europe should be worried more about energy security than it has shown in the last decade when it turned away from its own production of oil, natural gas and coal, shuttering fossil fuel generators, cutting lease ales, and banning hydraulic fracturing and horizontal drilling.
America should not follow–but is–following in Europe’s energy transition footsteps and can look forward to energy price increases in the future, along with less secure energy supplies. The West’s preoccupation with renewable energy sources as a “solution to global warming” does not stand up to the tests of its own interests in energy, economics, and national security. Despite the clear writing on the wall, it has chosen to ignore all the signs and plunge ahead. It appears there are still lessons that need to be learned.
*This article was adapted from content originally published by the Institute for Energy Research.
The Unregulated Podcast #113: Predictions
December 31, 2022 by Leave a Comment
On the last episode of The Unregulated Podcast for 2022, Tom Pyle and Mike McKenna discuss how their predictions for the year panned out, and boldly predict how 2023 will unfold.
The Unregulated Podcast #112: Grain of Salt
December 16, 2022 by Leave a Comment
On this episode of The Unregulated Podcast Tom Pyle and Mike McKenna discuss the latest inflation numbers, the last hurrah of the 117th Congress, Mike’s candidacy for RNC chair, and Secretary Jenny’s “major” announcement.
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ESG’s War On Your Retirement Account
December 15, 2022 by Leave a Comment
Environmental, Social, and Governance (ESG) investing is all the rage among those who are frustrated that democracy and freedom are not making others do what the ragers want them to do. It is also popular among some firms who repeat the chants and don the mantle of ESG in hopes that the ragers won’t try to cancel them. However, these hardcore ESG advocates want to mandate their version of ESG, dictate which firms can get bank loans, who, in addition to stockholders, directs the firm’s actions, and how the firms’ leadership is constructed. Not surprisingly, politicians — whose currency standard is power — want in on the market. This could be bad for economic growth and bad for your retirement account.
Some proponents claim that ESG investing is more profitable, and mandates will be good for stockholders. The logic, here, is feeble and the evidence is fleeting, at best. There is plenty of pressure from stockholders (and potential stockholders) to discipline firm behavior towards maximizing returns. In any event, recent evidence indicates firms unhobbled by ESG constraints do better than the firms adopting ESG practices.
In a Wall Street Journal op-ed, last September, Terrence R. Keeley, a former executive at investment powerhouse and ESG advocate, BlackRock, noted that since 2017 ESG funds have had an average annual return of 6.3% compared to 8.9% for the broader market.
If this difference in rates of return is broadly symptomatic of the costs of ESG constraints, imposing market-wide ESG requirements could cost the median worker more than a million dollars in their retirement portfolio.
A typical recommendation is that workers put at least 15% of their annual, before-tax, income into their retirement fund. Taking 15% of median income for each year and compounding these savings at the 8.9% earned by the broader market and comparing it to the same savings compounded at the ESG return of 6.3% shows that ESG investing would cut the retirement total in half.
When the retirement contributions grow at the broader market’s 8.9% per year, the median-income worker who saves 15% of their income from age 25 to age 67 will have a retirement fund of more than $3 million. If the same contributions from the same annual incomes grew, instead, by the lower 6.3% observed in the recent ESG investments, the retirement fund would end up with only $1.5 million.
Like the Black Lives Matter movement, the ESG proponents use words that make anyone who doesn’t agree sound like a sociopathic Neanderthal. Of course, black lives matter, but the BLM movement’s leaders are Marxists who want to uproot basic American institutions (like the police) and get rid of capitalism. The uncontroversial proposition that people’s lives matter and that slavery and segregation were abominations is used as a cover for radical policies few would support.
ESG advocates say they want investment “to make the world a better place,” and to be “socially responsible” and “sustainable.” Who wouldn’t want a better world? ESG goes beyond simple-minded nostrums to mandates that are a gut punch to our economy and ultimately, the quality of life for Americans.
