Bits and Bobs of Information
Before writing this diary, I knew little about the financial side of coal. Some tidbits:
* Total United States coal production 2005-06: 1131.5 million short tons (eia.doe.gov).
* There are 72,340 employees involved in domestic coal mining — only about half of which actually mine (bls.gov).
* As of 1999, there were 984,453 million tonnes of proved recoverable coal reserves worldwide — of which the United States has 249,994 million tonnes, over 25% (worldenergy.org).
* There are four types of coal: lignite, sub-bituminous, bituminous, and anthracite. Loosely speaking, lignite coal is the lowest quality and anthracite coal is the highest. Generally, I won’t bother to differentiate between the different types because the data often doesn’t allow me to do so completely or correctly (wikipedia.org).
Where is coal mined?
The first step in understanding why coal is on the lips of so many politicians is to understand just where coal is located in America. It turns out that it’s located all throughout the country, but in dramatically different quantities. Three states produce 60% of the coal in the United States: Wyoming (36%), West Virginia (14%), and Kentucky (11%). However, 26 states produced some coal, with 16 states contributing at least 1% of the United States coal production in 2004-05 (eia.doe.gov).
Remember that this is geography, not demographics. It just might be that Mississippi’s coal production is a bigger share of their state economy than Texas’ — so while the above map is a nice proxy for the “importance” of coal production in a state, it certainly isn’t the end-all be-all. Furthermore, as mentioned above, coal has different qualities, and these qualities are “batched” — that is, a single mine rarely excavates more than one or two of the qualities. Therefore, not all of those states are producing coal that could presently be used for so-called clean coal or coal-to-liquids projects. However, there is hope that scientists will be able to discover processes which allow all kinds of coal to be used, thereby keeping all coal-producing states interested in these applications.
Where is coal used?
Coal comes out of the ground all over America, but where is it used? After all, coal producers may not be the only ones interested in helping out the coal industry — coal consumers might be concerned about rising coal prices. To understand this question, first note that only 4% of coal is exported (eia.doe.gov), and of the 96% remaining for domestic use, over 90% is used to generate electricity (eia.doe.gov). So, states which generate lots of their electricity using coal are more susceptible to increased prices in coal, and therefore may be more likely to oppose any limits to coal production. Within the United States, 51.8% of electricity produced is from coal fired plants. Below is a map of all states (plus DC)’s usage of coal to generate electricity within their state (eia.doe.gov).
Notice that when the map below is compared to the production map, there is quite a bit of correlation. This isn’t surprising — coal is cheaper if you don’t have to ship it far. However, it’s also worth noting that the Southeast seaboard consumes a fair bit of coal for its electricity generation without any production whatsoever. Additionally, a cluster near the great lakes, including Indiana, Michigan, Wisconsin, Minnesota, and Iowa consume quite a bit of coal without producing any. It’s not clear that Congressmen from states which use — but don’t generate — coal are much on the side for or against coal; I suspect that Republicans are more likely to work for the coal industry and Democrats are less likely, but with such a small sampling, it’s hard to predict.
Who is Coal’s Congress?
You see the map above of where coal is located, and the political uber-geeks can instantly apply that map to the US Senate breakdown. For the rest of us, here it is — first the political party breakdown of all coal producing states, then just the states that produced 1% or more of US coal.
22 Democrats, 30 Republican. 7 states with 2 Dems, 8 split, 11 with 2 GOP. 4 Kerry, 18 Bush. 63 Electoral votes Kerry, 197 Bush.
14 Democrats, 18 Republican. 4 states with 2 Dems, 6 split, 6 with 2 GOP. 2 Kerry, 14 Bush. 42 Electoral votes Kerry, 138 Bush.
This should help explain some of why House Speaker Nancy Pelosi’s (D-CA) decision to name Ed Markey (D-MA) head of a new committee on climate change, passing over folks like John Dingell (D-MI), created such a clamor. Notice California and Massachusetts on the maps, and now notice Michigan. Neither California nor Massachusetts produce coal nor use much, but Michigan uses quite a bit. Furthermore, since global warming is as much about petroleum as it is coal, and since Michigan is home to a number of automobile companies, there’s obvious tension.
