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King Coal: Looking to an uncertain future

Northwest Colorado towns mull impact of EPA’S Clean Power Plan


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At Invesco Field in Denver, the Broncos were nearing kickoff against the Baltimore Ravens. Some 200 miles to the northwest in Craig, customers at Eastside Liquor prepared to watch. Wearing orange jerseys, they bought whiskey and beer mainly. The store has a decent selection from craft breweries, including Longmont’s Left Hand Brewing and Fort Collins’ Odell.

A Fat Tire? Not at Eastside Liquor or, for that matter, any other liquor store, bar or restaurant in Craig. The slight was intended. New Belgium, the Fort Collins-based brewer of Fat Tire, had donated money to WildEarth Guardians – the group that filed a lawsuit challenging federal leasing of coal at the ColoWyo Mine, located 30 miles south of Craig. ColoWyo’s coal keeps the fires going in the three power plants in Craig Station, Colorado’s second largest electricity generating complex. The mine employs 230 and the power plant another 300, many of whom live in Craig, population 9,000.

U.S. District Court Judge R. Brooke Jackson agreed with WildEarth Guardians that the Department of Interior had violated environmental disclosure laws. In Craig, a different offense was seen: WildEarth Guardians had threatened the town’s very existence. “Deplorable” was one word used to describe the group. In May, at a meeting about the lawsuit held at Moffat County High School, only a few of the available 815 seats remained vacant. When New Belgium’s funding of WildEarth was later revealed, Fat Tires were yanked from coolers. New Belgium reps explained they had not specifically provided money to fund the lawsuit. Since then, a revised environmental review has been conducted. For now, however, Fat Tires remain retired.

WAR ON COAL

Black-and-white “Coal Keeps the Lights On” signs dot Craig and other parts of the coal-mining country of northwestern Colorado. In April, the three-county area of Routt, Moffat and Rio Blanco delivered two-thirds of the coal mined in Colorado.

The area has 3,149 of Colorado’s 8,467 jobs coal-mining in Colorado, according to a report by economist Gary Horvath for the Economic Development Council of Colorado. The mining jobs in northwest Colorado deliver an average household income of $110,449.

People there talk about a war on coal. They’re not altogether wrong. WildEarth Guardians makes no bones about its goal. Denver-based Jeremy Nichols, the group’s climate and energy program director, said coal needs to stay in the ground. Coal, when burned, pollutes the atmosphere with carbon dioxide, a greenhouse gas that threatens global climate disruption because of increased temperatures and other effects.

This was not the first spear flung by WildEarth Guardians. Responding to another lawsuit, Jackson in 2014 had ruled that the federal government erred in its analysis of a proposed coalmine near Paonia. The government described in detail the job creation and other economic benefits of the mine but glossed over the economic harm caused by burning coal.

In Craig and other towns along the Yampa River, many residents dismiss such talk as nonsense. They point to blue skies. “Now, Denver and Boulder, that’s where you get air pollution,” they say. If they concede harm from carbon dioxide at all, they dismiss the importance of U.S. efforts to reduce emissions.

“We will throw the United States economy into a further tailspin because of this nonsense, and for what? One-hundredth of a degree,” said John Kincaid, a Moffat County commissioner. 

Kincaid was referring to an estimate by the Cato Institute of how much the Environmental Protection Agency’s Clean Power Plan will slow global increases in temperature. The EPA’s plan was formulated in response to a lawsuit filed by Massachusetts and 11 other states plus three cities and 13 mostly environmental non-government groups. In a 5-4 decision, the U.S. Supreme Court in 2007 ordered the EPA to show why it shouldn’t regulate emissions of carbon dioxide and other greenhouse gases from smokestacks under the Clean Air Act. It goes uncontested that coal-fired electricity plants account for roughly 28 percent of America’s annual greenhouse gas emissions.

EIGHT YEARS, 1,500 PAGES

In August, almost eight years after the Supreme Court decision, the EPA announced the final Clean Power Plan. It runs more than 1,500 pages, plus supplements. The plan requires states to significantly reduce greenhouse gas emissions by 2030 – in Colorado’s case between 31 percent and 38 percent. Another way of looking at this is the carbon dioxide emissions per megawatt-hour of electricity produced. In Colorado, 1,973 tons of C02 were produced per megawatt in 2012, the baseline year. By 2030, that needs to be reduced to 1,174 tons. Some of that reduction has already occurred, and more will soon be achieved, even before the plan is filed. But there’s still a gap.

“It’s fair to say that in order to meet these goals, there are going to have to be some changes in how we use energy in the state of Colorado,” said Will Allison, director of the Air Pollution Control Division at the Colorado Department of Public Health and Environment.  “I think we can meet the challenge, but it’s not a slam dunk.”

Allison’s agency is taking the lead for Colorado, working closely with two other agencies, the Public Utilities Commission and the Colorado Energy Office. Ultimately, the Colorado Legislature may choose to get involved. In late September, state officials met for the first time with Colorado’s two privately owned electrical providers, 22 co-operatives and 29 municipal providers, plus other stakeholders. State officials hope to have a final plan prepared in September 2016, to allow time for legislative review the following winter and consideration by the Air Quality Control Commission, the state’s ultimate decision-making body. The EPA’s deadline is September 2018, unless the state seeks a two year-extension.