A prominent ESG take is that the conventional energy which powers the world is bad because it isn’t “sustainable.” Though a fundamentally vacuous concept, sustainability seems to mean only doing things that you can do the exact same way forever. Since there are only finite amounts of chert and flint, this logic would limit humanity to a pre-Stone Age lifestyle. Don’t worry though, the self-appointed arbiters of sustainability can make exceptions—usually for themselves. For instance, there were 400 private jets in the fleet that carried the participants to the recent COP26 UN climate meetings in the luxury resort seaside town of Sharm el-Sheikh, Egypt. Cutting down trees to expand farmland in Brazil is not sustainable. Cutting down trees in the southeastern U.S. to burn in British power plants is sustainable. Mining metals is not sustainable, except for lithium, cobalt and nickel mining for use in EVs and wind turbines.
Most of the E in ESG really focuses on “C,” which is climate. The climate activists would have you believe fighting climate change through eliminating carbon-dioxide emissions is imperative because we are already in the midst of existentially threatening, catastrophic climate change. Their evidence is every hurricane, flood, drought, tornado, and forest fire. Included too are snowstorms, when convenient. IPCC and US government data, on the other hand, show no upward trends in these extremes. Though a 0.01 C increase in temperature per year and an annual three-millimeter increase in sea level is generally acknowledged, the lack of worrisome trends in extreme weather events has been a consistent feature of the science chapters in the IPCC reports, once one gets beyond the “summary for policymakers,” the dumbed- down,hyped-up PR messaging document made for shallow politicians and even shallower journalists. This scientifically documented lack of trends is just as consistently ignored in the politically vetted introductions to the reports. This lack of trends has been noted by many conservative commentators, including IER reports here and here, but is overwhelmingly ignored by most mainstream media. It’s too much work and it doesn’t fit the narrative.
Advocates for ESG mandates offer this tradeoff: Arbitrary (and self-enhancing, for them) rules to address a non-problem in exchange for half your retirement account on top of lower economic growth. That doesn’t seem like it would make the world a better place.
*This article was adapted from content originally published by the Institute for Energy Research.
China Strengthens Its Energy Security As Biden Weakens America’s
December 13, 2022 by Leave a Comment
It is not enough for China to be the dominant economy in the electric vehicle battery supply chain and the biggest processor of critical minerals, but it is now making inroads in the liquefied natural gas (LNG) tanker business with nearly 30 percent of this year’s record orders. Local and foreign ship owners turn to China’s shipbuilders because shipbuilders in South Korea are fully booked by orders to service Qatar’s massive North Field expansion. Three Chinese shipyards, with only one of them having experience in building large LNG tankers, won almost 30 percent of this year’s record orders for 163 new LNG carriers, making gains in a sector where South Korea usually captures most of the business. LNG tanker orders for Chinese yards tripled as China’s gas traders and fleet operators sought to secure shipping after freight rates soared to records following Russia’s invasion of Ukraine. Chinese yards also attracted more foreign bookings, including the first overseas orders for some ship makers only recently certified to build membrane-type LNG carriers.
This year, Chinese shipyards won 45 LNG tanker orders worth an estimated $9.8 billion–about five times their 2021 order values. By late November, Chinese yards had grown their LNG order books to 66 from 21, giving them 21 percent of global orders worth around $60 billion. In comparison, Chinese shipyards have only built 9 percent of the existing global LNG fleet.
LNG tankers, like aircraft carriers, are among the most difficult ships to build, taking up to 30 months. LNG is natural gas that has been cooled to –260° F (–162° C), changing it from a gas into a liquid that is 1/600th of its original volume for shipping. For membrane-type containment tanks, 200 workers spend two months welding barrier walls made of paper-thin steel and 130 kilometers (81 miles) of connecting lines. Workers on these systems have to be certified by Gaztransport & Technigaz, a French engineering company that holds the patents and licenses its designs to shipbuilders.
Shanghai-based Hudong-Zhonghua Shipbuilding is the only Chinese yard with experience building large LNG carriers, having built dozens since 2008. This year, it received 75 percent of China’s new orders, of which 26 orders were from local owners, compared to nine in the last two years. Two other shipyards–China Merchants Heavy Industry and Yangzijiang Shipbuilding–were certified to build large LNG carriers this year and received interest from both local and foreign shippers. Chinese shipyards received 19 foreign orders for LNG tankers this year and that number is likely to grow.
