Invest in Coal?

By Mike Koetting June 4, 2024

I wasn’t planning on writing another blog on environmental issues so soon, but my interest was severely piqued when I saw a recent article in the Chicago Tribune with the headline:

Communities Being Urged to
Double-Down on Coal

I assumed this was surely not what it appeared to be but was a clever hook for some different kind of story. I was curious enough to look.

Nope. The story was pretty much as advertised. A little more complicated, but the headline was straight. A number of communities around the state who are currently getting their electricity from coal-burning plants are being asked to extend their commitments to coal into the 2050s. To be fair, part of the argument is that by extending their commitment, they would finance the development of carbon-capture technology so that by 2050 it would be “net zero”.

The main problem with that proposition is that this technology does not currently exist in a financially feasible way. Will it get there? It might. Some form of carbon-capture technology would certainly be useful and there are lot people working on it. Then, again, it might not. And in the meantime, coal will continue to get burned with well-known consequences.

I don’t know if there is anything that could be done about the existing contractual obligations that run at least 10 more years. It appears that renewable energy would be available for the same amount or less than these communities are currently paying. However, given the contracts, making that shift now might be difficult.

But extending into the 2050’s on the basis of a technology that doesn’t exist is hard to grasp. The argument is being advanced by the Illinois Municipal Electric Agency, (IMEA). Contrary to impression, this is not a state agency, but is a non-profit consortium of 32 Illinois municipalities for the purchase of power. It is proposing that all of its members re-up to keep the larger of two coal plants burning and finance the carbon capture project.

IMEA does own 15% of the current power producing facility, so that may be part of the reason. (The rest of the project is owned by a shifting cast of investors.) I don’t know how important that share of the ownership is to the economics of the consortium. But it seems likely that the difficulties of generating electricity with coal will continue to grow in step with growing concerns about environmental conditions. There are already new environmental standards on the books for the near future. It seems the odds of getting stuck with environmental problems and an unprofitable coal-burning plant are high.

IMEA argues it is already too late for these communities to lock into low-cost renewable sources in 11 years when the current contract expires. The experts quoted in the Tribune article scoffed. They suggested there was already plenty of renewable energy available with more coming on line all the time. It also seems that if these communities bet on a carbon-capture solution, they will really paint themselves in a box and may find themselves needing to throw ever more money at a technology with no good track record.

A different argument made by IMEA is that coal is particularly reliable. That is true—if you shut one eye and squint hard enough about what you mean by “reliability.” Coal generation does not rely on wind or solar or hydroelectricity, each of which has some degree of indeterminacy. But coal is also reliable in its proven effect on greenhouse gases and public health. Moreover, at least so far, innuendoes about renewable energy being less “reliable” have turned out to be mostly balderdash.

It is fairly the case that an organization composed primarily of small city utility managers—those who are very personally at the sharp end of things going sideways—would be extremely concerned with reliability. But they would also be affected by rates substantially higher than what others are paying. So, while it’s not inconceivable they’d be willing to pay a little more for “reliability”, how sure can they be, given the way the world is going, that coal-burning is in fact a reliable source of energy at a remotely affordable price 20 years from now.

In the absence of an obviously compelling argument—there may be one, but I don’t see it—I am guessing that IMEA is infected with its own brand of energy MAGA. It is a sentiment concocted out of a sense of lost paradise, nostalgia for particular things, a resentment at being given guidelines by people they believe to be condescending, and, in many cases, specific losses or fear of them.

Bigger Picture

When I first read the Tribune article, I was annoyed that the constant comparison point for the IMEA proposal was “Biden’s Plan,” “Biden’s approach,” “rules from the Biden administration,” and so forth. I saw this as a deliberate partisan provocation. Then my wife reminded me that electrification was Biden’s plan and, in fact, it was contrasted to the Republicans having no plan at all.

The penny dropped. There is no Republican plan for energy except to capitalize on this stew of discomfort with whatever environmental constraints are proposed. By refusing to participate, they are able to blame Democrats for whatever people don’t like without having to accept any responsibility themselves.

It’s not that people are being crazy. The underlying discomfort is real. There is a generalized sense of loss. I remember the cars of my youth, fueled with cheap gas and absolutely no thought of “environmental impact.” The world seemed infinite. The Arab Oil Embargo of the early 70s shattered that and it hasn’t been the same since. In some sense that and subsequent events are a loss, but mostly in the sense that growing up inevitably comes with some sense of limits. Societal acceptance of this is complicated by the fact that those limits are not evenly distributed. It was much easier for native American tribes to embrace the environment since they all shared more or less equally in both the riches and the limits, and it all happened in real time.

The resentment is even greater if there is a sense that the limits are being placed by someone who faces different circumstances. The trope of rich environmentalists restricting what rural people can do hardly does justice to the situation, but it is not without more than a few grains of truth. Maslow’s Hierarchy gets muddy when the impacts of action are spread over time and complication. Something that is a very basic level of environmental survival for all of us might not feel nearly so compelling to someone facing an even more immediate survival crisis. The price tag of electronic cars may seem reasonable in the face of gas north of $4/gallon, but not if you can barely afford the clunker you depend on.

It is also true that the transition to cleaner energy includes specific winners and losers. It is no accident that Republican support is greater in states with larger fossil fuel economies. That makes it even easier to put a partisan gloss on environmental issues. The 32 communities that are members of the IMEA coalition include several wealthy Chicago suburbs but most of the 32 are rural communities, many of them deep in the coal mining country of southern Illinois. For some of those communities, keeping open the plants that burn their coal does seem existential. Especially if they can convince themselves that there might be a way to make it carbon neutral.

Mining this discomfort is a strategy of opportunism. In the Republican world, there is no need for a plan for environmental issues: just keep insisting that everything will be more or less okay and any attempt to control events is another form of socialism. This is Ron DeSantis and the Republican Legislature limiting use of  the term “climate change”, nullifying previous commitments to renewable energy and approving a movie for educational use that downplays climate concerns and vilifies renewable energy.

One of the favorite Republican arguments is that they don’t want to favor one form of energy over another. Folks, picking one policy over another is the essence of government. That’s the job! And while it’s true no policies are perfect, and some hedging of bets makes sense, all the available evidence suggests some policies are better for the society than others. To hide behind pretending to “protect people” by focusing on their discomforts without attempting to recognize context is foregoing leadership for hucksterism.

What Happens Next

I don’t know what will happen with the IMEA proposal. I’d be very surprised if the Chicago communities accept it. Although the deal twenty-years ago was done without fanfare, substantial activism is already taking place in these communities this time around. (My guess is that they were the ones who called the Tribune’s attention to the matter.) Whether or not the rest will go forward, I’ll leave to them. In the meantime, the Republicans will continue to harass Democrats about the problems of whatever they propose. They will continue to act as if this is all going to take care of itself and if the rest of us would stop worrying about it, things would work out fine without having to make any big changes.

And, yeah, trickledown economics really does work. Just give it more time.