FirstEnergy’s Decision to Close Coal Plants is a Sign of the Environment

FirstEnergy Corp.’s decision to retire six older coal-fired power plants with a total capacity of about 856 megawatts is a sign of the times, or a sign of the environment. The plants are located in Ohio and will cease to operate no later than 2020 — a move that the Cleveland-based utility said is prefaced on economics, and that it could not afford to operate the units any longer.

It is getting increasingly costly to run coal-fired power plants, given the array of federal clean air regulations that seek to tap down on emissions. At the same time, the country is awash in natural gas that is both cleaner and cheaper than coal in today’s electricity markets; Ohio, meantime, is undergoing a shale gas boom there in the Utica Shale basin.

The announcement, delivered Friday to FirstEnergy’s investors, marks a bit of a milestone in Ohio: more than 10,000 megawatts of coal-fired units are on the chopping block and ready to retire. That marks nearly 10 percent of all such announcements around the country. Altogether, the US Energy Information Administration anticipates 90,000 megawatts of coal-fired generation to be closed in the United States between 2014 and 2040.

The 856 megawatts to be shuttered in Ohio, though, represents 5.6 percent of the state’s coal-fired capacity, of nearly 15,400 megawatts, says the energy agency.

“For the past five years Ohio has led the nation in coal retirements, and ‘as goes Ohio, so goes the Nation,’” says Bruce Nilles, National Sr. Director of Sierra Club’s Beyond Coal Campaign. The “announcement follows news last week that coal units were retiring in two other coal-heavy states, Montana and North Dakota, and brings the total number of coal plants nationwide announced to retire since 2010 to 238, a whopping 45 percent of all the coal plants operating just six years ago.” 

Another Ohio-based utility, American Electric Power, is going through a similar transformation. Within 10 years, it says that coal will comprise 48 percent of its electric generation portfolio. That’s down from 61 percent.

Certainly, the federal regulations have a lot to do with this trend. But that dynamic was not created in a vacuum. It is the function of consumer demand, advanced technologies and cheaper fuels.

The coal industry and its advocates are reacting by saying that the economic and social benefits flowing from fossil fuels over the past two centuries — a doubling of life expectancy and an 11-fold fold rise in incomes — outweigh any potential environmental costs from climate change.

Those social and economic strides could be made, however, using other, less carbon-heavy fuels. With that, a Harvard University study done in 2011 concluded that the external cost of coal — that amount paid by entities other than the coal or utility companies — is as much as $523 billion a year. Such costs include those related to health care and repairing environmental damages, which will cause lost economic opportunities in other fields.

The lead author, Paul Epstein, said that if the external costs were assumed by the coal industry, the price of the associated electricity would at least double. Instead, those costs are paid by taxpayers, he adds, noting that 70 separate entities were consulted. “We look at the public health burden … All told, the true cost of coal is a third-to-a-half-trillion dollars per year. This is not borne by the coal industry.”

Coal has long powered the country and it will continue to electrify many parts of the developing world. If advanced coal technologies can be commercialized — the ones to capture and bury carbon emissions — then it will have a future, globally. Until then, though, the developed world is searching for cleaner fuels and at least the United States has found a plentiful and reliable one in natural gas.