Lexington, Ky., March 1, 2010 —There are challenging days ahead for the coal industry, said Janet Gellici, CEO of the American Coal Council, in a speech delivered last month to the Lexington Coal Exchange in Lexington, Ky.
Gellici said there have been some “game changing” events happening in Washington, D.C. and around the country that could have wide-ranging implications for the coal-fired generation industry.
“There have been some game changers lately for the Democrats. Republicans chalked up wins for the Red Team in last year’s gubernatorial races in New Jersey and Virginia. The surprising outcome in the Senate race in Massachusetts last month put another “ËœW’ on the board for Republicans. It also eliminated the 60-vote safety margin in the Senate,” Gellici said.
Gellici said the coming 2010 elections could have a moderating effect on the policy front, adding that this doesn’t rule out the possibility of challenging times ahead for the coal industry.
“One downside to a more cautious legislative agenda this year is that it likely means the Executive Branch will be more in play, especially on energy and environmental issues. Of course, it’s already difficult to play against the Feds since they keep changing the rules of the game as they go along,” she said.
On the big picture front, she said, recent polls are showing that jobs and the economy are more pressing concerns for U.S. citizens than environmental or climate change issues.
“The message is apparently finally getting through to the White House,” she said, referring to President Barack Obama’s State of the Union address. “The president’s address was pretty much a request for a Mulligan or a do-over. Clearly the administration’s game plan for this year is to focus on jobs/the economy and deficit spending.”
The coal industry is also not satisfied with some of the provisions in the president’s FY 2011 budget, she said. Tax preferences for coal would be cut out of the budget, which could cost the industry $2.3 billion over the next decade and make coal-fired electricity more expensive, she said.
“So if you’re playing on the coal team these days, you’re probably thinking, “ËœThis ain’t croquet.’ In fact, it’s more like a gladiator sport,” she said. “The industry is definitely under siege by pretty much all branches of the government.”
Speaking on the judicial branch, she said public nuisance injunctions are now condoned for operations that contribute to global warming.
Describing some areas where “pushback” is taking place, she said some Senate and House resolutions and legislation could mean an organized opposition to the Environmental Protection Agency’s (EPA’s) endangerment finding on carbon dioxide and other greenhouse gases.
Also, eight Senators have sent a letter to the White House in protest of the administration’s decision to review all state-issued coal mine permits as proposed by the Department of the Interior, calling it a state’s rights issue, she said.
“It’s not a long list of counter-offensives, but signs of an offense nonetheless,” she said.
On energy policy, she said she expected to see a more incremental level of progress this year.
“Expect an Energy Lite bill, focused on energy efficiency, establishing a national renewable electricity standard and funding for carbon capture and storage and clean energy technology — absent major greenhouse gas rulemaking,” she said.
Possible outcomes could include an economy-wide cap-and-trade system, an industry sector hybrid, an energy bill without greenhouse gas regulation, or EPA regulation without a bill.
“Most folks believe there won’t be major climate legislation passed this year. One notable dissenting opinion, Kevin Book, ClearView Energy Partners, expects climate and energy bill in the second quarter of 2010 because cap and trade provides a revenue stream needed by feds and states. In other words, he believes a poor economy is driving climate legislation,” she said.
In conclusion, the administration and Energy Secretary Steven Chu have both expressed public support for the future of coal-fired generation, clean coal technologies and carbon capture and storage.
“(But) it’s difficult at times to take this support seriously when they seem to be giving with one hand while taking with the other. Support for CCS won’t matter if you shutter a majority of U.S. coal production by denying surface mine permits,” she said.