Wyo tilts at windmills to save coal. Let’s embrace them instead

Every time I think Wyoming can’t deceive itself further, contorting all reason to justify keeping the ventilator running on its dying coal industry, politicians prove me wrong.

It’s time for Gov. Mark Gordon and state lawmakers to face reality and let nature — in this case the natural laws of free-market economics — take its course. They have no business tethering the fate of Wyoming taxpayers, ratepayers and the state’s largest utility to that of the dearly beloved but clearly doomed King Coal.

PacifiCorp plans to retire several of its aging coal-fired power plants ahead of schedule and invest about $4 billion in new wind energy, transmission and battery storage projects in Wyoming. The company estimates the switch could save up to $599 million across its six-state operating region.

Utilities throughout the country have made the same decision to switch from coal to much cheaper natural gas and renewable energy.

Gordon asked the U.S. Department of Energy to study the potential environmental and economic impacts of retrofitting Wyoming’s coal-fired power plants to use carbon capture utilization and storage.

The study, which immediately drew criticism from PacifiCorp and environmental groups, concludes CCUS would significantly reduce CO2 emissions, decrease ratepayers’ bills, save jobs and provide more tax revenue for state and local governments. 

Sounds great, doesn’t it? But DOE’s report would have more credibility if its findings didn’t fly in the face of what happened at Petra Nova in Texas, the nation’s only commercially operational CCUS project before it was mothballed earlier this year.

The $1 billion project near Houston didn’t perform as advertised and failed to meet its lofty environmental and economic goals. The unit captured less than half of carbon dioxide emissions in the slipstream it was processing during the first quarter of 2020, not the consistent 90% figure claimed by owner NRG Energy. 

The project likely could not have survived its three years in operation without a $190 million investment from DOE and $250 million in loans from a Japanese bank.

“Proponents of these projects are selling an unproven dream that in all likelihood will become a nightmare for unsuspecting investors,” states an Institute for Energy Economics and Financial Analysis report on Petra Nova. 

Meanwhile, PacifiCorp’s analysis of the DOE’s report said it comes up short in many critical areas. It does not consider a utility’s costs for income taxes, tax credits, property taxes or net power costs, a company spokesperson told WyoFile. The utility added that the study doesn’t adequately factor in fuel and system costs.

In other words, it was that standard-fare output of a Trump-administration agency: an alternative facts bit of propaganda that relies more on politics than science.

The carbon captured from coal-power production can be piped in to enhance oil recovery projects or sequestered underground. What scuttled Petra Nova was the oil market crash this year, with prices falling below $45 per barrel. The DOE study for Wyoming, PacifiCorp noted, does not even consider a market price for oil below $60 per barrel.

Lux Research, a market research firm, analyzed the Petra Nova project and determined it won’t be economical again until oil prices reach $70 per barrel.

The questionable DOE report is one of several coal-boosting initiatives Gordon announced. All are tied to President Trump’s unfulfilled promise to save the coal industry, and all will likely collapse if a new administration takes over.

The EPA is rolling back an Obama-era rule that limited the volume of toxins coal plants can dump into waterways. The agency is doing it to save money for coal-plant operators — an estimated $140 million annually, including about $8 million in Wyoming.

It’s an unconscionable decision that the EPA and Gordon are touting. “This disastrous rule will allow coal power plants to continue dumping toxic wastewater — filled with dangerous pollutants like lead, mercury and arsenic — into the same waterways that our families drink and play in,” the League of Conservation Voters said in a statement.

Despite Petra Nova’s costly failure, Wyoming is plunging ahead on a public-private plan to demonstrate geologic sequestration of coal-derived carbon dioxide near Basin Electric’s Dry Fork Station, the newest coal-fired power plant in the nation.

The most audacious part of Wyoming’s pro-coal power play is small potatoes financially, but still should provoke taxpayers’ outrage. The Wyoming Legislature granted Gordon’s request for a $1 million fund to market coal, and he’s spent half of it renewing a two-year contract with the Energy Policy Network.

EPN will lobby other states to delay plant closures and keep using Wyoming coal even though it’s proven to not be cost-effective. Wyoming might as well have taken that $500,000 and tossed it into a 60-mph gust of wind.

It’s par for the course in a state whose lawmakers passed a bill requiring public utilities seeking to retire a coal unit to first make a “good faith effort” to sell it to a third-party buyer. Who is going to buy a plant whose owner has determined it’s not economical to run on coal?

The measure’s supporters are so anxious to prop up the coal industry, they ignore the fact that the law violates the universal rule that fiscal conservatives constantly preach: let the free market prevail.

Wyoming’s 267 million tons of coal production in 2019 was its lowest volume since 1975, according to the Energy Information Administration. This year the COVID-19 pandemic has led to even steeper declines in coal mining as several companies temporarily halted operations, furloughed workers or scaled back. Many of those mining jobs simply aren’t coming back.

At an April press conference, a frustrated Gordon seemed resigned to the uphill battle facing the coal industry, which has provided tax revenue for state and local governments and schools for the past half-century.

“I don’t think anybody is prepared for the losses we’ve seen periodically over the past several years,” the governor said. “We’ve never indicated that the state is going to bounce back from this with ease.”

But the quixotic quest of Gordon and the Legislature to keep coal mining alive seems to have no end. 

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The governor’s office directed the Wyoming Public Service Commission to investigate PacifiCorp’s findings in its exhaustive Integrated Resource Plan that converting coal-fired plants to renewable energy is the best way to provide consumers reliable electricity at the lowest cost. Gordon’s office even paid for the PSC’s investigation.

Though championed by conservative lawmakers, it’s unlikely Wyoming could win any legal challenges to force the state of Washington to build a terminal to export Equality State coal to Asian markets. 

Pouring millions of dollars into coal research may eventually produce positive results, but it’s a long-term, shaky gamble at best, and it won’t keep U.S. plants buying Wyoming coal. CCUS technology can’t survive without enormous tax credits and government investments.

It’s past time for state officials to accept that market forces are driving the steep decline of coal production, and focus on helping Wyoming benefit from future wind, solar and battery-storage projects. Last year renewables surpassed coal’s share of U.S. power generation for the first time since the 19th century. And we have plenty of wind and sunshine. Yet our politicians refuse to embrace this growth industry

Renewables likely won’t ever generate the tax revenue coal has provided, but will create good-paying jobs that can help revive communities hit hard by coal’s decline. They will also reduce costs to electricity ratepayers.

Having to jump off coal’s gravy train may not be easy, but it’s a fiscal reality that should finally force legislators to fulfill their promises to diversify the state’s economy. State government is faced with a $1.5 billion biennial deficit, and already the state has announced cuts  to programs that help seniors, the mentally ill and disabled and residents who live in poverty.

How can any candidate look voters in the eye — even on Zoom — and say with a straight face that coal is our future?

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Kerry Drake: Veteran Wyoming journalist Kerry Drake has covered Wyoming for more than four decades, previously as a reporter and editor for the Wyoming Tribune-Eagle and Casper Star-Tribune. He lives in Cheyenne and can be reached at kerry.drake33@yahoo.com.