After years of almost unimpeded progress supplanting coal as the premier fossil fuel used to create electricity, war and weather have revealed some of natural gas’ weaknesses and provided an opening for Indiana’s small but politically connected coal industry to regain its primacy.
Now, lawmakers are using claims of reliability, affordability, national security and even freedom to pass legislation with dubious benefits to Hoosiers but clear benefits for the coal industry.
AN OPENING FOR A COAL COMEBACK?
Coal-fired steam was first used to produce electricity beginning in the 1880s, but major discoveries of oil in the U.S. led to coal being replaced as the country’s main energy source in the first half of the 20th century.
The use of coal increased again in the latter half of the century, but mainly as a primary energy source for electric power generation.
Coal contains naturally occurring toxic chemicals and heavy metals that are concentrated in ash when coal is burned for fuel. Coal ash contains arsenic, lead, mercury and many other toxic substances that can damage every organ in the human body. Burning coal also releases large amounts of carbon dioxide, the main cause of climate change.
Demand for coal use for electricity peaked in 2007 but declined for most of the 2010s, with natural gas gaining primacy as the most used fossil fuel for creating electricity due to its low price and comparatively low carbon dioxide emissions. Utilities in the U.S. began planning for the retirement of coal-fired power plants, with 23% of the country’s total coal-fired capacity planning to retire by the end of 2029.
But low supply of natural gas brought natural gas prices to a 14-year high in 2022. The increase is attributed to low production in the U.S., as well asRussia’s withholding of gas shipments to some European nations in response to sanctions for its invasion of Ukraine.
Higher natural gas prices and low supply contributed to the poor showing of natural gas-fired power plants across several regional electrical grids during the deadly Winter Storm Elliott in Christmas 2022. More than 100 people died as a result of the storm.
The PJM Interconnection, which provides electricity to eastern Indiana and 12 other states, and other regional grids suffered massive electrical outages due to plant shutdowns caused by bad equipment and inadequate fuel supply.
Natural gas plants made up 70% of the PJM outages, 16.5% were coal-fired power plant failures and about 13% were failures from a mix of nuclear, oil, wind and solar energy sources. Similar outages happened at utilities serving the Tennessee Valley Authority, the Electric Reliability Council of Texas and the Northeast Power Coordinating Council.
Indiana’s lawmakers, seeking to “improve reliability,” have introduced several bills that would aid the state’s coal industry.
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Senate Bill 9
“Electric Service Reliability”
Authors: Sen. Jean Leising, Sen. Eric Koch, Sen. Susan Glick
The bill would require utilities that decide to retire, sell or transfer a power plant of at least an 80-megawatt capacity to notify the Indiana Utility Regulatory Commission of its decision to do so if the closure was not already part of the utility’s short term action plan.
The IURC can then deny the closure. If the IURC denies the plant closure, utilities will not be able to submit a new request for 180 days.
Indiana is one of four states with the most coal-fired capacity announced to retire through 2029.
The bill could essentially prevent utilities from retiring their coal-fired power plants ahead of schedule, delaying the transition to less carbon intensive fuels.
The bill’s main author, Sen. Jean Leising, said she wants to keep coal-fired power plants operational until renewable energy becomes more dependable.
“I think that there are so many reasons why we should be concerned about early closures. I don't want any company to retain a unit that is going to cost more than they can possibly get back out of it. You know it'd be like keeping the junker car or the junker truck, and it just doesn't make sense anymore. But the reality is to close early just to be maybe more carbon friendly when your plant still has another five or 10 years… that's probably what I'm trying to get at until we have better battery storage, for instance,” Leising said during the Feb. 23 hearing of the Senate Committee on Utilities.
Coal trade organizations support the bill, saying the bill would help keep the state from relying too much on natural gas.
The bill is similar to a controversial bill proposed in 2020 that would have forced utilities to give the IURC a three-year notice before retiring any power plant. That bill did not become law.
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Senate Bill 292
“INPRS investments”
Authors: Sen. Travis Holdman, Sen. Linda Rogers, Sen. Eric Koch
House Bill 1008
“Pension Investments”
Authors: Rep. Ethan Manning
Senate Bill 292 and House Bill 1008 are part of a nationwide effort by Republicans to prevent financial institutions from considering environmental, social and corporate governance issues, or ESG, when making investments.
Republicans have blamed ESG investing for an alleged lack of capital for the fossil fuel industry, gunmakers and other industries that have traditionally received special protections from them at the state and federal level.
SB292 would prevent Indiana Public Retirement System investment managers and their proxies from investing in financial entities using ESG considerations.
HB1008 would make it so IPRS investment managers and proxies would violate their fiduciary duties if they invest in financial entities that have eliminated, reduced or offset greenhouse gas emissions for nonfinancial purposes. They would also violate their fiduciary duties if they invested in entities that have divested or limited investment in companies that do not commit to environmental standards or disclosures or are involved in the fossil fuel industry.
The bill also singles out gunmakers and associated businesses, as well as businesses involved with U.S. Immigration and Customs Enforcement’s child detention, for protection.
The bill is expected to increase INPRS administrative costs about $5.5 million over the next decade. It is unclear how much the bill would affect INPRS investment returns.
Despite that, more than two thirds of all Republicans in the Indiana House of Representatives, 47 in all, have signed on as co-authors of HB1008.
Coal companies like Indiana-based Hallador Energy Co. have claimed that they have been told they have been denied loans because a financial institution’s CEO has made an “internal ESG commitment.”
Many of the financial institutions accused by Indiana Republicans of “ESG discrimination,” like BlackRock Inc. and Vanguard Group. Inc, have invested heavily in coal and other fossil fuels for years.
Republicans at the federal level have successfully passed anti-ESG legislation, attempting to roll back a Biden administration rule that would simplify ESG investing in private sector retirement plans. President Joe Biden has said he will veto the bill.
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House Bill 1007
“Electric utility service”
Author: Rep. Ed Soliday
House Bill 1007 would require energy decisions made in the state to officially account for a handful of considerations, including reliability, affordability, resiliency, stability and environmental sustainability.
The bill would also require electric utilities to have a plan to be able to produce or purchase 85% of its peak energy demands.
The bill, along with other legislation, could be used to justify delaying the retirement of coal-fired power plants due to increased natural gas prices and other factors.
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House Bill 1417
“Utility deferred costs and accounting practices”
Author: Rep. Ed Soliday
House Bill 1623
“Administrative rulemaking”
Author: Rep. Steve Bartels
House Bill 1417 would allow utility companies to charge their customers directly for, among other things, the future costs for coal ash cleanups.
House Bill 1623 would prohibit the Indiana Department of Environmental Management from making any rules for a proposed state coal ash permitting program that are more stringent than federal regulations.
Neither bill directly benefits coal companies, but the bills lessen the disincentives for continuing to use coal for electricity.
Rate increase proposals submitted to the IURC in 2022 by the Northern Indiana Public Service Co. and Duke Energy Indiana ask to recover coal ash cleanup costs as a capital expense, essentially allowing them to make a profit off the cleanups paid for by customers. If HB1417 is made law, more companies could do the same.
If the U.S. Environmental Protection Agency approves the state of Indiana’s proposal to establish its own state coal ash permitting program, companies could most likely depend on regulations that force companies to do as little as legally possible for the cleanups.
All of the bills mentioned in this article have been passed by the Indiana House of Representatives and are now being considered by the Indiana Senate.