China needs about 80 vessels to ship 20 million metric tons a year of LNG from the United States, which will be part of the 33 percent increase in the global LNG fleet over the next five years. The tankers may also be used to trade cargo on other routes.
Qatar LNG
Qatar is already the world’s top LNG exporter and its North Field expansion project will enlarge that position and help guarantee long-term supplies of LNG to Europe as the continent seeks alternatives to Russian natural gas. The North Field expansion of the world’s largest liquefied natural gas project includes six LNG trains that will increase liquefaction capacity from 77 million metric tons per year to 126 million metric tons per year by 2027. Qatar signed deals for stakes in the first phase of the expansion project, North Field East, with TotalEnergies, Shell, Exxon, ConocoPhillips and Eni. For the second phase, North Field South, TotalEnergies is investing around $1.5 billion. The North Field South project will have three partners, part of the same group as North Field East, with signing ceremonies expected soon.
LNG prices rose from record lows below $2 per million British thermal units (mmBtu) in 2020 to highs of $57 in August. This increased spot LNG cargo prices to $175 to $200 million, from around $15 to $20 million two years ago, and has consolidated trading in the hands of a few major traders. QatarEnergy is expected to become the world’s largest trader of liquefied natural gas over the next 5 to 10 years, a position that is currently held by Shell. Following Russia’s invasion of Ukraine, Europe became a major market for LNG, where massive amounts are being purchased to replace Russian natural gas that used to make up almost 40 percent of the continent’s imports. Europe is estimated to need to import around 200 million metric tons of LNG over the next decade to phase out Russian natural gas.
Shell and TotalEnergies are estimated to have a combined portfolio of 110 million metric tons of the current estimated market of 400 million metric tons. QatarEnergy’s portfolio is estimated at 70 million metric tons, and BP’s is estimated at around 30 million, with these four players accounting for more than half of the market. Traders estimate Qatar’s nameplate LNG export capacity to be around 106 billion cubic meters with about 90 to 95 percent in long-term contracts and 5 to 10 percent in spot contracts.
Conclusion
China is ensuring that it will be able to ship LNG from the United States by building LNG tankers. Despite its new entrance as a major LNG shipbuilder, it is getting almost 30 percent of the new tanker orders, both domestic and foreign, due to South Korean shipbuilders being fully booked by Qatar’s expansion in the North Field. China is clearly ensuring that it will be able to get energy of all kinds in the future, while it uses the demand for LNG to enhance its already-strong shipbuilding capability. China’s energy policy is in sharp contrast to the climate and energy policy of the United States under the Biden administration, which is pursuing only intermittent renewable energy (wind and solar power) that is very expensive once the storage batteries to back-up the intermittency periods are taken into cost consideration.
*This article was adapted from content originally published by the Institute for Energy Research.
The Unregulated Podcast #111 Too Many Mikes
December 9, 2022 by Leave a Comment
On this week’s episode of The Unregulated Podcast Tom Pyle and Mike McKenna discuss the Georgia runoff election, Vanguard’s withdrawal from ESG commitments, and the leadership race for the RNC chair.
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Biden Blocks Much-Needed Permits
December 8, 2022 by Leave a Comment
After recently denying a permit to an enormous U.S. refinery in St. Croix, U.S Virgin Islands, which could supply petroleum products to the Northeast, President Biden’s Environmental Protection Agency (EPA) is denying a renewal permit to a coal-fired plant in Ohio that generates 11 percent of the state’s electricity. EPA denied the James M. Gavin plant—a 2,600-megawatt supercritical coal plant– in Gallia County permission to release coal ash into an on-site coal ash pond that was part of its normal operations since first coming on line in 1975. The plant is Ohio’s largest generator and the 8th largest coal plant in the nation.
EPA gave the facility near Cheshire 135 days to find another way to dispose of the ash. If it cannot find one, the plant may have to shutter. As is typical with the Biden administration, there is no analysis of the impact on the electric grid of the plant’s closure, nor what the impact on electricity prices would be since Biden’s goal is to make coal, oil, natural gas and electricity prices generated from those fuels very expensive. The Gavin plant is in the PJM Interconnection, which oversees the grid that supplies electricity to Ohio, 12 other states and the District of Columbia.
