Lynn Good, CEO of Duke Energy, considers that “the economics [of coal burning] are challenged”, regardless of recent federal support for a revival of the US coal industry.. Ms Good was speaking on 1 March during a presentation at the US DOE Advanced Research Projects Agency-Energy Energy Innovation Summit. I think coal continues to be an important part of a diverse set of resources … about a third of our generation comes from coal, but that will be declining over time”.
But the decline of coal has not been caused simply by federal regulation, she said. The regulations passed in the last administration did play a part, but so did the decrease in natural gas pricing.
Regarding regulation, Good suggested that Obama administration’s Mercury and Air Toxics Standards (MATS) had certainly forced many energy generators to make difficult decisions about whether the investment to address that regulation made sense given the life of each of those plants.
The US Supreme Court did eventually strike a blow against the MATS rule, finding in June 2015 that the Environmental Protection Agency had not adequately considered the cost of compliance in drafting the rule. However, the Rule remained in place after the agency released a final cost consideration in April 2016. Many power generators have already made their compliance choices, shutting down their plants, or making significant investments.
The coal industry faced significant challenges other than those imposed by the federal government, however, as the advent of fracking caused natural gas prices to fall steeply. “We watched the shale gas revolution… and there was a debate …. on whether or not it was here to stay”. Duke decided to assume that shale gas would stay, and acted accordingly. “We began by introducing combined cycle gas plants,” she said. “Since 2008 we’ve built seven of them in the Carolinas, and still some of those seven are under construction.”
While president Donald Trump has promised to re-invent the nation’s energy system, Good suspects that most energy companies will be looking further into the future than even a double presidential term. :We are running a long-cycle business, trying to make decisions for 2025, 2030, and 2035. We, of course, need to watch what is going on at the federal level and the state level over any election cycle or any administration, but we also have to keep our eye on what we believe makes sense even beyond that administration,” she said. The future of the energy system will be driven by a decarbonisation imperative, she said. “I think [they] will go in the direction of lowering carbon, is the way I would describe it.”