How to Prevent the Premature Retirement of Coal-Fired Power Plants

Published March 22, 2018

The coal industry has been the principal target of the assault. It is, however, possible to reverse the policies that have caused this harm and allow the markets for electricity again to best meet consumer needs. More than 250 coal-fired power plants have been retired since 2010, taking more than 34,000 megawatts (MW) of power generation capacity offline. As a result, coal’s share of the electricity generation market fell from 50 percent in 2008 to around 31 percent in 2017.

Most of the retired plants, 88 percent, were older, smaller units with a generating capacity of less than 250 MW. However, newer, more efficient coal-fired power plants with larger generating capacities also have been slated for retirement. The premature closure of these plants will cost consumers billions of dollars in higher electricity prices and lost economic opportunities.

These coal-plant closures are being driven by three factors: 1) Obama-era Environmental Protection Agency (EPA) regulations on carbon dioxide (CO2) and other emissions; 2) national and state government policies that mandate the use and subsidize the producers of renewable energy sources; and 3) competition for electricity generation from low-cost natural gas.

Low natural gas prices are the result of hydraulic fracturing and horizontal drilling, technological innovations that have made the United States the largest producer of natural gas in the world. By making previously unrecoverable natural gas resources economically accessible, the “fracking revolution” has changed the nation’s energy marketplace in ways that significantly benefit consumers and businesses.

By contrast, EPA regulations on CO2, mercury, ozone, and small particulate matter, as well as market-distorting subsidies and mandates for renewable energy at the state and national level, provide zero measurable economic or environmental benefits. Worse, they put the reliability and affordability of the U.S. energy supply at great risk. In order to reverse the damage, the Trump administration, Congress, and state elected officials must move swiftly to revoke these policies and preserve the coal-fired electricity fleet.

The first Policy Study in this series, “How the Premature Retirement of Coal-Fired Power Plants Affects Energy Reliability, Affordability,” describes how the reliability and affordability of the U.S. electricity supply are jeopardized by the retirement of coal-fired power plants. The study offers South Australia and California as case studies of the damage done by anti-coal policies.

The second Policy Study in the series, “How Obama-Era Regulations Are Shutting Down Perfectly Good Power Plants,” drills down, explaining in detail how the Obama-era Endangerment Finding and regulations on greenhouse gases and traditional emissions have resulted in the premature retirement of coal-fired power plants and why these regulations were based on faulty scientific assumptions.

NOTE: This Policy Study is the last in a four-part series. Read the firstsecond, and third parts.