According to the coal industry, coal ash has not been definitively linked to any serious health problems and coal ash contamination was never detected in the groundwater near Cheshire. The EPA, however, indicated that the monitors measuring the groundwater could miss contamination because they are too far apart. According to the EPA, the groundwater monitoring around the ash pond is inadequate and the Gavin plant failed to conduct an appropriate statistical analysis of contamination data. Supposedly studies conducted by environmental groups have found trace amounts of coal ash contamination.
Coal ash regulations were finalized in the last year of the Obama Administration but were not enforced under the Trump administration where America first was the government’s energy policy, producing reliable, abundant and inexpensive energy. Earlier this year, however, the Biden Administration indicated it would revoke permission for some coal plants to release ash into unlined coal ash ponds. This is presumably part of his “whole of government” approach to climate, building on his promise to “end fossil fuels.” The Administration’s myriad actions can only be seen in this context as he has taken similar actions regarding oil and gas development and use.
Last month, EPA denied a request by the James M. Gavin Power Plant for extra time to comply with the federal coal ash rules. Barring any grid reliability problem that might justify a later deadline, the EPA indicated that no more coal ash can be released into the pond after April 12, 2023. The company that manages the facility plans to keep operating while converting to a “dry ash” handling system that complies with the federal rules.
The Gavin coal plant has already stopped placing coal combustion residuals into the Bottom Ash Pond and is expected to complete conversion of its units to dry ash handling this month. Dry ash handling generally uses air to cool coal ash for storage before commercial use or eventual disposal in a landfill. Unlike wet ash handling, it does not use water to clean out and transport ash. Landfills that receive dry coal ash should be properly lined and meet regulatory requirements in effect since 2015. The company also expects to close its bottom ash pond by September 2024.
The EPA still has not made final rulings for about 50 other coal plants that have asked for more time to comply with coal ash regulations. Plants that have sought extensions include two 1950s-era coal plants that are subsidized by Ohio ratepayers under House Bill 6: Clifty Creek and Kyger Creek. EPA issued a proposed denial on January 11 for the Clifty Creek plant—a 1,300-megawatt coal plant in Madison, Indiana. Clifty Creek officials applied for an extension until April 2023 to continue using the plant’s coal-ash basins, to give them time to construct alternative disposal systems. As with Gavin, the closure of the plant could cause increased and accelerated costs to the plant operator and could also negatively impact the stability of the electric grid and power markets. EPA has not yet issued a decision on the Kyger Creek coal plant’s extension request. The Kyger Creek Power Plant is a 1,086-megawatt coal-fired plant located south of Cheshire, Ohio in Gallia County.
Conclusion
Under the Biden administration, the regulatory climate is not hospitable to coal, and it is forcing economic changes to fossil fuel plants that are moving the power grid toward renewable energy, particularly wind and solar power. While coal has been and continues to be a workhorse at U.S. power plants, regulations finalized during the Obama administration made coal plants uneconomic compared to natural gas plants. Now, the Biden administration is pushing to close the remaining coal plants that produce reliable power 24/7 because of its zero carbon policy, and transition the U.S. electrical system to wind and solar power that operates only when the wind blows and the sun shines.
Europe is finding that very low wind speeds are reducing wind’s generation levels and is forcing Europe to use more natural gas and coal for generation, which is increasing rather than decreasing emissions. The Biden administration may find the same result, but have no coal plants left to produce power when needed most despite having the largest proven coal reserves in the world.
*This article was adapted from content originally published by the Institute for Energy Research.
Transmission Permitting is Broken
December 7, 2022 by Leave a Comment
Net zero proponents, such as Net Zero America at Princeton University, believe the United States needs to build between 2x and 5x as much electricity transmission as we have today. The National Renewable Energy Laboratory estimates that to meet President Biden’s goal of a zero-carbon gird by 2035, the transmission capacity must increase up to 3 times today’s capacity “or between 1,400 and 10,100 miles of new high-capacity lines per year starting in 2026.” One big question is whether this is even possible. Based upon the approvals for transmission given out by the Biden administration, there is no possible way to build that many miles of transmission lines.
