America’s Collision Course With The Debt Ceiling
As the nation counts down to default, Diane talks to longtime Congress watcher Norm Ornstein about the debt limit negotiations, what's at stake and whether he sees a way forward.
Guest Host: Derek McGinty
Are we nearing the end of the age of coal? The headlines on the industry are pretty dire. Two of the largest coal producers in the U.S. have filed for bankruptcy, and American coal production has fallen to its lowest level in decades. Reasons for the decline include competition from cheap natural gas and new environmental policies… not to mention a slowing of global demand from places like China, and a new climate change agreement out of Paris. While this is bad news for the industry, with significant implications for jobs, some environmentalists argue its great news for the planet. Still it appears coal isn’t quite done just yet. We’ll talk about its future.
MR. DEREK MCGINTYThanks for joining us. I'm Derek McGinty sitting in for Diane Rehm. She is recovering from a voice treatment. For generations now, coal has provided the power to heat our homes and light our way, but it would seem the coal industry itself may be running out of juice. As domestic and foreign demand dips, major American coal producers have gone bankrupt. Natural gas, new environmental rules and global developments, especially in China, are also part of the equation.
MR. DEREK MCGINTYBut what does this all mean for the future of this major U.S. energy source and the people who make a living digging it out of the ground? We're here to talk about the U.S. coal industry now and into the future and what this could mean for energy jobs and the climate. Amy Harder of The Wall Street Journal, Joseph Romm of the Center For American Progress and joining us via the telephone for the hour from Pittsburgh is John Pippy.
MR. DEREK MCGINTYHe is with the bituminous coal industry, the CEO of the Pennsylvania Coal Alliance. Welcome to all three of you. Good to have you with me.
MR. JOHN PIPPYThank you. Great to be here.
MCGINTYYou know, Amy, we have seen a lot of headline talking about the poor health of the coal industry. How bad is it really?
MS. AMY HARDERWell, in 2008, coal provided 48 percent of the U.S. electricity and today, it's down to 34 percent. That's a pretty significant drop, especially for a capitalistic society that thrives off increasing how much you make and how much you produce. By 2040, though, still about the same, actually, 34 percent. So you're seeing a significant decline over the last decade and one that coincides with President Obama's time in the White House.
MS. AMY HARDERNow, I would say that, as you said, it's due to a confluence of factors both under President Obama's control and those outside of his control. We're seeing a lot of bankruptcies in the coal industry. Arch Coal, one of the biggest U.S. coal companies, filed for bankruptcy this week. Over 25 percent of U.S. coal production is now in bankruptcy.
HARDERNow, that doesn't mean we're going to see all this coal go away altogether. You're going to see some shifting around and declines in certain parts of the country, such as in Pennsylvania and in Appalachia, such as in West Virginia and Kentucky. You're going to see a lot more declines there instead of, say, Wyoming where there's a lot more efficient technology.
MCGINTYI want to go to John Pippy because, John, 34 percent is still a pretty huge hunk of the American power industry. So tell me how do you see the future of the coal industry right now and are you on your heels?
PIPPYWell, it's correct right now that we're having some cyclical challenges and some market conditions that are very difficult for the industry. But I would make an argument, though, that, I mean, that is what I said, cyclical. That is because the unnaturally low price of natural gas. It's because of the dollar being so strong right now so it makes coal exports less competitive. You have the situation in China with lagging economy so they're not importing, actually, potentially exporting.
PIPPYBut those are market conditions. And the industry, you know, they shift, they adjust and they can recover. And the reason why Amy was able to say that we're still going to maintain 34 percent is because the rest of the world, by 2040, will need twice as much energy as we needed in 2010 and that's because of the development of third world countries, developing nations, the urbanization of those nations.
PIPPYSo it is very challenging. Our biggest complaint right now is the regulatory environment creates uncertainty so even when you're having challenges, you can't get financing to weather some of these storms. So that's, I mean, there's a lot into it. The part of it's market, but long term, the concerns will be on the regulatory side.
MCGINTYAll right. We'll talk about that. John Pippy -- I'm sorry, Joe Romm, do you have a sense that coal is on the way out?
MR. JOSEPH ROMMYeah. I think coal is on the way out for a number of factors. I have a post up of kind of progress today on peak coal. Goldman Sachs actually told its investors back in September that peak coal is coming sooner than people thing and that coal use in the world peaked in 2013. And you have a confluence of factors. In the U.S., we have not just the cheap coal, but cheap renewables. Renewables have been coming down in price. I mean, solar came down in price 99 percent in the last quarter century.
MR. JOSEPH ROMMSo I think environmental concern and the competition have changed the coal market in the U.S. And let me just say, China is now reversing its coal use permanently so it was the biggest driver of coal growth in the last 15 years. It is now reducing its coal use for environmental reasons.
MCGINTYMr. Pippy seems to think that it's cyclical, though, that a lot of this demand will come back as other developing nations need more and more energy. He said twice as much in the next couple of decades as we're using right now and that the demand for coal will be steady at least.
