EPA rigs energy markets; western Colorado loses

http://www.gjsentinel.com/opinion/articles/epa-rigs-energy-markets-western-colorado-loses (GJS subscription required)

By Stuart Sanderson
Colorado Mining Association

The Western Slope was recently rocked by the layoff of 150 miners at the Bowie Mine in Delta County.

The announcement drew widespread sympathy and support for the families whose lives have been uprooted, and for the communities reeling from the economic body blows. As the Delta County Economic Development Director mentioned earlier this year, losing a few hundred jobs in rural Colorado is equivalent to losing thousands in Denver.

These layoffs are not, as some have implied, the result of natural market forces. And it isn’t just about “cheap” natural gas, which is still about double the cost of coal. A series of government actions is to blame; they include settlements of lawsuits by the feds that will result in power plant closures in the east, state actions here at home, and the looming Environmental Protection Agency (EPA) regulations on carbon.

Although the mine cited the termination of a contract to supply clean coal to the Tennessee Valley Authority (TVA), government is largely blame for manipulating and shrinking the export market for Colorado coal. TVA plants are closing because of “friendly” settlements negotiated behind closed doors between government agencies and high-cost energy cronies. Anti-coal groups get involved in the action, and then walk away with a handsome check for their efforts or millions in funding for “green” energy projects. Nice work if you can get it.

These actions have provoked criticism from lawmakers for lack of transparency and legal basis. Rep. John Duncan (R-Tenn.) blasted the 2011 TVA settlement, noting that “this deal came about because the money is not coming out of the pockets of the elitists who reached it.” No, it’s coming out of the pockets of low- and middle-income energy consumers who must pay for the multi-billion dollar transition to higher-cost energy. As a result, the coal mines in Colorado, which ship two-thirds of their product outside the state, must deal with a vastly shrinking export market for their clean, high-quality product.

The mines also face similar challenges here at home. As a result of mandates for high cost and heavily subsidized renewable energy dating back to 2004, utilities must now generate up to 30 percent of their electricity from wind and solar with little regard for cost. And that’s only the beginning. The 2010 Clean Air Clean Jobs Act will shut down or convert to natural gas close to 1,000 megawatts of coal generation along the Front Range. This legislation is costing coal producers about 4 million tons or $100 million in sales annually. And it hasn’t exactly jumpstarted Western Slope economies, as gas drilling has declined since enactment.

EPA’s proposal to limit carbon emissions from power plants, however, will deliver an economic coup de grace, forcing even more coal power plants to close and more mines to reduce their workforces. Mines can’t produce what they can’t sell. And that points to a very dark future for Colorado, marked by double-digit rate increases. Coal is America’s most abundant and affordable resource and still meets 64 percent of Colorado’s electricity needs.

NERA Economic Consulting recently projected that severe carbon limits proposed by EPA will shut down 45,000 megawatts of coal-fired generation within the next five years. That’s in addition to the more than 70,000 megawatts of lost coal power from plants that have already announced retirements due to other EPA policies. In fact, the U.S. could lose more than one-third of its coal generation fleet by the year 2020.

Along with plant shutdowns comes the increased cost of electricity, goods and services. NERA projects that utilities could spend between $41 billion and $73 billion each year, more than five times the EPA guesstimates, and consumers will suffer the consequences.

Oh, and by the way, don’t expect any climate benefits. Even if we accept the flawed science behind EPA’s scientific models, full implementation of the rules — according to EPA’s own analysis — will reduce atmospheric CO2 concentrations by less than one-half of a percent. That will lower global temperatures by 2/100th of a degree, and reduce sea levels by 1/100th of an inch — equal to the thickness of three sheets of paper. That is a ridiculous price to pay.

There is a better path forward. Go to a Partnership for a Better Energy Future at http://www.betterenergyfuture.org to learn more and to voice your concerns. Do it for your family, your community, and for the miners in Delta County.

Stuart Sanderson is president of the Colorado Mining Association.