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Despite Trump Move on Climate Change, Utilities’ Shift From Coal Is Set to Continue

Cassandra Sweet, The Wall Street Journal

Curbs on carbon emissions may be eased, but companies are sticking with plans to invest in power from gas, wind and solar


The Trump administration’s expected move to roll back President Obama’s signature climate-change policy may extend the life of some aging coal-fired power plants, but companies and energy experts say it is unlikely to reverse the U.S. utility industry’s shift to natural gas, solar and wind as leading sources of electricity.

President Donald Trump is expected Tuesday to sign an executive order that would begin to reverse the Clean Power Plan, which would have required utilities to reduce power-plant carbon-dioxide emissions to 32% below 2005 levels by 2030. The order also rolls back guidance from the Council on Environmental Quality on climate change and rescinds a temporary ban on new coal leases on federal lands, a senior White House official said Monday night.

While the action may give a reprieve to some coal-fired plants facing extinction, large utilities say they will continue long-term investments to generate more power from gas, wind and solar, which are being driven by economic as well as regulatory forces. The White House official said Monday that the order is part of the president’s promise to restore the coal sector, but the official acknowledged that merely repealing the regulations wouldn’t bring back jobs.

Cheap U.S. natural gas unlocked by hydraulic fracturing and horizontal drilling has prompted many companies to scrap older coal plants in favor of gas-fired plants, which require fewer workers to operate. Companies are also taking advantage of tax credits for renewable power to build out solar and wind farms, which are becoming more cost-competitive with fossil-fuel generation thanks to economies of scale and advances in technology.

Duke Energy Corp. says it plans to invest $11 billion in natural gas and renewable power generation over the next 10 years, as the company aims by 2026 to cut its greenhouse-gas emissions by 35% from 2005 levels.

That represents a long-term company strategy and isn’t likely to change, Duke Chief Executive Lynn Good said in a February interview. The utility’s power generating mix is now 34% coal and 28% natural gas, compared with 61% coal and 5% gas in 2005. By 2026, it estimates gas will be the dominant fuel, followed by coal, nuclear and renewable power.

“Because of the competitive price of natural gas and the declining price of renewables, continuing to drive carbon out makes sense for us,” said Ms. Good. “Administrations will change during the life of our business and our assets, and we’ll continue to move forward in a way that makes sense for our investors and our customers.”

Southern Co. plans to invest at least $1 billion a year over the next five years in new wind farms. It now uses natural gas to generate 47% of its power, with coal providing 31%, nuclear 15%, and hydropower, wind, solar and other renewable sources 7%.

“Going forward, we anticipate an increase in renewable generation capacity and declining utilization of coal,” said Terrell McCollum, a spokesman for the Atlanta-based utility.

U.S. utilities generated more electricity from natural gas than from coal last year. Power from coal plants fell to 3.4 million megawatt-hours a day in 2016 to supply 30% of U.S. generation, down from 33% in 2015, according to the U.S. Energy Department. Natural-gas plants supplied 3.8 million megawatt-hours daily, or 34% of total power supplies this past year, up from 33% the previous year.

Hydropower and other renewables generated 1.7 million megawatt-hours daily, or about 15% this past year, up from 13% in 2015. Nuclear plants contributed 20%, and petroleum and other sources produced the rest.

Without the Clean Power Plan, however, the Energy Department expects coal-fired generation from existing plants to rise and natural gas-fired generation to fall by 2020, followed by another reversal after 2030 when it anticipates gas will exceed coal again.

The extent of a coal recovery will depend largely on the price utilities pay for gas, which averaged about $3 a million British thermal units last year. The department predicts it will rise to more than $4.50 in 2020, and $5 in 2029.

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