Wyoming is collaborating with the Trump administration to develop strategies to extend the lives of the nation’s aging coal-fired power plants — the primary customers of the state’s coal mining industry.
The suite of initiatives announced Thursday by Gov. Mark Gordon and U.S. Environmental Protection Agency Acting Deputy Administrator Doug Benevento include a rollback of an Obama-era rule that would have further limited the volume of toxins that coal plants can dump into waterways — a change they say will save coal-plant operators an estimated $140 million per year nationwide and $8.1 million per year in Wyoming alone. EPA has also granted Wyoming regulatory primacy over injecting CO2 underground for permanent geological storage in the state.
The initiatives also include a public-private plan to demonstrate geologic sequestration of coal-derived CO2 near Basin Electric’s Dry Fork Station coal-fired power plant in northeast Wyoming, as well as a Wyoming taxpayer-funded lobbying effort to oppose coal plant retirements in other states.
Thursday morning’s joint press conference to discuss the initiatives included members of EPA, University of Wyoming School of Energy Resources and other state officials.
“Wyoming has been leading the way [on coal carbon capture and sequestration technologies] for a long time,” Gordon said. “I think we just saw yesterday that this summer was one of the hottest summers on record. There’s a concern about CO2 being in the atmosphere, and Wyoming really has led the charge on addressing this climate challenge with carbon capture and sequestering.
“There have been significant events this last couple of years,” Gordon continued, “particularly this year, that affect the future of Wyoming, Wyoming coal and power plants that burn Wyoming coal.”
The nation’s aging fleet of coal-fired power plants make up more than 90% of Wyoming coal’s customer base, much of which is no longer cost-competitive. Nationwide, utilities are accelerating plans to retire coal-fired power units and, equally devastating to Wyoming’s coal industry, they are operating coal plants at much lower capacities.
For much of the 2010s, cheap natural gas out-competed coal for reliable, low-cost electrical power. Now, even new renewable energy out-competes existing coal-fired power on cost to utilities and ratepayers. The unsubsidized cost to develop wind energy declined by 70% since 2009, according to University of Wyoming energy economist Rob Godby. The result is that Wyoming’s coal industry — one of the state’s largest revenue sources that has provided a financial foundation for schools, state and local governments for nearly five decades — is rapidly shrinking. The industry is shedding jobs, and industry experts say the worst is yet to come.
Gordon said part of the solution to the multiple challenges facing Wyoming coal is to delay the decommissioning of coal-fired power plants while advancing carbon capture utilization and storage (CCUS) technologies to extend the life of the U.S. coal-fired power fleet.
“This delegation is part of our strategy to use today’s technology, such as carbon capture, utilization and storage to keep coal burning, reduce CO2 emissions and keep jobs here in Wyoming,” Gordon said.
Key study under scrutiny
Much of Gordon’s case for CCUS technologies is outlined in a new study that gives a glowing analysis of cost savings, jobs and state revenue if the technology is applied to Wyoming coal-fired power plants. In 2019, he asked the DOE to initiate the Wyoming Carbon Capture, Utilization, and Storage Study. It was made public earlier this week.
The study examines “the potential opportunities for retrofitting existing power plants, the economic impact, and carbon dioxide (CO2) emissions reductions for the State of Wyoming compared to an alternative case in the most recent PacifiCorp 2019 integrated resource plan (IRP),” according to its executive summary.
The study claims that, compared to PacifiCorp’s plan for the state’s power plants, adoption of CCUS would:
- Reduce CO2 emissions by 37%.
- Cost $24 less per ton of avoided CO2 emissions.
- Save ratepayers approximately 10% per month.
- Quintuple the employment benefits for Wyoming.
- Produce more local and state revenue from property, sales, severance, and other associated coal taxes as well as federal royalty payments.
Randall Luthi, chief energy advisor to Gordon, told WyoFile that DOE funded the study, set the scope of the study and chose the vendor: Leonardo Technologies, Inc., of Ohio.
“[DOE] asked if certain Wyoming entities, such as UW and EORI [Enhanced Oil Recovery Institute] would participate knowing that they would have significant Wyoming centric data at their fingertips,” Luthi told WyoFile via email. “We encouraged their participation.”
The study lists the University of Wyoming School of Energy Resources, UW’s Enhanced Oil Recovery Institute and UW’s Center for Economic Geology Research as contributors.
The study’s comparisons refer to PacifiCorp’s 2019 Integrated Resource Plan (IRP), the most recent in a rolling cost-benefit analysis of how to best meet its obligations to provide reliable, lowest-cost electricity as a monopoly and regulated utility. PacifiCorp provides electricity to customers in six western states and operates as Rocky Mountain Power in Wyoming. It is the state’s largest utility.
PacifiCorp’s IRP drew the ire of Wyoming lawmakers by proposing to retire several coal-fired power units in Wyoming ahead of schedule while investing some $4 billion in new wind energy, transmission and battery storage projects in the state. Its analysis claimed that a shift from coal to renewable energy across its six-state operating region could save up to $599 million.
The state responded by passing a law, Senate File 159 “New Opportunities for Wyoming Coal Fired Generation,” requiring public utilities that want to retire a coal unit in Wyoming to first make a good-faith effort to sell it to a third-party buyer. Under pressure from the Wyoming Legislature, and at the direction of the governor’s office, the Wyoming Public Service Commission made the unusual move to launch an investigation to test PacifiCorp’s claims in its IRP. The governor’s office provided funding for the investigation.