Massachusetts
If state public policy influencers understand and appreciate the above, what can they do within Massachusetts to help relieve the pressure many politicians feel from the coal lobby? Here are some thoughts…
* Expand and extend the Massachusetts RPS requirements. For those who are unfamiliar, it works like this: beginning in 2003, electricity providers had to use 0.5% renewable. That increases to 4% by 2009, and then is slated to increase 1% per year, indefinitely — after 2009, the obligation will rise by one percent each year until such time as DOER may set for freezing the minimum percentage. Beacon Hill can legislate these increases, which (a) guarantees that they will really happen and that the DOER can’t undercut the effort, and (b) sends a signal to electricity providers that this program will continue and grow, and that they’d better get off of their duffs and actually find some renewable energy instead of allowing the providers to buy their way out of one-third of their 2004 obligation. The cost of the buyout was only $51.41 per MWh in 2004 and has increased to $55.13 by 2006. Obviously, increasing this fine will induce the electricity providers to actually come up with the renewable energy resources (which, BTW, don’t have to be in Massachusetts, making compliance easier to obtain).
* Gently expand the RPS to include municipally owned electricity suppliers, currently exempt.
* Increase taxes and regulations on the Filthy Five. Poll
ution restrictions were passed in 2001, but more could be done. While these plants may now be behaving better, they are still emitting pollutants. Eventually, abiding by the adequately strict regulations becomes too expensive and new power plants will be built instead. This is important because power plants built before 1970 are “grandfathered” and even in light of the 2001 regulations are still far nastier to the environment than newer (still nasty) coal fired plants.
* Work to expand RGGI. Encourage DC, Pennsylvania, Maryland, and Rhode Island to become full participants, as well as Canadian provinces New Brunswick, Prince Edward Island, Nova Scotia, and Newfoundland and Labrador. Bringing Quebec and/or Ontario to the table would be a major coup. By expanding RGGI’s participants, demand for coal will be reduced, resulting in fewer states as producers or major producers, thereby reducing coal’s influence nationally.
* Require electricity suppliers in Massachusetts to allow customers the option of purchasing renewable energy, at the appropriate (neither profit nor cost inducing) additional cost to the consumer. Many states offer this option, but Massachusetts doesn’t on a state level. Why the heck not? Let us liberal elites with money to burn help finance the green power revolution personally! Of course, in light of the RPS, the utility should not be allowed to include the green energy purchased “extra” by customers to also count toward their RPS standard — this should be above and beyond their RPS requirements.
* Ban construction of any new coal fueled electrical generating plants in Massachusetts. If you want to be “generous”, you might allow the generation provided that it comes with the decommissioning of the same generating capacity of a pre-1970 plant (ie a member of the Filthy Five). This won’t reduce coal demand, but it will reduce pollution somewhat.
* Expand tax exemptions, rebates, grants, and other methods to encourage people to (a) create their own renewable energy locally using solar or wind, and (b) to reduce their electricity demand outright.
Since only 30% of electricity generated in Massachusetts is coal, there isn’t much that Massachusetts can do to reduce demand on the national market — but, on the bright side, since its “only” 30% it will be that much easier to reduce the demand to 0%. Only 1.2% of electricity generated in California uses coal as fuel — Massachusetts can get there too.
Conclusion
In conclusion, 22 Democrats represent states that produce some coal, 14 of which represent states producing at least 1% of the United States’ coal. While the total number of coal jobs is relatively small within most of the states, no politician wants to be tied to the elimination of jobs in his home state — and because the coal industry results in employment in other areas (transportation, science and technology, electricity generation, etc), the impact of increased coal regulations could be presented as significant. If individual states could reduce their reliance on coal for electricity generation that might relieve some Congressmen from the pressure of supporting coal initiatives, but that’s not so easy to do in light of increasing natural gas prices and a reluctance to increase nuclear power capacity. Renewables are the key — both for reducing the number of politicians who feel pressure to support coal production and usage, and for increasing the number of politicians who can actively work toward legislation that increases the number of jobs and price security while decreasing the pollution and negative health effects that coal usage provides.
Note 1: This is the first part in a 3ish part series. I’m hoping to crank them out about once a week. Solar should be next, then one on wind. Please feel free to pester me for the next parts if you find them interesting, or to encourage other related topics.