ROMMWell, all I can tell you is that renewable energy has been exploding. Natural gas has been doing exceedingly well and the two of those combined pretty much have swallowed up all of the coal that you've seen decreased in this country. I do not believe we'll be using 34 percent electricity -- coal for electricity in 2040.
MCGINTYWhere will we get that energy from? What will replace it?
ROMMIt will be solar energy, wind energy. By 2020, new renewables, new non hydrogen renewables like solar and wind, will be 10 percent of U.S. electricity, up from 1 percent just when Obama started. So we are seeing what's literally exponential growth.
PIPPYWell, the -- one reason it's exponential is because it is so heavily subsidized by the U.S. government. It's the equivalent of a coal plant not having to pay for its coal. But that's a policy decision. The numbers I talk about come from the IEA, International Energy Agency. And they look at 2.3 billion people moving into urban populations in China, India and Africa alone and they look at where are we going to get that energy.
PIPPYAnd the most reliable, low cost and stable source of energy is coal. So I'm an environmental engineer. I always argue that we should be using technology to create growth and create opportunities. Our industry, over the last three years, has reduced emissions by 90 percent while we've increased production by 163 percent. So there is a third ground that I hope we can get our country to do eventually.
MCGINTYBut not carbon dioxide emissions, not carbon pollution. You've reduced emissions of the urban air pollutants that cause smog and all that, but you have not reduced the pollutants of carbon dioxide, which is the principle green house gas which the nations of the world, in December, decided we are getting off of in the next few decades.
PIPPYWell, two things. First, carbon dioxide, as you mentioned, if we were to eliminate every coal plant in the United States, eliminate, completely eliminate, you'd have less than a one percent impact. And these are the EPA's own numbers. So to argue you have one -- less than a dime's worth of -- if you buy into 100 percent, all the numbers, it would be one dime's thickness in sea elevation. So to argue that this is about, you know, protecting Manhattan, just -- it doesn't ring true because all the reality of what's actually occurring supersedes the political talking points that come out sometimes.
MCGINTYLet's get Amy Harder into this.
HARDERI do think that the debate about coal and the fate of coal really rests outside of the U.S., China and India and Indonesia, places in Asia where the demand or lack thereof can have a significant impact on the future of coal around the world. The International Energy Agency reported in December that following more than a decade of growth, it's projecting that global coal demand has stalled.
HARDERNow, that's significant and in a bad way for the coal industry and in a good way in terms of getting a global deal on climate to reduce carbon emissions. But I think it's important to put some of this into perspective in terms of what other countries are looking at. For example, India's state-owned coal company has a coal production goal, meaning they want to increase the amount of coal that they produce. I find that stunning in the face of most of the headlines around the Paris climate talks talking about reducing carbon emissions and reducing coal use.
HARDERCoal is still the cheapest option in a lot of places in the world, including places like India. That's not to say there aren't significant efforts underway to get renewable energy in there. There are, but coal is still one of the cheapest options. And just to comment on the cyclical impact of cheap natural gas and things like that and the stronger dollar, I do agree that absent a host of environmental policies that the Obama administration has put in place and the Paris climate deal, which I think has sent a negative signal to coal companies around the world, I think absent those things, the coal industry could bounce back much more easily.
HARDERBut given those policies, I don't see that happening as much. I like to use the analogy you put the nail in the coffin. It was these market signals that have sort of lead coal into its coffin and then it's going to be the environmental policies that kind of puts the nail on the coffin. Now, the caveat is, of course, coal is still a huge part of our global energy supply, the biggest after oil and so I think -- we talked about coal being dead and things like that. That's not true at all. It's just been knocked off of its throne so to speak.
MCGINTYSo it's going to be around, we're still going to be using coal for quite some time, but perhaps it's not King Coal anymore.
MCGINTYAll right. John, I wanted to get your reaction to that very quickly.
PIPPYWell, I think there is -- you're gonna see a more diverse portfolio when it comes to the total energy mix, as was mentioned. You will see renewables continue to increase, but even in Pennsylvania, they represent -- and we have an aggressive alternative energy portfolio standard of which I was involved when I was a senator in crafting and voting for. Renewables have seen tremendous growth, but it's only one and a half percent in our state.
PIPPYAnd even if we double it over the next ten years, very aggressive incentive programs, you still have siting locations, You still have the variability challenges. So the idea that it will completely replace coal or take a big chunk just isn't -- it isn't practical in at least the next ten to twenty years. Gas is great, but the challenge is you have to build pipelines and those same people that point to gas as being the solution, don't want the pipelines to go to the power plants and they're against the power plants.
PIPPYSo I think they -- just like all politics that's occurring, you know, if we bring this back to a middle ground, there's going to be plenty of growth for everyone because the world needs energy and we really should be focusing on replacing older plants like we do with our car fleet, you know. We have more efficient engines.