The White House recently celebrated their “ongoing efforts across the Biden-Harris Administration to accelerate the buildout of long-distance, high-capacity transmission lines.” But a deeper look into what they are bragging about shows how deeply dysfunctional the federal government is with transmission permitting.
The White House boasted that they “jumpstarted permitting for key transmission lines that cross Federally-managed lands. In 2022, three major transmission projects received final approvals for construction from the Department of the Interior,” including the Gateway South Transmission Line, Ten West Link Transmission Line, and Gateway West Transmission Line. Let’s investigate these approvals.
Gateway South Transmission Line
In May 2022, the administration granted a “notice to proceed” for this 400-mile transmission line from western Wyoming to central Utah. This notice to proceed, however, was not “final approval for construction” as the White House claimed. A notice to proceed is an important step, but this notice to proceed (NTP) only “authorizes PacifiCorp to start non-surface disturbing, pre-construction work on the ROW.”
Not only does the notice to proceed only authorize pre-construction work but it does not authorize preconstruction work for the entire transmission line. The notice to proceed states, “Several segments of the transmission line are excluded from this NTP. Segments of the transmission line excluded due to incomplete cultural treatments will receive an NTP issued by the BLM Field Manager within whose field office the cultural site is located, once BLM archaeological staff and the Field Manager determine the treatment has been completed in compliance with the Historic Properties Treatment Plan (HPTP).” While PacifiCorp has started some work, there is no green light to start with the actual construction. A partially permitted transmission line does not transmit.
The process of authorizing this transmission line has been slow. It started in November 2007, when PacificCorp first submitted an Application for Transportation and Utility Systems and Facilities on Federal Lands (SF-299) to the Bureau of Land Management (BLM) for this project. It then took 9 years for the BLM to reach a Record of Decision and then an additional 5½ years for PacifiCorp to receive the notice to proceed on parts of the line.
All told, 15 years have passed since PacifiCorp submitted their original application for this transmission line and actual construction has not yet begun. Nor has such construction been permitted.
Ten West Link Transmission Line
In July 2022, the administration granted approval for the construction of the Ten West Link Transmission line—a proposed 125-mile transmission line from Tonopah, Arizona to Blythe, California. This is great news, but the approval was still not a speedy process.
In the case of Ten West Link, the application (SF-299) was filed in September 2015 and the Bureau of Land Management worked through a relatively speedy process and signed the Record of Decision in November 2019—a mere four years. But it still took along 3 years after the Record of Decision for the federal government to give the go-ahead to start construction. Less than 7 years from filing an application to start of construction is still not fast enough to even double our transmission capacity before 2050
Gateway West Transmission Line
In September 2022, BLM signed a notice to proceed for some of the segments of this proposed 1,000-mile long transmission line from eastern Wyoming to western Idaho. Like Gateway South, these approvals have been over a decade in the making.
This transmission line was first proposed in May 2007. From the proposal to the Record of Decision (ROD), it took 6 years until November 14, 2013. But even then, the BLM explains, “The ROD identifies the BLM authorized route on public lands for Segments 1 through 7 and Segment 10. As explained in the ROD and initially presented in the final EIS, the BLM has chosen to pursue a phased decision for the project, deferring the decision for Segments 8 and 9 until a later date.” In other words, after 15 years, there still is no final approval to construct this transmission line. The uncertainty associated with deferring a decision on the entire route stifles investment since builders are properly concerned that conditions may change the economics of any proposal, triggering potential additional delays and red tape.
The White House bragged about giving three projects “final approval for construction” but it appears that only one of the three received an actual final approval for construction. The other two—Gateway South and Gateway West were both proposed over 15 years ago and have yet to receive approval to fully construct the transmission lines.
There are currently around 160,000 miles of high-voltage power lines in the United States. The White House is proud of making progress toward approving less than 1,600 miles of transmission lines—not for actually approving 1,600 miles of transmission lines but for making progress. Progress is good, but it has taken over 15 years for the federal government to make this progress, which would increase capacity by 1 percent. Given these examples of the slow transmission permitting process by the federal government, it does not appear possible to get enough transmission permitting to achieve President Biden’s goals. It has taken 15 years to permit a 1 percent increase in capacity, while Biden’s plans call for a 200 percent to 500 percent increase in a dozen years. Something is wrong with their math.