Note 2: The maps were created using Texas A&M U’s mapmaker utility. They have tUS and state maps; unfortunately the state map for Massachusetts is based on counties and not cities and towns. That the map utility is from Texas might also explain Texas’ apparent size dominance on the map.
Note 3: Charley on the MTA encouraged me to write this based on my post on his Pelosi’s end run around Petro-Dems (with Markey as fullback) diary. Thank you for the encouragement Charley!
I’m really looking forward to the rest of the series.
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One friendly question: How about a similar overview of energy efficiency? It’s not all supply side, as I know you know!
I can get to it (eventually). The nuance is that supply side tends to really nudge Congresscritters, whereas demand side doesn’t in quite the same way.
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That is, the coal constituency is much more tangible than the “building standards should require adequate insulation” constituency.
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Nevertheless, ask and ye shall receive.
No list of Senators in the pocket of Big Insulation? No detailed maps of caulk-rich states?
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Okay, point taken. (Though a map of efficiency potential–some sate regulatory agencies have ordered studies of that–might be interesting.)
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But it would be possible to detail positive steps that Massachusetts could take, paralleling that part of your post. And actually it was the absence of the supply dimension from your poll that got me thinking. (Which is better, a state that gets 20% of its kWh from coal or one that gets 30%? Obviously the answer depends on the total number of kWh. Which, the less the better.)
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It is precisely because people are not used to thinking about the poor, mundane supply side–and the fact that it is our best hope to slow global warming–that I hope you will be able to address energy efficiency somehow. (Well, that and the fact that it is a sort of personal hobbyhorse of mine.)
The best way to encourage conservation is to make it more expensive not to conserve.
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I know, I know — rising prices aren’t so great for the poor. I didn’t say it would be fun or fair or friendly. But, if you want to reduce demand, increase price. If you want to reduce demand during peak hours*, shift to time-based metering.
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* Peak demand is M-F, 9-5ish. The collection of peaks peak when the weather is hottest, or coldest just after dark, again on a M-F non holiday. If you’re interested in reducing cost or pollution, trimming peaks is key, because peaking plants — those that are only run for 100-1000 hours per year — are the most polluting per kWh and produce the most expensive electricity per kWh, so shaving those peaks is a win for the environment and the pocketbook.
< understatement>Electricity markets don’t work particularly well < /understatement>, so price signals are not a very good way to reduce emissions. It’s one area where public policy can be much more economically efficient than just raising prices. I suppose you and I might just disagree about that.
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The value of peak trimming is chiefly that it avoids new capacity (both generation and transmission & distribution). From an environmental point of view, though, it is not a given that the kWh saved at peak entails more carbon than the kWh saved off-peak. (Maybe it does, especially if older dirtier plants are used as peakers.)
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Even if the peak kWh are dirtier than the off-peak ones, the difference might not be very great, so peak shifting (as opposed to energy efficiency) might only avoid a tiny bit of net environmental damage.
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Regardless of how well the internal electricity markets work at balancing predicted future demand with capacity for generation, the real issue is: what does the demand curve for electricity look like? Is certainly isn’t flat, but it isn’t perfectly vertical either. For one thing, substitutions exist, but substituting natural gas, coal, or oil for electricity doesn’t help much if at all. However, it is well known that a consumer can spend some capital to reduce his electrical variable cost. These are those “efficiency” things we keep hearing about.
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The higher the marginal cost of electricity, the sooner the break-even point for everything from compact fluorescent bulbs and motion sensors to more insulation to more efficient washers & dryers to more efficient massive industrial machines.
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So, raising the prices will result in less demand. How much less? Depends on (a) the slope of the curve, and (b) how well informed the consumers are. Policy can’t touch (a), but can significantly impact (b).
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As for trimming…
You’re spot on. The value is in not manufacturing more plants, a nontrivial and not insignificant environmental impact in and of itself. Furthermore, peaking plants are more heavy polluters (although rarely coal, they are often diesel fuel oil), so shifting demand would have the impact of lowering pollution, even if just on the margins. It would have another impact in the big picture though: currently, it’d be damned hard to shut down a dirty coal plant because the grid needs the spare capacity. Even though coal plants aren’t peak plants, they are operating at times of peak, thereby contributing to peak supply. By smoothing out the peaks, you create more slack in the system, and can then justifiably retire dirty coal plants because peak demand can be met without their help. Currently, that just isn’t the case, and that effectively makes it impossible to shut down very many dirty coal plants.
