The recent announcement by President Barack Obama on climate issues and new regulations on emissions from existing and new coal fired power plants should be of great concern to Ohio elected officials.
Recently, the Ohio House Policy and Legislative Oversight Committee met at Ohio University-Eastern to hear testimony from a variety of interested parties and hear their questions and concerns about new clean air regulations and energy issues. As a member of this committee, I listened closely to the views of those testifying and share the concerns of many of the economic impact that these regulations could have on Ohio since so much of our electrical power is produced by coal fired power plants.
EPA regulations have affected Ohio coal for years, going back to the 1980s and 1990s under Presidents Reagan and George H.W. Bush. The current political climate in Washington makes Obama's announcement even more worrisome as it is unlikely Congress and the president have the ability or willingness to develop a clear and comprehensive energy policy that addresses environmental rules, improvements to the power generation system and grid and a path forward to make sure that the energy and power needs of our residents and industries are met. Without the passage of this type of comprehensive legislation, we will be left with a piecemeal approach to energy and environmental rules that severely hinder our use of coal.
In addition to the lack of a comprehensive energy policy that opens the door for environmental rules that cannot be met with existing technology, the use of coal has other economic forces that may determine its future.
One of these is the development of the shale gas industry which has the potential to provide large quantities of natural gas and oil. Since 2004, the share of U.S. electricity from natural gas jumped from 16 percent to 26 percent, while the share from coal plummeted from 51 percent to 40 percent, according to the Energy Department. Last year, coal production fell to just 37 percent of the power produced. With gas prices at a low level, energy producers are looking at its use to supply power.
Recently, Advanced Power North America announced that it will build a new $800 million gas fired power plant in Carroll County that will produce enough power for 700,000 homes. The company stated that it is not proposing to construct the plant because of shale gas, but instead because of the decision of Ohio utilities to close several coal fired plants. Nonetheless, the development of shale gas will play a major role in the decline in the use of coal for electric power.
Even with this increase in gas production, history has shown that natural gas prices are very volatile and coal must remain as a steady source for generating electricity. This is another reason to make sure any new EPA regulations do not severely hinder the use of coal and for the development of a comprehensive energy policy.
The decision making of the electric utility industry is another economic force which will impact the coal industry. While it is easy to believe that the decision to close coal fired power plants is driven totally by the EPA regulations, the decisions are driven by a combination of the stricter EPA regulations, market changes, grid reliability issues, state requirements for energy efficiency and alternative energy and shareholder profits.
Utility decision making has affected coal mining for years. As a newly elected legislator in 1983, I fought to keep the North American No. 3 mine open. The utility at that time actually owned the mine and could not be convinced to keep it operating due to the high cost of coal production. This was a business decision of the utility and unfortunately many miners lost their jobs.
Now, business decisions by the utilities have led to announced closings of power plants even though PJM, the regional transmission organization that coordinates the movement of wholesale electricity in all or parts of 13 states, including Ohio, and the District of Columbia, has raised concerns about the effect the closings have on reliability of the grid. Some of these closings were announced well in advance of any final EPA regulations taking effect.
Some utility decisions have, however, helped the coal industry. Large investments have been made at some power plants to meet EPA regulations. The industry also continues to support efforts to find ways to further reduce emissions. The electric power industry, the U.S. Department of Energy and the Ohio Coal Development Office have partnered on many projects over the years. One, known as the Chemical Looping Process for Energy Conversion, is being developed at Ohio State University. This project could lead to one of the "lowest cost and most efficient technologies yet developed for CO2-free energy from coal and has exciting applications for the production of high value chemicals and other materials."
As a member of the Coal Technical Advisory Committee, I recently visited Ohio State's lab to view and discuss this project. It has now moved to the developmental stage. More information can be found at osu.edu/features/2013/ohio-state-develops-clean-coal-technology.html
Time is needed to develop these types of technology. Also, the utility industry must be willing to follow through with investments into the commercialization of these technologies.
However, new EPA regulations that are not part of a comprehensive energy policy from Washington will limit development of technologies that could provide us with a future of reliable energy that includes coal. It's time to move beyond the political rhetoric surrounding this issue and produce a sound energy policy that makes sense for Ohio and the United States.
(Cera, D-Bellaire, represents the 96th District, which includes Jefferson and Monroe counties and a portion of Belmont County, in the Ohio House of Representatives.)