MCGINTYAll right. The voice of John Pippy, CEO of the Pennsylvania Coal Alliance, Amy Harder of The Wall Street Journal and Joe Romm, senior fellow at the Center For American Progress. I'm Derek McGinty. This is "The Diane Rehm Show."
MCGINTYYou're listening to "The Diane Rehm Show." I'm Derek McGinty, who's sitting in for Diane. And I want to talk -- go back to John Pippy of the Pennsylvania Coal Alliance and talk about the job issue. What has the decline of coal meant for communities in your state?
PIPPYOh, it has been -- had a tremendous impact. When -- in 2012, we released an economic impact report that showed that about $7.5 billion worth of impact in the economy and about 45 -- or 43,000 jobs. Update two years later, we're looking at about $4.5 billion and 36,000 jobs. So it was -- we saw a tremendous hit to the men and women in the industry. But you also have the secondary and tertiary impacts upstream, downstream and also, in certain parts of our state, the coal economy is the economy.
PIPPYSo southwestern Pennsylvania, in particular, you know, so now you're starting to impact schools, municipal governments, police forces, because the tax dollars aren't coming in because people aren't working. So it…
MCGINTYWe should note that those jobs quite often are well-paying jobs. These are -- some of them are $100,000 a year jobs.
PIPPYYes, on average about $80,000 a year, with a very full, strong benefit package. And a lot of my companies invest in the employees' children and as it relates to, you know, college. So, I mean, these are the jobs everyone -- every politician, Democrat or Republican, says, you know, I want, you know, family-sustaining jobs. So I think there's a middle ground. And I don't want to argue that there isn't a need to continue to diversify. It's just the pace and what drives it -- whether it's political talking points or technological innovation.
MCGINTYWell so, Joe, what do you think? I know you want to see coal go away eventually. But what about that middle ground and what about the pain that has been caused as the use of coal declines?
ROMMWell, yeah, I've always thought that, as we shift away from coal because it harms people's health and destroys the climate, that the government should do something to help the coalminers and the climate bill that we tried to pass in 2009 did in fact do that. But the fact of the matter is, the world changes. and the world has unanimously agreed in Paris that we're going to leave most fossil fuels in the ground, because otherwise we will destroy a livable climate, we'll see droughts like we do in California all the time, floods. We've had crazy weather in -- here in Washington, D.C. So the scientists of the world, the nations of the world, they're in agreement on this.
ROMMI think it's important because we know what the future is -- which is we're getting off of coal and replacing it with clean energy -- for us to be the leader in the clean energy jobs of the future, because we added 35,000 jobs in the solar industry last year.
MCGINTYJobs that pay maybe half what those coal jobs were paying.
ROMMThe average wage for an installer of solar is $21 an hour.
MCGINTYBut it's like $40-some an hour for a coalminer.
ROMMRight. The world has changed. We are not this sole superpower anymore. But these are -- the best new high-paying manufacturing jobs are in solar and wind.
HARDERWell, just on that point, on the renewable-energy jobs versus coalmining jobs, one dynamic of that is you need to install solar panels on a house or in a field. But once you install it, there's significantly fewer jobs. It's like a construction site. Whereas with coalmining, you have to be at the -- you have to have lots of people at the site on a regular basis. And so just by the nature of the way the energy is developed, you have fewer jobs on any particular site of a wind farm or a solar plant than you do a coal mine. The same is true in the oil and (word?) ...
ROMMBut, Amy, those numbers are backwards. Per, you know, megawatt of energy, you generate a lot more jobs with renewables. Because fundamentally what you do -- most of the coal jobs, you build the power plant. Yes, there are steady mining jobs, but the coal plant just sits there, run itself. If you want to replace a coal plant, you have to build a whole lot of solar panels. You have to transport them. You have to install them. And, yes, you do have to maintain them over time. And the studies clearly show, you get a lot more jobs from clean energy.
HARDERI was not talking about power plants, I was talking about coalmining jobs. And also another section of jobs we haven't talked about but which is very relevant to states like Pennsylvania and West Virginia, historically big coal states, is natural gas. Even more than wind and solar, natural gas is coming in and providing an economic cushion for these states at a time when they're getting hit hard because of coal job losses. Now, I've spent a lot of time in West Virginia. It's not like a coalminer can go work at an oil and gas well. The skills are very different. And so you're seeing this hard transition of some of these people who have to go and get retrained for a different job, if in fact they want to stay in the whole energy industry.
HARDERBut I think you're seeing, from a macro perspective, some of these states are not doing as bad as they would have been, absent the resources of shale, natural gas.
MCGINTYAmy Harder is a reporter covering energy and climate for The Wall Street Journal. Joe Romm is here in our studio as well. He is senior fellow at the Center for American Progress, also a former acting assistant secretary of Energy under President Clinton. And on the phone with us is John Pippy, CEO of the Pennsylvania Coal Alliance, which represents the bituminous coal industry. I want to get your phone calls. The number here is 800-433-8850, that's 800-433-8850. You know, John, one of the things we kept hearing in some of the political campaigns is the phrase, war on coal. Is that a fair phrase from your perspective?