Great post! The economics of an issue, when carefully parsed and detailed, usually offer great insight.
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Without truly understanding the environmental debate about turning coal into diesel fuel, I would say that if Governor Schweitzer thinks it’s a good idea than it probably is a good idea.
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I had the pleasure of working peripherally with Schweitzer and his campaign when he ran for the Senate seat in 2000. Though he lost that race (it was close), he was by far the better candidate and was able to transfer his campaign experience in to a successful gubernatorial run in this quite red state. I’ve met a lot of politicians and Schweitzer is hands-down the nicest politician I ever met in over a decade of political work.
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This is a man who graduated from college and then took off with his college sweethearts to build irrigation systems in Africa, Asia, Europe and South America. He then spent almost seven years in Saudi Arabia, home to much of the world’s oil, but worked not in oil but in developing thousands of acres of irrigated cropland. And then he became a self-made millionaire with the brilliant idea of growing and selling mint of all things.
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Schweitzer truly epitomizes the new “Western progressivism” that embraces social justice issues, rejects radical Christianity, and truly understands how to shape debate to achieve results. For example, his efforts to re-define environmentalism in a way that embraces both wind technology (a big Schweitzer initiative) as well as hunting and fishing is truly progressive.
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His environmental record and positions, coal plans aside, have consistently earned him the endorsement of every major environmental group.
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For all these reasons, I give Schweitzer the benefit of the doubt that his plans are environmentally and economically sound until proven otherwise.
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A sweetheart for each continent. Convenient.
Don’t be.
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The plans he’s proposing will be economically sound for Montana, as long as a barrel of crude costs more than $53. After all, the state of Montana owns 533 million tons of coal, and so not only would Montana have a market to sell that coal, but doing so would also result in capital investment and jobs in Montana.
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Fischer-Tropsch process would work out quite handsomely in Montana, much like drilling for oil in Alaska’s state-owned fields allows Alaska to have neither income tax nor sales tax.
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That doesn’t, however, make the move environmentally sound. The F-T process requires large amounts of natural gas, which while cleaner-burning than coal still isn’t great in terms of carbon emissions. Furthermore, solving our oil problems on the supply side only pushes peak oil a bit to the right, but doesn’t help solve the actual problem — moving people around using less oil. It merely delays the inevitable, and while it may pollute less than traditional gasoline, that traditional gasoline will be used too, resulting in a net increase in pollution.
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F-T is great foreign policy and economic policy, as it helps the balance of trade and creates jobs that simply can’t be outsourced — and helps reduce the amount of Persian Gulf oil relied on by America. However, it is still a fossil fuel, still emits carbon, and still pollutes. I’m not particularly opposed to F-T to help advance America’s interests, but I would also like to see much more effort on progress that both reduces fuel dependency and environmental impact, not merely one of the two.
way to go. I’m looking forward to the next post on energy!
I’m really happy that so many folks recommended this diary. It’s long, a bit tedious, and certainly not as exciting as the day-to-day presidential or House stuff.
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It also may have set the record for most links in a post.
thanks stomv, great job!
Thanks for this first of threeish. I have to say that if you live near a coal burner (and you all do, sorry to say) or you’ve seen first-hand the damage coal does (Wenham Lake–drinking water for 80,000 Mass residents-or Inez, Kentucky a coal slurry spill bigger than Valdez, black lung in Appalachia, or even the dangerous mines of Columbia (or other tinderboxes) where the coal burned in Salem is said to originate, you can’t take coal use of any kind lightly.
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One thing that coal gasification promoters don’t tell you is that the process yields nearly the same amount of CO2 as conventional and vintage pulverized coal burners. The advantage is that some of the CO2 is actually segregated in the chemical process allowing us to somehow sequester the CO2 once we figure out where to put it. On this issue, my favorite Dem candidates are Hillary and John Edwards, both of which I’ve heard give passionate speeches on the Senate floor and I listen very carefully.
