Peter Knight explains how Big Sandy makes America’s energy planners look a Bit Silly
Prepare to meet a cast of familiar energy characters, including: Clean Coal (the artist formerly known as Coal), Hydraulic Fracturing (aka What the Frack?), Common Sense (Gone Fishing), and US Energy Policy (Gone Missing).
Industrial America was fuelled by the nation’s abundance of coal, trees, oil and natural gas, creating personal mega-fortunes and a political distaste for energy planning.
The market – driven by the vested interests and their ability to pay off the politicians – led to the US dependence on oil for transport, coal to keep the lights on and a dislike of energy efficiency.
We are now in the messy middle of America’s energy story, symbolised in many ways by the demise of Big Sandy and her dependents. Big Sandy is the unlikely name of an old, very big and very dirty coal-fired power station in eastern Kentucky (where the Big Sandy river flows).
This beautiful southern state is best known for four things: bourbon whiskey, bluegrass music, horse racing and coal mining. Much of the coal is burned in big power stations supplying populations far away (including New York City) with electricity – or as the (clean) coal lobby likes to say, keeping the lights on.
Big Sandy, one of about 500 coal-burning power stations in the US, consumes 90 railway wagons of coal a day. Because of its venerable age (49), most of the mercury, sulphur and other pollutants from combustion go straight into the air, and then into our lungs and the fish we eat. And so now, new federal government regulations necessitate the $1bn retrofitting of Big Sandy with technology to capture its contaminants.
After much resistance to change, the owners of the plant have decided to withdraw their application for a retrofit and are expected to close the plant, although converting to natural gas is also being considered. This will mean job losses in the nearby coal mines, located in an area that has no other major employers.
The Kentucky politicians have fought hard to prevent closure but the plant owners say they would have to raise electricity prices by a third to finance the retrofit. This would mean that consumers, including the poorly paid local coal miners, would have to pay 33% more for their electricity.
No to coal
Environmentalists working through the Sierra Club, a big conservation organisation, have been lobbying hard to end coal burning. Recently their fight has been bolstered by a $50m grant from the billionaire New York mayor, Michael Bloomberg.
Local pro-coal politicians have been quick to vilify the environmental lobby and the Environmental Protection Agency (which sets emission limits).
But it turns out that the reason for the decline in the interest in coal is not primarily to do with wealthy greenies and pollution regulations. Rather, it is the dramatic fall in the price of natural gas that is digging coal’s grave. It is cheaper for the electricity producers to switch to cleaner-burning, and now much cheaper, natural gas.
You would think this would make the environmentalists happy, but it does not. Here’s why.
Gas has become cheaper because of this wonderful technology sweeping the world called hydraulic fracturing, or fracking – drilling deep into shale, pumping water and chemicals down the hole under pressure to fracture the rock. This releases masses of natural gas and, poof, the price drops.
Fracking has been implicated in contaminating groundwater supplies and it continues to worry many. But America has, on the whole, embraced the practice without much thought for the future.
Such lack of planning has contributed to Big Sandy’s demise. In a similar way, the lack of a comprehensive national energy plan looks likely to lead to a rather messy energy future for America.
This could be ameliorated if the US had a proper energy policy and relied less on vested interests to make energy choices. Unlike China, the US lacks a plan because Republicans are ideologically opposed to what they see as central planning – the thing only communists do.
This means that those who control the oil, the gas, the coal, and the energy infrastructure are the de facto writers of the nation’s energy policy – a job they do haphazardly and expediently. What’s playing out now at Big Sandy, together with the human and environmental tragedy that goes with it, is inevitable in a nation that refuses to plan about something so fundamental to its future.
Peter Knight is president of Context America.