PIPPYWell, I think if you're the person that's being impacted and you see what's going on globally with the growth. And I understand the political talking points that came out of Paris. But I also remember a couple years ago we were told that health care would cost less and you could keep your doctor. There's a huge difference between the political talking points of 50,000 feet and actually what's on the ground. So if you're the person who's lost your job because they saw that a coal-fired power plant was prematurely closed due to regulatory uncertainty and due to challenges right now, then, yeah, you feel it. It is a war.
ROMMFrankly, a lot of people who work in the coal industry are heavily involved in the volunteer fire companies. They're men and women in our military. So, yeah, that when they feel like they're being attacked, that's what they say. So I think if you look at that. And the reason is, because in the great -- in the past, you know, Tip O'Neills and, you would see these great debates. I spent 16 years as a senator and a state representative in the Pennsylvania legislature. So, you know, you would have debates. And the bills that were passed, no one actually liked because it was a full of bunch of compromise.
PIPPYOur biggest complaint right now is, that's gone, because it's now strictly through the regulatory, because it's inconvenient to have to talk about all these job issues. I've been in coal plants. I used to work for U.S. Steel. You don't just run the plant. It requires hundreds of people to maintain those valves, to do the environmental compliance, do the testing. And so, I remember a union member from the IBEW said, you know, how many cars are in the wind parking lots? There aren't any. You know, once you install and you have a couple of maintenance guys periodically come in, there are not presence there.
PIPPYSo it's not an apples-to-apples argument. And so I think, once again, there needs to be a middle ground and we can get there if we work hard.
MCGINTYAll right. Joe Romm, when you say, well, the world's changed, are you being a little callous toward all those folks who are really suffering because of this?
ROMMWell, like I said, I really always think we should do something to help the workers. To be clear, the reason why the Obama administration is pursuing a regulatory approach is because, when it tried to pass legislation six years ago that would put a price on carbon but would also invest in clean coal and helping the workers, conservatives and the coal industry worked to kill it. So given that we have to reduce pollution, we have to avoid catastrophic warming, the Obama administration and the world had no choice but to act the way they did. So I feel that the coal industry has, in some sense, made its own bed. And I would just say that the future is known. We are getting off of coal. The world has decided that.
ROMMSo we need to have a national strategy to help the coal workers, but also to be the leader in solar, wind, batteries, electric cars.
MCGINTYJohn wants to get back in here. Go ahead.
PIPPYTwo things. First, we are the leader. We -- as a developing nation, we've seen more declines and we've seen a transition in our energy portfolio. So here in Pennsylvania, over 22 percent reduction in CO2. If China did any of that, the problem would be solved. So to say we're not a leader is just not correct with the facts. The second is the reason it couldn't get passed is because of the Democrats in Congress. This was in -- you say conservatives and coal, you talk about, this is -- people always forget, this was a nonpartisan -- it was a Democratic House and a Democratic Senate that said to the president, no, because it doesn't add up to unilaterally economically disarm ourselves.
ROMMThe Democratic House passed the bill.
PIPPYAnd that we need to come up with something better.
HARDERWell, it's now 2016 and that was...
MCGINTYAll right. Amy Harder, go ahead please. Referee this.
HARDERIt's 2016. That was seven years ago when we were debating those bills. So taking a look at today's environment, I think a lot of the reason why China is cutting their coal use is, one, because their economic -- their economy is slowing down and, number two, the traditional pollutants out of that country are staggering. The air quality has reached levels where they have create new levels of how bad the air quality is. Now that actually has very little to do with carbon emissions. It has to do with traditional pollutants like sulfur dioxide and things that the U.S. has tackled decades ago.
HARDERAnd so you're seeing China reduce its coal -- it's not even reducing its coal use, it's actually just slowing it down a little bit. You're seeing them doing that because of the traditional pollutant concerns. And then here, from a carbon-emissions standard here in the U.S., carbon emissions are going down primarily because of our economic recession in 2009 and, secondly, because natural gas, which burns 50 percent cleaner carbon emissions than coal, has been supplanting a lot of the coal here in the U.S. And so I think that -- those are the primary drivers of the carbon emissions going down here in the U.S.
MCGINTYLet's get to our phones. Amy, in Charlotte, N.C., you're on the air.
AMYHi. I'm an environmental scientist. I work in this industry for a living. There is no such thing as clean coal. But my grandfather was a coalminer in southwestern West Virginia. He died in a coal mine. They had an accident in 1986. I understand both sides of this argument. But the core problem for me is the people. There is an absolute level of poverty in southwestern West Virginia and other coal regions that isn't being addressed. It's being talked about. But the right side makes it harder for them to have any other infrastructure. For years, the coal companies have abused these workers and not put any infrastructure in and (word?) makes it harder for them to earn a living.
AMYMost houses up here don't have septic tanks. And sewer systems, they're not there. I kayak and I love to kayak. But I'll never kayak in those rivers where I grew up because of the contamination.