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One nuance you might consider is that US coal is very high in sulfur content so much of the coal being used to meet tighter emission standards (at least here in Mass) is being imported. When this happens, it’s not much better than getting oil from the Middle East, so the domestic argument falls by the wayside. Additionally, Massachusetts may only get 30% of it’s power from coal but they are some of the nastiest coal burners around–with Brayton Point in Somerset (near New Bedford) and Salem being the two worst polluters in all of New England by many measurements. Your conclusions are right on–no RIGHT ON!–renewable energy is key. In so many ways, it’ll save our hides.
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Thank you for this. Also stomv, would you send me an email (lori @truth and progress dot com) as I have a report, hot off the presses, that I’d like share with you and Charley regarding electricity on the demand side in Massachusetts.
Is there some reason you can’t post it here? There must be many people here (including me) that are interested in knowing about energy usage in MA.
Stomv,
Thanks for the education on this subject. Do you plan to address the geopolitical arguments for reducing use of oil vs. coal? I assume also that from the emphasis on coal that that source of energy is far more polluting than oil or gas. Can you shed more light on how much more damaging coal is? Thanks again for this subject.
It’s actually quite difficult to compare coal to oil in terms of electricity generation.
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It’d be good to use less of both — but doing so actually requires substantially different strategies. The fastest and lowest cost method is to build a bunch of natural gas plants, but those still pollute and are still subject to dramatic price swings and foreign pressure.
…Much as I find this interesting–and I really do–the sad fact that if you don’t publish this on something other than a regional blog, it will get no distribution elsewhere.
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I have no idea who you are, or what credentials you have. Is this the start of an academic paper?
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This, with the “nuclear option” post above, would be interesting. I (I have a physics background) have a number of thoughts about this.
This was a great read.
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I especially like the Massachusetts section. I am interested getting the option to buy green power. Time based metering is a great idea. Also I am interested in grid deregulation so people with turbines and solar panels can sell power back to the grid.
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The reality is that blackouts are extremely motivating for people politically and given all the difficulty in getting people to use less electricity or accept new plants, we are stuck with the dirty 5.
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Grid deregulation isn’t necessary for people with turbines and solar panels to sell power back to the grid, depending on setup.
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If you use electricity from the grid some times and supply elec back to the grid other times, you get a meter that literally spins backwards. For example, if during the day you have solar panels and you’re not home, you might generate 1.4 kWh of electricity back in to the grid, and your meter will spin backwards that 1.4 kWh. When you get home and the sun goes down, you might consume 1.6 kWh, and so in the 24 hour period your net usage is 0.2 kWh.
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As long as you will use more than you will supply, and your generating capacity is “home sized” (not power plant sized), net metering is already in effect in Massachusetts.
The two places where you might go wrong:
1. Large power generation. Even if you could get zoning and building approval, generational capacity exceeding a certain amount isn’t eligible for net metering. A home install of either solar or wind isn’t likely to come anywhere near this limit, so this is generally non-binding for homeowners.
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2. If you generate more than you use in the span of the year, you get little or no payment from the electrical company. In some states, you get the wholesale rate (a few cents per kWh), in other states, you get $0.00. In either case, it makes it economically inefficient to install more generational capacity than you’ll use in consumption within the span of the year.
…the payback period that might be required to justify the purchase of a solar panel array to feed power to the grid? I have no idea what solar panels cost here in the US (they cost about 800 Euros per panel in Germany).
Far too many variables.
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There’s fixed cost (inverters, wiring, estimates, getting the guy to your house to install) and variable cost (the cells themselves and parts of the install).
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The latitude of your house, and the direction it faces play a large role, and nearby trees may play a role too.
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The market price of electricity varies in tUSA quite a bit, even within MA. Furthermore, the payback varies widely depending on if you have a flat rate (what most of us pay) or a rate that changes based on time of day.
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The grants you qualify for (Fed tax, state tax, others?!) play a big role.
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I’ve not seen situations where people installed solar cells in MA and estimated a payback any earlier than 12-15 years. There are plenty of situations where the payback is never (bad siting, for example). There used to be a BMG poster floating around here who installed these guys for a living, but I can’t recall his handle at the moment. Finally, there’s REnU, a company from which you can lease solar panels. They own the panels and therefore the maintenance; in return, you buy the electricity generated by those panels for a pre-agreed upon price (generally, the price at the date the 1, 5, or 25 year lease is signed). This is a great deal if you believe the price of electricity will go up; you lock in the lower rate, and they make the difference between current and future rate should prices go up.