Beshear energy plan would hurt Ky.'s coal industry

January 15, 2014 

  • About the authors: Sen. Damon Thayer of Georgetown is Senate majority leader; Sen. Jared Carpenter of Berea is chairman of the Senate Natural Resources and Energy Committee.

News of coal's decline seems to be everywhere in the Bluegrass State. While Kentucky's coal communities remain strong and united in the fight to protect coal, our own state elected officials could threaten the future of Kentucky's coal industry.

This fall, Gov. Steve Beshear proposed a framework for reducing carbon dioxide emissions from power plants in the state.

Although the plan claims to "ultimately favor a diverse portfolio," it is clear that the plan in fact seeks to move away from our most abundant energy resource, coal, much like the Environmental Protection Agency has done at the federal level.

The coal industry not only provides livelihoods for thousands of Kentuckians, but it also affords us the third-lowest electricity prices in the country, as more than 90 percent of our energy portfolio is derived from coal.

Importantly, affordable electricity from coal has positioned Kentucky as a business leader, sustaining industries from bourbon to aluminum smelters, and supporting a manufacturing sector that employs more than 200,000 people, producing billions in economic output.

Kentucky's coal industry is suffering as a result of EPA regulations: coal mining jobs are at their lowest levels in more than 80 years and 11 coal-fired units are scheduled to close across the state.

In a puzzling declaration, the proposal claims the benefit of already achieving a reduction in Kentucky's greenhouse gas emissions through "market forces combined with regulations," as if to present coal-plant closures stemming from EPA's rulemaking as progress.

As proposed, Kentucky's plan would have no effect on global climate change, as the state's entire coal fleet emits 0.2 percent of global greenhouse gases, whereas China and India are responsible for more than 20 percent of worldwide emissions

These troubling points are just the beginning.

First, although the plan refers to the program as "mass-based," it is, in reality, a cap-and-trade program that would impose stringent CO2 reductions that would be unattainable by coal-fired generating units in the state.

Reduction levels begin with a jaw-dropping 17 percent from 2005 levels by 2020; a 28 percent reduction in 2025; a 38 percent reduction in 2030; and a staggering 80-percent reduction by 2050.

Other efforts to impose a cap-and-trade system have been met with opposition by Democrats and Republicans. In 2009, congressional members from both parties rejected the similarly structured Waxman-Markey bill because of the harm that such a program would have caused to the U.S. economy.

Second, the economic fallout from Kentucky's proposed system is unknown, and the proposal fails to include any such analysis. Based on what we know from past cap-and-trade proposals, however, the damage would be significant.

The U.S. Energy Information Administration's analysis of Waxman-Markey found that by 2030, as much as 85 percent of the nation's existing coal capacity would retire and that coal generation would decrease by up to 87 percent.

This would cause electricity rates for businesses and families nationwide to skyrocket, and one can only imagine the disproportionate economic impact to coal-reliant states like Kentucky.

Finally, Kentucky's plan, as proposed, is inconsistent with the Clean Air Act, under which EPA is attempting to regulate CO2 emissions from coal-fired plants.

Although there are conflicting opinions of whether the Clean Air Act is an effective way to regulate greenhouse gas emissions, the rule clearly instructs states to develop technology-based performance standards that utilize the "best system of emissions reduction" available that have been "adequately demonstrated" at power plants.

This means that CO2 performance standards should be based on efficiency improvements and similar measures at power plants. They should not and cannot be achieved through emission reduction targets like those in Beshear's proposal.

Considering coal's rich history in Kentucky, it is deeply concerning that our governor would put forward such a problematic proposal — a proposal we might expect to see coming out of California or Massachusetts, not in the heart of coal country.

The alternative energy sources that would replace coal under the proposal, like natural gas and renewable resources, could impose enormous costs, threaten electric reliability and cause unthinkable damage to Kentucky's economy.

Significant changes must be made to Beshear's plan to ensure our state's future remains bright and businesses have continued access to affordable electricity from coal.

Sen. Damon Thayer of Georgetown is Senate Majority Leader; Sen. Jared Carpenter of Berea is chairman of the Senate Natural Resources and Energy Committee.

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