MCGINTYSo, Amy, is it -- is your contention that the coal-mining companies are responsible for this?
AMYI think both sides are responsible. The coal-mining companies, for years, historically have had no problem reaping the benefits without putting in long-term advantages. And the left side, we don't want the pollution, but we don't want to help the workers either. Tell me a massive infrastructure plan that the left has and I may get behind partial coal regulations.
MCGINTYJoe Romm, I'll let you respond first on that.
ROMMWell, look, he's exactly right. Look, the coal companies extracted massive wealth from countries -- states like West Virginia. But they didn't put it back in the state. And so, yes, coal jobs have been declining steadily for 50 years, because the industry has been technologizing, moving to strip mining. And it's really the industry, I think, as much as anyone that has led to this lack of investment.
ROMMBut I just want to add one thing on China, because I was there in June. China peaked in coal in 2013. Coal use dropped 5 percent -- excuse me, 3 percent in 2014. It dropped...
MCGINTYWhen you say peaked, are you saying in terms of the supply of coal or that it's their in terms of the use of it.
ROMMIn the use of coal.
ROMMChina -- and all of the leaders are committed to it. China dropped coal use 5 percent last year. It's projected to drop another 2 or 3 percent this year. If you've been to Beijing, you know the air is unconscionably bad. So there's no question that the air pollution is the main driver. But the -- President Obama and China, in November 2014, signed -- made a deal. If the U.S. reduced carbon pollution as we committed to, using EPA regulations and others, China would peak in CO2 emissions by 2030 and ultimately peak in coal much sooner.
MCGINTYI'm Derek McGinty and you're listening to "The Diane Rehm Show." All right, John Pippy, I know you want to get in on this. How much is the industry to blame for the state of the workers and the infrastructure around them?
PIPPYWell, I can only speak to the state I live in and have represented and now work in the coal industry. And the average coalminer makes $30,000 more than the average person in the economy they live in. That's across the Commonwealth. I already talked about the family-sustaining jobs. I think, you know, you talk about the China issue, the reason is because they're using old technology. If they built a new coal-fired power plant today, it would meet every environmental regulation. That's our argument is that if you truly cared about cleaning the environment, you would be promoting replacing older plants, like we do with our cars, with a newer plant. You -- it'd take less coal to create more energy and then it would balance.
PIPPYAs far as the economics though for the industry itself, that's just not the coal industry of today. You know, you -- if you keep on going back to 1900s, you know, you're living in the 1900s. If you look at what the coal industry does today, they're leaders in safety, they're leaders in environmental compliance. The number of environmental engineers and technical engineers, the water quality and air quality people we need and what we pay them in order to meet compliance issues is staggering. So, you know, let's talk about the future and what we can do, as opposed to some of the challenges of frankly a century ago.
HARDERJust quickly going back to some of the comments that the caller made, you're seeing some of this come up in the presidential election. The Republican candidates are handling it very differently than the Democratic candidates. Hillary Clinton, the top Democratic candidate for president, is supporting President Obama's array of environmental regulations. At the same time, she's put forth a plan to try to help some of these communities that are hit hardest by a coal decline in the U.S.
HARDERThe Republicans, on the other hand, are not focusing as much on helping these coal communities transition, instead trying to repeal several Obama regulations -- primarily, the EPA's Clean Power Plan, which is the signature climate regulation cutting carbon emissions from power plants, which will hit coal the hardest.
MCGINTYAll right. I'm going to take a -- read an email from one of our listeners. This is Greg in New York, who say, the bankruptcy of Arch is partially their mistake. They overpaid for international coal in 2011. That debt is over 60 percent of their total debt. They also have fallen prey to the same problems of oil, namely, that the price would always rise. Like the housing bubble, prices don't rise forever. When management makes a bad decision, capitalism makes one pay. John Pippy, what's your response to that?
PIPPYWell, I'm not going to speak about individual companies. But I will tell you that, yeah, they are susceptible to market conditions, to investments. I don't know the specifics to Arch. They're not one of the main producers in my state, so I can't speak to them.
PIPPYBut I can tell you that, you know, for the companies in my state that are going through problems, a big part of it right now is the reduced demand for coal. And you don't mine the coal and just pile it. If you don't have a customer that's willing to pay at a price -- and this is the key -- at a price where it actually makes -- is profitable to take the coal out of the ground, then you are idling those mines. And that's putting a lot of pressure. The challenge is, during these tough times, savvy investors would do a lot of capital improvements, they would get -- so that when the economy came back, you know, when natural gas prices come back in the next 18 to 24 months, then they would be positioned to really pick up the growth.
PIPPYThat's not happening because of regulatory uncertainty. So, you know, it's a very big challenge right now.
