Perry hints at big policy shifts with coal group

Source: Umair Irfan, E&E News reporter • Posted: Friday, April 21, 2017

Energy Secretary Rick Perry hinted at upcoming policy changes as he spoke to an advisory group about innovation in coal power.

“I didn’t come here to do inconsequential things,” Perry told the National Coal Council, an independently funded advisory group to the Department of Energy, at its annual meeting in Alexandria, Va. (Greenwire, April 19). “I came to serve a president with a clear and bold vision for this country.”

Perry praised President Trump’s February executive order that requires agencies to roll back two regulations for every new rule they produce. DOE has some rulemaking authority, particularly in producing efficiency standards, but observers aren’t sure how the order will impact the agency (Climatewire, Feb. 10).

“He [Trump] said we’re going to stop extremist political agendas from hijacking America’s energy needs,” Perry said. “Over the last eight years, we saw policy driven by political agendas.”

To this end, Perry noted that he commissioned a new study to look at how incentives for renewable energy threaten baseload power generators like nuclear and coal plants, thereby hampering the reliability of the electricity grid.

The study will be led by Travis Fisher, a political appointee at DOE who has previously criticized incentives for renewable energy like the production tax credit and state-level renewable portfolio standards, rules that according to Fisher undermine the steady output produced by nuclear and coal power plants (Greenwire, April 19).

Perry said that power markets don’t price factors in favor of coal and nuclear power, like on-site fuel storage, and blamed the previous administration’s “hostility to coal” for reductions in grid reliability.

“The experience is we’re seeing this decreased diversity in our nation’s electric generation mix,” Perry said.

Some analysts were puzzled by the new study and questioned its premise, suggesting that it may provide technical cover for cutting back on renewable energy incentives while boosting coal (Climatewire, April 18).

The U.S. Energy Information Administration noted in its 2017 outlook that U.S. power production is growing more diverse as coal loses market share and alternatives like wind, solar and biomass fill the void.

“In the electric power sector, coal-fired plants are replaced primarily with new natural gas, solar, and wind capacity, which reduces electricity-related CO2 emissions,” EIA wrote in the report.

In addition, there are bigger threats to existing coal-fired power plants than renewable energy and its associated incentives.

The 700-megawatt Longview Power Plant in Morgantown, W.Va., the cleanest and most efficient coal plant in the PJM Interconnection, faced curtailments last year.

Asked what kind of market conditions would make a top-of-the-line coal plant dial back, Stephen Nelson, chief operating officer at Longview Power LLC, responded: “Really cheap gas.”

“There are cases like a year ago, in March, where we saw natural gas below $1.80, and overnight you’re going to see really low prices, below our marginal cost,” he added. “You’re going to see negative prices, and when that happens, PJM gets on the phone, and they direct us down.”

Perry added that he believes in the potential for “clean coal” and highlighted his visit to the Petra Nova project in Texas, the world’s largest carbon capture and utilization retrofit, a project that received initial DOE funding under President Obama.

“DOE is working to develop innovative and cost-effective technology that not only can make coal cleaner and more efficient, but it can help support economic growth,” he said. “Some of the work is being done at our national labs. … They are an extraordinary asset to our country.”

But Perry also endorsed Trump’s budget proposal released last month, describing it as “forward-looking, mission-focused.”

The outline would cut DOE’s budget by 5.6 percent, including a $900 million cut to DOE’s Office of Science, which operates 10 national laboratories. The budget blueprint also would shrink the Office of Fossil Energy, which funds advanced coal projects, and eliminate the Loan Guarantee Program, which has supported carbon capture demonstration plants.