The EPA gives states great flexibility in how to achieve reductions. Colorado can increase use of natural gas, which produces half the carbon dioxide of coal when burned, add more renewables, or even cut energy demand, by pushing greater efficiencies. The plan even offers the opportunity for Colorado to work with other states, such as Wyoming, to create new markets for emissions reductions. Congress also created multi-state markets in 1990 in response to concerns about acid rain. Those requirements benefitted Colorado producers of high-energy, low-sulphur coal.

Not a single person contacted for this story presumed to know exactly how Colorado will respond.

Utilities emphasized how much they’ve already done or are doing now to decarbonize electrical supplies. Colorado Springs Utilities, for example, wants to ratchet down electrical demand 10 percent while attaining 20 percent of its electrical portfolio from renewables by 2020.

The utilities, including Tri-State Generation and Transmission, majority owner of the Craig Station, also stressed traditional measuring sticks: low prices and reliability. But beginning in 2004, Colorado voters approved the first renewable portfolio standard, adding a third yardstick: environmental impacts. On that score, Colorado is already on a clearly defined path.

“Those on both sides of the issue who are saying (the EPA plan) is revolutionary are sort of exaggerating things,” said Howard Geller, director of the Southwest Energy Efficiency Project. “It’s not huge in terms of what it’s calling for as opposed to the path we’re now on. That’s the relevant comparison: the path we’re on now and where the EPA said we need to get. There isn’t that big a difference.”

SURGE IN ENERGY USERS

From 2004 to 2014, Colorado’s population grew from 4.6 million to 5.4 million, or about 14 percent. Demand for electricity grew at a slower clip — 11 percent — and has tapered since the recession. Efficiency programs offered by Xcel Energy, which is responsible for 60 percent of customers in Colorado, and other utilities began taking hold. Improved efficiency, said Geller, is the most cost-effective way to comply with the EPA’s requirements. “There’s still a lot we can do with energy efficiency in the state,” he said.

Coal lost ground this decade. It was responsible for 74 percent of electrical generation in 2004, but last year shrunk to 60 percent. Renewables have filled the gap, expanding from 3 percent a decade ago (that includes electricity from big dams in the West) to 17 percent last year. More specifically, wind has been the major story among renewables.

Natural gas has had smaller gains. During the next two years, however, it will become a larger slice of the energy pie, as Xcel replaces its old coal-fired power plants in Boulder and north of downtown Denver with natural gas-burning units. That will significantly reduce Colorado’s greenhouse gas emissions from the power sector — but also shed jobs in Northwest Colorado. Coal for the plants comes from the Twentymile Mine between Oak Creek and Hayden.

When all is said and done, Xcel will have retired a third of its coal-burning fleet between 2004 and 2018, while adding just one unit, the Comanche 3 plant in Pueblo. Going online in 2010, Comanche 3 converts coal at 36 percent efficiency, according to Xcel, compared to 33 percent efficiency of older units. But combined-cycle natural gas plants are even more efficient, achieving 60 percent efficiency, points out John Nielsen, of Western Resource Advocates. This means fewer greenhouse gas emissions per megawatt-hour produced from coal. Nielsen projects that coal will shrink further to 40 percent of the state’s energy mix by 2030.

EARLY RETIREMENT

Will the Clean Power Plan create stranded assets? That’s the phrase used to describe still operable fossil fuel plants retired early because of public policies or new market forces. That’s a sensitive issue because newer plants have not been fully depreciated.

“The plant age is relevant to this discussion,” Martha Rudolph, director of environmental programs for the Colorado Department of Public Health, said at a meeting sponsored by Women In Sustainable Energy. “Given the flexibility the Clean Power Plan allows states in implementation, it’s unclear to what extent – if at all – utilities will see any stranded assets,” said Stacy Tellinghuisen, an analyst for Western Resource Advocates.

Speaking to a large crowd in Craig in September 2014, Shawn McGrath, the regional EPA administrator (and a former mayor of Boulder), made no assurances but told the crowd that the EPA had not set out to shut down the coal industry.

A legal challenge to the EPA’s authority could slow or even block implementation. Colorado Attorney General Cynthia Coffman, a Republican, joined 22 other states in a lawsuit that alleges the EPA has over-reached its authority under section 111 (d) of the Clean Air Act. Rudolph said Colorado will prepare its plan on the assumption that EPA authority will be upheld.

In Craig and the Yampa River Valley, people see none of these paths going in the right direction. Kincaid, a retired control room supervisor at the power plant, describes the 2010 law shifting the Denver and Boulder coal plants to natural gas as a “nasty, backroom cigar-smoking bill.” Locals cite subsidies for renewables. The sun doesn’t always shine, they say, and the wind doesn’t always blow. They talk, again, about their blue skies.