MCGINTYAll right. That's John Pippy, CEO of the Pennsylvania Coal Alliance, representing the bituminous coal industry. Our guests here in studio, Amy Harder, a reporter covering energy and climate policy for The Wall Street Journal, and Joe Romm, senior fellow at the Center for American Progress, author of "Climate Change: What Everyone Needs to Know." I'm Derek McGinty sitting in for Diane Rehm. And you are listening to "The Diane Rehm Show."
MCGINTYYou're listening to "The Diane Rehm Show." I'm Derek McGinty, sitting in for Diane as we continue our conversation on the future of coal. Cuts in demand, regulatory issues and concerns about climate change have made the industry a little shaky lately. As a couple of companies have gone bankrupt and jobs have been threatened. The number here, 800-433-8850 and our email is email@example.com and I'm going to read a couple of emails from you to our guests and have them respond.
MCGINTYHere's one. It says, if we cut our coal use to zero, and replaced it with zero emissions energy, how much would global CO2 emissions drop? And if it's a very small decrease, well then how much should we spend to achieve it? I'll let Joe Romm respond to that.
ROMMWell, there's no question, if the United States acted by itself, it would only have a modest impact. The point is, we made a global deal. We're the richest country and we have done the most carbon polluting in the course of the last century. So, we had to take action in order to get other countries to act. The amazing thing about what happened in Paris is that every other country did in fact put a serious commitment on the table, including China, including Brazil, including Indonesia, including the European Union.
ROMMSo, as a result of the US being willing to put serious reductions on the table, we got a global deal. This is a global problem, but if the US said hey, we're the richest country in the world. We caused a lot of the problems. We're not going to do anything. Well, it's going to be awfully hard to get other countries to do things.
HARDERI agree that the deal in Paris was a significant deal when it comes to the future of coal over the long term. And some stocks went down on the announcement of that deal. But it's important to realize that that deal does not get us to the two degrees that the scientists, two degree drop that the scientists say that we need to get to. And also, it just slows the growth of global carbon emissions. It does not cut them from where -- it's just the line is going up less steeply than if we didn't have this deal. It's not like the line is going down for carbon emissions.
MCGINTYThe question the listener seems to be asking is is it worth it when you think about the jobs and the other things that are affected by this change? Are we getting bang for the buck, and maybe John Pippy wants to address that.
PIPPYWell, if you do the cost/benefit analysis, absolutely no way and no how. And I know someone may start talking about the health benefits, but you can't double count them. If you include them on the MATS regulations impact to the plants, and you can't try to count them on the clean power plant. The issue here is, and Amy mentioned it very quickly, recently. This isn't about reducing CO2. What this is about is if the US is an access, you're going to see less than a one percent impact overall because, I'm just looking at some recent numbers.
PIPPYChina underreported their CO2 emissions significantly up to almost equivalent of 600 million tons. Well, that's almost 70 percent of the US coal production. Utilization. You know, coal or power generation represents about 30 percent of the CO2. You gotta take into account transportation, which is a larger, frankly, and growing faster. You have to take into account natural sources. So that's why the actual impact is so small. And so, when we say, what's the cost benefit?
PIPPYPennsylvania and the nation are gonna see, without the clean power plant, almost a 25 percent reduction.
MCGINTYBut John, I think you got...
PIPPYSo if you get to 32, it's almost impossible, without completely eliminating the coal fleet, and that will get you the minimus returns because it's less -- I mean, we're talking hundreds of a percent.
MCGINTY...but, but John, John, John I think, to be fair, you have to take into account the factors Joseph Romm brings up, which is that if we don't do our part in this country, the nations that are using more coal would not be in a position, or be willing to make the sacrifices they're going to have to make. So you kind of have to count that into the equation, as well, don't you? I mean...
PIPPYOh, you do. 100 percent. And my point is, you count it at 25 percent. We reduce CO2 emissions by 25 percent, which we are on a glide path to because of what's happening with the economy. And the redistribution of the power generation grid and the growth of renewables and stuff. But it's kind of like when you do environmental cleanup, it costs you a billion dollars to get to 95 percent, and it's gonna cost you another 10 billion to get that other five percent. Because numbers don't add up. The growth of what's going on in the world.
PIPPYSo I would say if we had reasonable minds, we could come up with a number that would show the rest of the world. You know, we're literally leading this, so to say we're not leading just isn't -- doesn't take into account the reality of what's going on on the ground.
MCGINTYAmy, you've been trying to get in here.
HARDERYeah. I think the reason why climate is such a difficult problem to address is because it's very hard to answer the question. Is it worth it? Well, it might not be worth it tomorrow or the next day or ever to the United States. Us, to drop our coal use significantly is not gonna be that big of a -- as much of an issue as it is in say, India, or China. I think it's the type of problem where you need to make sacrifices today and now for something that might not be realized for a century or two. And so, you know, there's a whole body of work that's been done on the psychological challenges of addressing climate change.
HARDERAnd, you know, we see terrorist attacks. Those are very real challenges that we face, whereas with climate, it's something that we have to -- certain parts of the world have to make sacrifices today in order to realize benefits centuries down the line.
