EPA's proposed new regulations could keep coal industry reeling

| Friday, Sept. 13, 2013, 12:01 a.m.

Proposed regulations for new power plants could slam a door that's already closing fast for the reeling coal industry, industry officials and experts said Thursday.

Coal has been struggling to grow as fast as natural gas, solar and wind, and now it will be forced to innovate if it will survive, local experts said Thursday. The Environmental Protection Agency likely will require that new coal-fired plants trap and store their carbon pollution, a mandate that would virtually block construction if coal ever again becomes competitive with gas, several wire services reported.

“In some sense, it closes a door pre-emptively,” said Julien Dumoulin-Smith, an analyst at UBS in New York who follows Western Pennsylvania's biggest power companies. “The reality is low natural gas prices are going to do in coal much more significantly than any new regulations are going to.”

The country is going through a transformation, one more powerful in Pennsylvania than maybe anywhere else, he added. Concerns over climate change and the boom in natural gas production from shale like the Marcellus are pushing generational changes in power production.

Pennsylvania is the country's second-biggest electric power generator and has more than 7 percent of the country's coal miners. Some of them could be in jeopardy, industry officials said. Carbon capture could spell coal's death because that technology isn't economical yet, said George Ellis, a lobbyist who leads the Pennsylvania Coal Alliance in Harrisburg.

“The president is legislating through regulatory bodies,” said Lynn Seay, spokeswoman at Cecil-based Consol Energy Inc., which saw its stock drop 1.7 percent to $34.56 per share Thursday. “This is a dangerous and unnecessary action at a time when the U.S. continues to sluggishly inch toward economic recovery.“

EPA officials have not publicly confirmed details. Several wire services reported bits of the plans, with official responses only confirming they will be released by President Obama's Sept. 20 deadline.

That news hit coal companies with local holdings harder than the power companies. Shares of Alpha Natural Resources Inc., which has 2,000 local workers, were down by more than 4 percent to $6.36. FirstEnergy Corp. dropped 1.6 percent to $36.90 per share, but NRG Energy Inc. was up 0.4 percent to $26.36.

Consol, which has 3,713 employees in Pennsylvania, and Virginia-based Alpha declined to say how they might respond. Alpha is withholding judgment until the EPA officially releases details next week, spokesman Ted Pile said in an email.

Pile said some local miners might be spared from any harm because a lot of their shipments get exported overseas. But even that market got gloomy news Thursday: China, the biggest importer of U.S. coal, will ban new coal-fired power plants in three key industrial regions around Beijing, Shanghai and Guangzhou to combat its notorious air pollution.

If the coal industry does have to make cuts, it has largely itself to blame, several experts said. It spent decades using political pressure to delay changes rather than investing in technology, said John Hanger, a former state Department of Environmental Protection secretary and current Democratic candidate for governor. It should be further along in figuring out how to capture its carbon pollution that's now trapping heat in Earth's atmosphere, he said.

Previously released drafts of EPA's proposals proposed a slow phase-in, giving the industry decades to adapt the technology at its new plants, said Edward S. Rubin, an industry expert at Carnegie Mellon University. And the industry has overcome similar hurdles before, notably in controlling sulfur dioxide that was fingered for causing health problems and acid rain in the 1970s and '80s, he said.

“No one today is claiming those regulations destroyed the economy or put people out of work,” he said. The new rules are “a push for innovation and creativity that over the long-term has a track record of making things better and cheaper.”

In the short-term it won't cause more pain either, he said. Some of the worst has already happened before these rules, with about a dozen local plants already closed or starting to. And plans to replace them aren't affected by this rule. That's because no one has any coal-fired plants on the drawing board in the state. All nine in the planning phase are natural gas-fueled.

A spokeswoman at FirstEnergy Corp., Pennsylvania's largest power supplier, declined comment because the company isn't building any new plants. A spokesman at NRG, which owns three local plants and part of two others, did not respond to requests for comment. It had said in June it would convert its Lawrence County plant from coal to gas to keep from closing it.

Even if new regulations do encourage another wave of plant closings and mining cutbacks, it's likely there will be more jobs in natural gas drilling and natural gas power to replace them, experts said.

“I doubt however that few in the gas industry are finding comfort in the EPA's tactics against the coal industry,” said Gary E. Slagel, a former Consol advisor who now works at the energy law firm Steptoe & Johnson. “Natural gas will likely be the next in line with increased federal requirements.”

What the EPA is doing is an important signal, though, said Randy Francisco, who organizes the Sierra Club's “Coal to Clean Energy Campaign” in Pennsylvania. It forces the industry, workers and policymakers to confront the future's need for cleaner and renewable fuels, so they can minimize the hurt for workers while still fighting climate change.

“We're at a turning point in history right now,” he said. “And if we don't get together to make opportunities out of that ... we're setting ourselves up to have a repeat of what happened in Pittsburgh in the '80s when the steel mills closed.”

Timothy Puko is a staff writer for Trib Total Media. He can be reached at 412-320-7991 or tpuko@tribweb.com.

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