The Real Cost Of Joe Manchin’s Opposition To More Aggressive Climate Action

Just about a year ago, a company that builds natural gas plants wanted to construct a 920-megawatt merchant facility in West Virginia. But it scrapped the project that sells its output on the open market and not at prices determined by utility regulators. That’s because it was up against coal, which controls the state capitol and which does not want competing energy forms displacing coal units.

In the end, Energy Solutions Consortium said it would not pursue a previously authorized $5.6-million loan guarantee from the West Virginia Economic Development Authority. Make no mistake: not even natural gas can seep into the veins of West Virginia politicians like coal can — even though the state is sitting on top of the rich Marcellus Shale basin. Sure, coal companies are fine with permitting new natural gas pipelines that feed out-of-state facilities. But they are not Okay with building more efficient combined-cycle natural gas plants. 

This example underscores the mindset of Senator Joe Manchin, D-WV, who is the chair of the Senate Energy and Natural Resources Committee — one of two senators holding up President Biden’s economic agenda that has a climate focus. Simply, the senator says that the transition to cleaner-burning fuels is already happening and that artificially facilitating that evolution is expensive and unnecessary. But West Virginia is also the nation’s second-largest producer of coal behind Wyoming.

“Thanks to Joe, this is where we are,” says Jamie Van Nostrand, a director of the Center for Energy & Sustainable Development at West Virginia University’s College of Law as well as a lawyer appearing before utility regulators. “This is not just hurting West Virginia,” he told this writer. “It is sinking the whole climate agreement and our ability to reduce CO2 emissions. He’s trapped by a handful of coal-burning utilities and it has global implications. It is shameful.”

The energy center analyzed President Biden’s Build Back Better program in the context of its potential effect on the West Virginia economy. If the state generated 80% of its electricity primarily from sustainable fuels such as wind and solar, it would save electricity customers a ton of money: $855 million through 2040. And it would increase employment by 3,500 jobs while growing earnings by $172 million annually. And billions would be invested in newer and cleaner power plants that would increase the state’s gross domestic product by $322 million annually. Meantime, the state’s air quality would improve while modern businesses would find the state’s natural environment enticing. 

The Least-Cost Path

Coal generates 89% of West Virginia’s electricity. Natural gas makes up 2% of the state’s energy mix. Director Van Nostrand studied the state’s electricity rates from 2008 through 2018. He found that they rose at five-time the national average. 

He points specifically to a recent West Virginia Public Service Commission ruling that allows American Electric Power’s three existing coal-firing units to keep operating through 2040. It’s not only dirtier than replacing them. It’s also more expensive — an option that will cost the utility $448 million in mandatory federal upgrades. That means utility customers will be paying 3.3% more in 2022. If the plants are retired in 2028, AEP says it would save ratepayers $28 million a year. 

So why not build natural gas units in their place? Or wind and solar plants? Or retrofit buildings to become more energy efficient? Coal now employs 13,000 miners — a far cry from the 100,000 it once did in 1950. Yes, market forces have displaced part of the workforce. But mechanization and automation have done the heavy lifting. With just 3% of the state’s employment tied to coal, why the outsized influence? Coal companies still pay property taxes and remain a vital part of the state’s tax base. 

“The key message is that a clean energy path produces more jobs, lower electricity prices, and obviously a cleaner environment for West Virginians,” says Van Nostrand. “But we are on a coal path. And we are getting pounded because of it. Our utilities have not diversified into natural gas or renewables. Let’s take advantage of the huge drop in prices for solar and wind. There is a least-cost path and there is a coal path — one that has quintupled in price.”

Coal’s real costs are “externalized” and not reflected in the price of electricity. That is, there are environmental and medical costs borne by taxpayers. Abandoned mines, for example, will cost billions to repair — if they are cleaned up at all. 

The University of California at Berkeley says that, nationally, shedding coal would prevent $1.7 trillion in health and environmental damages through 2050. It also says that the United States can generate 80% of its power from renewables in 2030. And that the cost to do so would not hurt electricity prices. That is because the price of wind and solar power is dropping precipitously — not to mention the cost of battery storage technologies.

The Burial

What is the clean energy standard that the Biden Administration wants to enact? It loosely defines clean energy as anything that either produces no CO2 or that can capture carbon and bury it. Electric utilities would need to produce a set amount of emissions-free power. Power companies that hit certain milestones would be given a payment — an incentive to increase their wind and solar production. The goal is to generate 80% clean electricity by 2030 and 100% by 2035.

To get Manchin on board, this standard would be eliminated from the package. However, his Democratic colleagues would toss in billions to accelerate this country’s carbon capture and sequestration technologies. Is that smart? 

It depends on one’s point of view. On the one hand, Coal is still expected to make up at least 30% of the global energy pie going forward, says the World Coal Association. And it does make sense to try and capture and bury CO2. On the other hand, Southern Company just destroyed its much-touted 582-megawatt Kemper plant in Mississippi that cost $7.5 billion. (It was originally forecast to cost $2.9 billion in 2006.) Even American Electric Power ditched its plans to build a carbon capture and sequestration facility in West Virginia while the FutureGen 2 was halted in Illinois in 2015 because of high costs and technological hoops. 

But does the recent spike in natural gas prices show that there is a place for coal? Coal use is expected to rise over the next year because of that volatility. 

“No one will build a coal plant based on current natural gas prices,” says Van Nostrand. “The increase is likely to be temporary and it is predicated on supply chain issues and a rise in demand because of the pandemic. Moreover, they keep saying that carbon capture and sequestration is always on the edge of a breakthrough. That is BS. Not even close. Coal is already out of the money. Then add on the cost of underground pipelines and the cost to sequester CO2.”

Consider the latest data from the U.S. Energy Information Administration: Between 2019 and 2020, coal-fired power fell by 20%. Meanwhile, renewables, including small-scale solar, increased by 9%. Wind, which it says is the most prevalent source of renewable electricity in the United States, grew 14% between 2019 and 2020. Nearly 40,000 megawatts of new capacity is expected to come online in 2021, adds S&P Global Platts. About 80% of that will be renewables. 

New Perspective

What’s next? In an ideal world, the best way to minimize carbon emissions is to tax those emissions. Companies would naturally migrate to lower-carbon alternatives. And if CO2 releases could be captured, investors would take a chance on it. But we all know that, politically, a carbon tax is even harder to enact than a clean energy standard — something that can be done through the budgetary process and that requires just 50 yes votes.

And it won’t win Senator Manchin’s vote, whose most recent filings show that fossil fuel interests are filling his campaign chest. Still, there is an array of hope — at least within the state legislature: it has eased the path to more solar energy deployment and development, which could become viable enterprises in formerly coal-occupied areas. 

“There has to be a sense of urgency,” says Van Nostrand. “Utilities are not doing this fast enough. They are making the clean energy transition — just not fast enough, which undercuts Manchin’s argument that the free market is working. Biden needs to go to COP26 in Glasgow with something that is a law — a statute that can’t be reversed if another Trump-like figure emerges.”

The preponderance of global citizens favors climate action. And so do most Americans. The effects of global warming are being felt today — even in West Virginia where flash floods ravaged parts of the state in 2016. Moreover, businesses are demanding action: it is not just tech companies like Microsoft, Apple, and Amazon that won’t locate to places without clean energy access. It’s also Proctor & Gamble, Target, and Toyota that are active in the fight.  

Joe Manchin is in his 70s. He needs to look past the next election cycle and into the future of his grandchildren. He needs to re-evaluate his positions and whether he is preventing both West Virginia and the country-at-large from getting ahead.