MCGINTYYou know, there's another email here from Richard, who asks are tax laws being proposed to incentivize states to be able to lure companies involved in research and manufacturing in the green energy sector? Which would help speed the inevitable swing to renewable energy? Is that on the table? Have you heard anything about that?
HARDERWell, the spending bill that Congress passed, at the end of last year, included five year extensions of critical tax credits for the wind and solar industries. Those tax credits will help companies and incentivize companies with government money to build wind and solar farms around the country. And so, that is helping those industries do invest in clean energy jobs around the country. And I think, also, of course, the EPA clean power plan, while not tax incentives do also incentivize renewable energy.
ROMMYeah, and you know, it's interesting, because we just -- John said we're going to -- Pennsylvania's going to cut carbon 25 percent. Well, President Obama, all he pledged to the world is that the United States would cut carbon 26 to 28 percent by 2025. So, all the rest of the states have to do is do what Pennsylvania did, and we will meet our target for 2025. Now, the point Amy made is Paris doesn't get you to a safe -- preserving a safe climate. So, in Paris, the nations of the world agreed every five years, we're coming back and we're ratcheting up our commitment.
ROMMSo, if the United States is going to go the next step, then the nation, other nations of the world also have to go to the next step. And that's, I think, the way to do it. Admittedly, we can't possibly solve this problem overnight. But we clearly have dawdled for a long time since the scientists first told us to act. So yes, we need to start steadily reducing. So I think it's important. We have time to get off of coal, but everyone needs to know, it's coming.
MCGINTYLet's take a phone call from Eileen, who's in Burke, Virginia. You're on the air.
EILEENHi. Yes, I just wanted to say that I agree with your previous speaker that, you know, despite the difference that coal may or may not make, I mean, we are an important example. We did sign this -- we did agree to this Paris Agreement. And we did real damage by not making the agreement in Kyoto and people remember that. I think it's really important for us to step up and show that we're making changes. And I also agree with the previous caller who said that I think that when we have these conversations, we really don't always talk about the people who will be affected by the jobs in their industry as people.
EILEENI think we need to be really thoughtful about maybe developing programs and being thoughtful about what they're going to do and not talking about just maybe jobs that are going to cut their pay in half. I wonder if the next President could develop a program that would really think about jobs training for people who would lose their jobs due to moving out of the fossil fuel industry. We're really serious about this.
MCGINTYThank you, Eileen, for the comment. I appreciate it. 800-433-8850 is the phone number. You know, Amy, back in October, states and coal companies filed lawsuits against the President's Clean Power Plan. What does the President have in mind and what do the states not like about it?
HARDERThe states, and also a handful of coal companies, including Peabody Energy and Murray Energy. They don't like, pretty much everything about it. They are challenging the rule on a host of legal grounds and the first action on that is expected soon, actually. A federal court here in D.C. is expected to decide soon whether or not it's going to delay the regulation during litigation. Now, if that happened, that will be very significant and a big blow to President Obama's commitment to the Paris Agreement and therefore a big blow to the overall efforts to keep this deal.
HARDERAnd so, I think there we talk a lot about, you know, what Congress might do to repeal this regulation, what the Presidential candidates might do, but really, the answer will be solved in the courts.
MCGINTYIf you had your way, John Pippy, would this be held up in the courts? Would the President's plan be rejected by the courts?
PIPPYWell, I think there's a very good chance that parts of this would be rejected, similar to the MATS Rule that was recently rejected and remanded back down to the lower courts for a whole host of reasons. I think right now, the issue here is, you know, people say we need to, we have plenty of time, you know, we, 2025, all we gotta do is get one or two percent. In Pennsylvania, we have achieved those because we have seen drastic cuts and drastic reduction in our presence, in the coal economy. You know, there isn't, if you go to 2030, there just isn't a way to reach those numbers and still maintain a significant fossil fuel base.
PIPPYSo I think we would want the stay, because a stay allows two years or want to stay until all the arguments are made because we don't want to see power plants prematurely closing. And then having them, in the worst case scenario, like it did with MATS, having the rule overturned, but the impact's already occurred.
MCGINTYWhat is it about the rule that specifically the coal industry is so opposed to? It says, for example, it says in 2022, states will have to cut their carbon emissions, use less coal, more renewable energy and it's supposed to reduce coal demand by 20 percent. Is that what the problem is for you?
PIPPYThe issue is you have a target CO2 number of about 1200 on average. And just for radio terms, I'm just going to make it 1200. The average coal fire power plant operates at about 2,000 pounds of CO2 per megawatt hour. Our newer plants can come in at about 1800, but there isn't -- the technology doesn't exist to get you from 1800 pounds of CO2 per megawatt hour to about 1200. Oh, coincidentally, that's where natural gas plays at. So, in order to meet the long term goal that wasn't discussed, but the 2030 goal, you have to eliminate coal.
