So what happens now to coal?
I found myself asking that question this weekend, as Senate Democrats passed the Inflation Reduction Act, their landmark climate, health care, and tax bill. The party hasn’t talked much about the future of our dirtiest power source, even as lawmakers have celebrated a piece of legislation designed to reduce America’s reliance on fossil fuels.
The reason why is obvious enough. The bill’s all-important 50th vote was Sen. Joe Manchin of West Virginia, the country’s second biggest coal-producing state. Democrats spent much of the past year speculating about whether Manchin would be willing to back any sort of climate bill at all, given his deep connections to the fossil fuel industry; the senator still owns a stake in the family coal business he founded, and is the leading recipient of donations from the oil and gas sector.
But back a bill he did, albeit one that was relatively gentle to fossil fuels. The legislation is expected to substantially reduce America’s emissions with the help of roughly $370 billion in green spending, including large subsidies for solar, wind, and other carbon-free electricity sources. But it would also ensure future oil and gas leases on federal lands, and expand tax credits for carbon capture technology, which in theory at least could keep coal plants running as utilities try to wring the CO2 out of their fleets.
Nonetheless, Manchin and the bill have come under attack from West Virginia coal interests. “The fact of the matter is all of the renewable credits and enhancements for other competing fuels in this bill will make it so much easier for these utilities to fuel-switch and close down their coal plants,” the head of the state’s industry association said on a popular radio show. Manchin has shot back that he is trying to save coal plants from long-term extinction by helping them “adopt new technologies to ensure their place in America’s energy future.”
You could argue that both sides are telling a version of the truth. Manchin’s bill can be viewed as a hail Mary giving coal its last, best technological shot at sticking around as part of America’s energy buffet, for better or worse. But at least one forecast shared with me by a think tank suggests the IRA will just do what many expect, and simply hasten the industry’s current freefall.
Since 2011, power companies have retired about one-third of all U.S. coal plant capacity, thanks largely to the availability of cheap natural gas. Going forward, coal faces a threat from ever-cheaper renewables, as well as efforts by states and private companies to slash their carbon footprint. In 2019, the think tank Energy Innovation estimated that “local wind and solar could replace approximately 74 percent of the U.S. coal fleet at an immediate savings to customers.”
Mining, too, has swooned; in West Virginia, companies dug up 90 million tons last year, a bit over half what they produced in 1999. They employed just under 12,000 miners, down about 47 percent in a decade.
In the meantime, the state’s energy output has shifted toward natural gas production, which has surged.
Just about everybody expects coal use to continue sliding, much to the climate’s benefit. But according to the modelers I’ve spoken with, exactly what happens to it in a post-IRA world depends in large part on the prospects of carbon capture and storage technology, which promises to contain greenhouse gas emissions so they can be buried underground or used in oil recovery. The legislation expands and jacks up the value of the existing tax credit for carbon-capture tech, essentially turning it into a direct cash subsidy.
But while most climate experts expect that carbon capture writ large will have to play an important role in the fight against climate change, particularly in heavy industries like steel and chemicals, clean coal experiments have yet to really work out, because retrofitting the plants is so costly and difficult. The only commercially operating U.S. coal plant with carbon capture technology shuttered last year; the one left in Canada has recently had trouble, well, actually capturing carbon.
Still, some forecasters think the near future could be different. In its preliminary analysis, the REPEAT Project at Princeton’s Zero Lab says that the IRA would “build on demonstration funding in the Bipartisan Infrastructure Law to make carbon capture a viable economic option,” and projects that the bill would lead more coal plants to adopt it in the years to come. (The report doesn’t state outright how the bill would affect coal’s overall share of America’s power mix; Zero Lab director Jesse Jenkins didn’t respond to my request for an interview).
Kevin Rennert, director of the Federal Climate Policy Initiative at Resources for the Future, told me that while his group hadn’t yet included the new tax credit in its latest modeling, the provision provided a big enough subsidy that some plants might retrofit. “What Sen. Manchin has done is craft provisions that give coal a chance to stay online,” he told me. (Emphasis on chance.)
The climate analysts at the Rhodium Group, who shared with me some unpublished numbers from an upcoming modeling, have a more pessimistic outlook (pessimistic if you own a coal mine, anyway). They expect that, even without the IRA, coal power capacity would shrink from 203 gigawatts today to as low as 93 gigawatts by 2030. With the IRA, it could fall as far as 66 gigawatts.
That’s partly because the bill makes renewable options so cheap, but also because Rhodium’s experts don’t think the IRA will lead to many additional coal plants adopting carbon capture beyond those that would without the IRA. “It just happens that coal is generally the most expensive electric- sector application of carbon capture,” John Larsen, who heads Rhodium’s US climate policy research team, told me. Even with generous tax credits, the tech won’t be worth it compared to other clean alternatives.
Manchin is almost certainly aware that’s a possible outcome, which is perhaps why the legislation he shaped includes several measures meant to help transition coal towns in West Virginia, and elsewhere, into a clean-power future. It provides bonus tax credits to renewable plants if they’re built in “energy communities” where the local economy either depends on coal, or a plant or mine has disappeared, and sets aside incentives for clean-tech manufacturers to build factories in those locales. At the same time, much of the bill is aimed at maintaining a future for natural gas, now so key to West Virginia’s economy, including as a power source and in the production of hydrogen. He also struck a side-agreement with Democratic leaders to finally approve a major pipeline in his state.
In short, the Inflation Reduction Act looks like a piece of legislation written by a politician who knows coal is on its way out, is doing what he can to save some piece of the industry, but is trying to set up his state for a different role in the energy economy—which has also more or less been Manchin’s message in his recent public comments to constituents back home.
“Unfortunately, despite our best efforts to the contrary, the industry has consistently declined under both Democratic and Republican administrations. Even President Trump, who promised to bring back all the coal jobs, could not stop the decline,” Manchin wrote in an open letter to his state’s coal trade group.
“Inaction will not reverse the trends that we have seen in the coal industry under both Republican and Democratic leadership at the federal level,” it continued later. “We have no choice but to focus on innovation, diversification of both uses for our coal and for our economy, new opportunities for our communities, and taking care of the families who have sacrificed so much for their fellow Americans.”
It would probably be a stretch to say that West Virginia’s senior senator is purposely sacrificing coal to give his state a stronger future in natural gas and renewables. But in the end, that might be what this bill achieves.