The Wyoming PSC is expected to unveil its own findings Tuesday.
Hours after Gordon’s press conference, PacifiCorp issued its own analysis of the DOE’s study.
“In an initial review, the report appears to have some significant limitations, many of which are simply wrong,” PacifiCorp spokesman Spencer Hall wrote in an email. “PacifiCorp continues to examine the study’s assumptions and calculations to properly evaluate its conclusions, but the list of items missed by the study’s analysis is very long.”
PacifiCorp alleges the DOE study does not effectively consider a utility’s cost for income taxes, tax credits, property taxes or net power costs. It doesn’t adequately factor fuel costs, savings from market sales or system costs, according to the utility. Nor does it consider a market price for oil below $60 per barrel, environmental compliance costs, or lower demand for coal-fired power due to lower cost renewable power sources coming online, Hall said.
“We continue to monitor and evaluate carbon capture technologies for possible implementation at coal-fired plants,” Hall added. “Given the current high capital costs of implementing carbon capture on coal-fired generation, as well as other barriers, carbon capture has not been considered a viable option to date, which is why it has only been installed at a single facility nationwide.”
That coal-fired carbon capture utilization project, Petra Nova in Texas, was mothballed earlier this year after failing to meet objectives and due to further struggles with the depressed price of oil this spring.
When asked why the DOE study varies so differently from actual case scenarios such as Petra Nova, University of Wyoming School of Energy Resources Executive Director Holly Krutka said deployment of CCUS on coal-fired power plants in Wyoming will benefit from lessons learned at Petra Nova and other past failures.
“Petra Nova was a first-of-its-kind project. This is not first-of-its-kind,” Krutka said. “The company that delivered the technology being used at Petra Nova — Mitsubishi Heavy Industries — has already indicated that the capital costs alone could be decreased by 20% in the next plant, and subsequent plants will get cheaper by this learning-by-doing.”
However, the DOE study did not “fully encompass” all unknown costs, Krutka added. She suggested that CCUS might perform better economically in Wyoming due to more favorable conditions for injecting CO2 into Wyoming oilfields, offsetting the cost of implementing the technology.
“In Wyoming, we looked at both multiple oilfields but also [carbon capture storage],” she said. Another difference is the availability of a new federal tax incentive for CO2 storage; the 45Q tax credit, which allows for a $35-per-metric-ton tax credit for CO2 captured and sequestered via enhanced oil recovery.
One of the biggest deficiencies in the DOE study, according analysts, is an assumption that Wyoming coal-fired power plants retrofitted with CCUS technology would operate at an 85% capacity or higher — a capacity unheard of for any commercial scale CCUS attempt.
“The notion of adding CCUS to a coal plant that’s already uneconomic, it’s just not a viable solution. Even if it were to work, it’s not competitive,” Energy and Policy Institute research and communications manager Joe Smyth said.
Others also question the timing of the DOE study — released just days ahead of the Wyoming Public Service Commission’s findings and potential action related to its investigation of the PacifiCorp IRP.
The timing appears to be intentional, said Bob LeResche, board member of the Wyoming landowner advocacy group Powder River Basin Resource Council and a former energy executive.
“And it strikes me that the way they represent the results of the study are contrary to the empirical evidence the world has seen for the past 15 years,” LeResche said. “My big disappointment is that the governor has taken sides in this, and it’s not the ratepayers’ side, and it’s not the citizens’ side.”
Another key component to Gordon’s plan to delay the closure of aging coal-fired power plants is the renewal of a contract with the Energy Policy Network — a lobbying organization that, in the past, has been funded in part by companies that mine coal in Wyoming, as well as Wyoming taxpayer dollars from the state and Campbell County.
The renewed two-year contract is worth $500,000. It will be paid from a $1 million account the Wyoming Legislature appropriated for the governor to use toward marketing Wyoming coal.
“Most Wyoming coal is not used in Wyoming. It is used elsewhere in the United States,” Gordon said, adding that Wyoming coal is preferable for its lower sulfur dioxide emissions, as well as its potential for carbon capture technologies. “We face the challenge that many other states’ public service commissions unfortunately don’t see it that way.”
Gordon said that if the Energy Policy Network can delay the closure of a power plant that burns Wyoming coal — even for just a year — that’s one more year of coal mining jobs and revenue to the state.
State officials have come under fire from watchdog groups for employing Energy Policy Network in the past, with accusations that the organization sets up front groups in individual states allegedly misrepresenting itself as a local ratepayer interest group.
Jason Begger, deputy director of the Wyoming Energy Authority, responded to a reporter’s question Thursday morning about whether Energy Policy Network will clearly represent itself in other states as acting on behalf of Wyoming interests.
The state has never hidden its relationship with Energy Policy Network while speaking in public inside Wyoming, Beggar said. However, Energy Policy Network is not obligated to disclose its donors or otherwise make clear that it is lobbying on behalf of Wyoming coal interests while working in other states, he added.
“I think the press conference today just goes to show that, hey, you know this is what we’re doing and no embarrassment about it,” Begger said.