“For many people, it’s paradise,” said Pam Foster, who graduated from the high school in Craig in 1960 before studying dance in Missouri, living later in Virginia, New York and Massachusetts. “We have some of the clearest, blue skies around, and the emissions that come out of that plant are so miniscule,” said Foster, who now lives in Craig again. “The community will fight to its death to keep that power plant.”

COAL AND THE ECONOMY

Coal — including four mines and two power-generating stations –plays a major role in the economies of the three-county area. That includes the string of small, blue-collar towns along the Yampa River and even Steamboat Springs, where running shoes and Tevas, not steel-toed work boots, are the norm. Peabody Coal, operator of the Twentymile Mine, between Oak Creek and Hayden, pays three times as much in property taxes in Routt County as Intrawest, operator of the Steamboat Resort ski area, reports the Yampa Valley Data Partners.

Consider effects, if the coal economy vanishes, on the Soroco School District, located south of Steamboat Springs. Peabody Energy provides 45 percent of the school district’s assessed valuation. Union Pacific, which runs almost nothing but coal trains from the Yampa Valley, pays another 5 percent to 7 percent of school property taxes. It also keeps the lights on round-the-clock at Penny’s Diner in Yampa, a town of 429, in case railroad crews need to eat. Then there are the jobs, paying $80,000 to $120,000 for underground miners. Some people commute to hotel and restaurant jobs in Steamboat, but those jobs pay little compared to blue-collar industrial work. The Hayden and Moffat County school districts have similar numbers.

Paul Bonnifield, a historian who lives in Yampa, said the value of his house would immediately drop in value 40 percent to 50 percent if on-the-ropes Peabody Energy closes Twentymile Mine. It wouldn’t be the first setback, though. Oak Creek was founded as a coal-mining town but lost steam when railroad locomotives switched to diesel after World War II.

“I lived in this country when the coal mines went bust in the 1950s and we were part of Appalachia,” said Bonnifield. People of Craig then looked down their noses at Routt County and its coal-miners, he said. “They had ranching and natural gas and gilsonite mining. Now they have a statue of a miner at their courthouse … It’s going to be extremely hard on them.”

CLEAN COAL: AN OXYMORON, OR ATTAINABLE?

To survive, said Bonnifield, the coal industry needs a cleaner product. By that, he means that carbon emissions must be captured and prevented from spewing into the atmosphere. Such technology exists, but it’s expensive and has not been demonstrated to work at scale. The U.S. government has allocated billions to research, including an experiment conducted adjacent to the Craig Station coal-fired plants, but with little success. Many environmentalists insist that the technology is a dead-end.

Compromise is needed said Bonnifield. “Given the political climate we have today, I don’t hold much hope for that,” he said. “The people in the mining industry, they are going to fight it because it is government regulation, it’s not necessary, and nothing is wrong with (coal). Those who are environmentalists say the coal is killing the Earth.”

In Craig, there’s talk about the need for compromise but no real vision of what it might look like.

“That coal was put here for a reason,” said Mayor Ray Beck. “It is here for our use.” Wearing a black shirt and a black hat, Beck dismissed the Clean Power Plan as regulatory overreach. In this local view, today’s coal-burning technology is the supreme triumph of civilization with no need for further invention. Coal is reliable and affordable, end of story.

But life existed in Craig before the coal-fired power plants were built between 1974 and 1984. Can Craig reinvent itself again? Well-paying blue-collar jobs are hard to replace. Beck muses on the potential for hemp farms. Craig voters in November will also decide whether to adopt a lodging tax, with the money proposed to pursue economic diversification.

Moffat County, like many other rural regions, still has not fully recovered from the Great Recession, Kincaid points out. Moffat County has shed more than 6 percent of its population since 2010 even as Colorado altogether grew 6 percent. “Even the avid environmentalist, I doubt, would want to see 230 people (the number of employees at the ColoWyo Mine) lose their jobs,” said Kincaid, a reference to the Wild-Earth lawsuit.

But even without coal mines closing or the Clean Power Plan being implemented, coal mines in the Yampa Valley have shed 25 percent of employees in the last three years, from 832 positions to 642, according to Yampa Valley Data Partners. Northwest Colorado has broader problems. With an economy so heavily dependent on coal, a fuel losing favor for a broad number of reasons, there’s an undercurrent of anger and helplessness in Craig. People in any number of professions – elevator operators, typewriter repairmen, newspaper reporters – can likely empathize.

Environmentalists have indeed been contemplating career changes for coal miners. State Sen. Kerry Donovan, a Democrat from Vail, whose district includes shuttered coal mines in Delta County, introduced a bill last winter to provide assistance to coal miners. It was defeated by Republicans in committee.

At WildEarth Guardians’ office in Denver, Nichols acknowledges the raw emotions in Craig and admits to tender feelings – but only so far. What Craig needs locally he said, are leaders who will help coal-dependent communities transition to new economies in coming decades.

Of course, change could come quicker rather than just decades. Consider high-flying Aspen. It had a boom stopped in mid-stride when price supports for silver were yanked by the federal government in the 1890s. The quiet years lasted a half-century. Then there’s Mt. Harris. It was a coal-mining town between Steamboat and Craig. The mines closed in 1965. Now, even the foundations have vanished.

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Allen Best

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