PIPPYI mean, you would have to significantly reduce coal to about 17 to 20 percent of where it is right now. That's the math and we don't have the gas infrastructure, we don't have the renewable growth. They're not going to be able to make up that delta and that's, I think, one of the biggest challenges is we can get lower. But you put the bar so high that you can -- it's a de facto ban on the utilization of coal by 2030.
MCGINTYThat's John Pippy. He's the CEO of the Pennsylvania Coal Alliance, representing the bituminous coal industry there. Joe Romm is here in the studio with us. He's senior fellow at the Center for American Progress, author of the book "Climate Change: What Everyone Needs to Know." And Amy Harder is a reporter covering energy and climate policy for the Wall Street Journal. The phone number here, 800-433-8850. I'm Derek McGinty in for Diane Rehm and you're listening to The Diane Rehm Show. I know you wanted to respond to that last comment, Joe.
ROMMSure. Well, I think the Clean Power Plan, I interviewed Christy Todd Whitman, who was George Bush's EPA Chief, and she said...
MCGINTYFormer Governor of New Jersey, too.
ROMMFormer Governor of New Jersey. Former Republican Governor of New Jersey. She said the EPA Clean Power Plan was the most flexible thing that the EPA had ever put on the table. I think listeners need to know that the reason the Clean Power Plan was put in place is because the Supreme Court ruled that if the EPA found that carbon dioxide endangered human health and well-being, the EPA was bound by law to issue these regulations.
MCGINTYBut John's point seems to be that the regulations were issued at a point that guarantees that coal will be blown out of the water, that it's not a fair regulation.
ROMMWell, there are two different regulations. He's talking about the new power plant regulations. And indeed, the new power plant regulations say, why would we keep building the dirtiest power plants when we know we're going off of coal? The Clean Power Plan is about the existing power plants, and that's the one that gives people flexibility. You've got a considerable amount of time to make choices. Are you going to do natural gas? Are you going to do solar? Are you going to do wind? Are you going to do energy efficiency?
ROMMBut yes, the message is we need to reduce carbon dioxide in the electric grid.
HARDERI've always found it somewhat amusing that, depending on who you ask, Obama's climate regulations are either the biggest destroying regulation ever to set foot on earth, or modestly better than the business as usual. I think it's somewhere in the middle. And in terms of the new power plant rule, making coal impossible to build under it, well I think that regulation is set because there's an abundant supply of natural gas that can easily be met with that. I've long said that the shale natural gas, which of course, shale natural gas production has increased 30, 40 percent over the last decade.
HARDERObama has been able to implement all of these regulations, especially the climate carbon ones and the mercury one that John has referenced a couple of times. Primarily because of the shale natural gas boom. Without an abundant supply of cheap fossil fuel resources, it would have been much harder to implement these regulations. That's not to say renewable energy's not an important part. It is, but the gas is what made it possible.
MCGINTYAnd the reality is, at this point, we don't have enough technology to get off of fossil fuels, at least no time soon.
HARDERCorrect. I think with natural gas, at least, it's -- natural gas provides a reliable source for when the wind is not blowing or when the sun is not shining. Now, there's a lot of collaboration going on around the US between solar and wind companies and natural gas to provide a streamless source of energy even when the renewable energy is not available.
MCGINTYPersonally, I'm still waiting for my hydrogen powered car. But in any case, Benjamin in Cincinnati, you're on the air.
BENJAMINHi. Thank you. I was wondering, for the panel, a lot of discussion has been going into solar and wind, (unintelligible) all their renewable energy sources. But my question is what they think about nuclear power as the future instead? And instead of putting more money into updating coal power plants instead of building new nuclear power plants?
MCGINTYI think it's a good question. I'm sure John Pippy is not necessarily excited about that idea, but what do you think, Joe Romm?
ROMMYeah, well, I think there's no question that as the world gets off of fossil fuels, we need every form of carbon free power we can. Now, I just recently wrote an article and talk about this in "Climate Change: What Everyone Needs to Know," but nuclear power was just very expensive. And its price has been going up and the government has put in huge incentives for nuclear power. Giving it the same kind of economic incentive that wind has, giving it insurance against catastrophic disaster. And tax payer guaranteed loans. And even so, we may build one, two or three more, but we're talking about things that cost 10 billion dollars.
ROMMThis is equivalent to the market capitalization of many utilities and a lot of them don't want to risk their entire financial future on one mistake ruining their company.
HARDERI have just a couple points on that. Number one, nuclear power does face a lot of economic challenges. Perhaps even more than coal. And secondly, nuclear power, zero emitting base load power, but despite that, environmentalists, most environmentalists are opposed to it. So that is a challenge in providing electricity.
MCGINTYAnd that will have to be the final word. Amy Harder of the Wall Street Journal, Joseph Romm, senior fellow at the Center for American Progress, author of the book, "Climate Change: What Everyone Needs to Know." And on the phone from Pittsburgh, John Pippy, CEO of the Pennsylvania Coal Alliance. I want to thank all of you for joining us. And you listeners, as well. I'm Derek McGinty. This is "The Diane Rehm Show."
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