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Coal May Be Suffering but Corporate America Will Do Just Fine

Just before Donald Trump was about to begin his one-day tour of Appalachia and promise the return of coal jobs, the 100,000th megawatt of coal-fired power was retired, all since 2010. That’s according to the Sierra Club, which said that Dynergy Corp. put the nation over that threshold.

Environmental managers can only sit back and watch the phenomenon. The reality is that they are more than likely buying power from utilities that are burning natural gas to generate electricity. Or they are generating their own juice on site that is possibly distributed through a localized microgrid.

“We are taking advantage of natural gas’s current low prices and lower emissions,” says Jeri Matheney, spokeswoman for Charleston, W.V.-based Appalachian Power, which is a unit of American Electric Power, in a talk with this reporter. “In fact, with gas so low right now, we’re using our gas plants much more than we thought we would a few years ago.”

As for Appalachian Power, which does business in West Virginia, Virginia and a tiny slice of Tennessee, coal had provided 74 percent of the electricity in 2012. It’s 60 percent right now and it is expected to be 53 percent in 2025, when wind and solar will provide as much power as natural gas at roughly 16 percent.

Nationally, American Electric Power — the owner of Appalachian Power — has retired roughly 5,750 megawatts of coal-fired generation. Duke Energy, FirstEnergy Corp, Southern Co. and NRG Energy. are making similar moves. Nearly 18,000 megawatts of coal was retired in 2015, according to government data.

Even without the Clean Power Plan that limits carbon emissions, coal retirements would come to about 40,000 megawatts in 2040. It would be more than double that if the plan passes legal muster, the government estimates.

As for Dynegy, it just said it would close 1,835 megawatts in Illinois, later this year. All told, it will retire about 2,800 megawatts in that state.

“This is a difficult decision, and we don’t take it lightly. For 40 years, the employees of the Baldwin and Newton Power Stations have generated reliable and affordable power for the people of Illinois,” Dynegy CEO Robert Flexon said in a statement

Natural gas is not the only beneficiary of coal’s woes. So is solar, whose installations have grown from 1,200 megawatts in 2008 to 27,000 megawatts now, according to the US Department of Energy.

The wind energy industry, meanwhile, points to a different U.S. Energy Information Administration analysis that says the wind sector will, by far, play the biggest role in fulfilling the objectives of the Clean Power Plan: about 57 percent of the compliance mix, although the resources will be distributed in geographies where wind is abundant — but where carbon reductions are most needed.

While the Obama administration’s Clean Power Plan is stuck in legal limbo, there’s a good chance it will make it out. All of those developments — the retirement of coal and the implementation of renewables — should be viewed, in part, in that context. As such, companies will either be forced to get cleaner — think manufacturing — or they will want to generate goodwill, and take steps to be greener. And if the nation’s utilities are burning cleaner fuels, it creates momentum.

This does not bode well for the coal sector. And it will not allow Donald Trump to keep his vows to people of Appalachia. But it will help corporate America, which means that it will help everyone else.

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