Hello everybody welcome to The County Seat
I'm your host Chad Booth. Last week the
Deseret news had a paper sponsored op ed in
their paper about carbon and Carbon referring
of course to the County and its base line
economic driver coal. In the course of that op
ed they ended up talking about the fact that we
need to wake up to the reality that coal is going
to be changing and they were just basically
saying that energy officials in the state should
be looking at re-training people and we did not
think that was a fair conversation so we have
invited to The County Seat for this half hour Dr.
Laura Nelson who is Governor Herbert's energy
advisor and the Executive Director of the
Governor's office of energy and energy
development. Thank you for taking the time to
join us here.
Thank you Chad and I'm glad to be here.
It's always good to have a chat with you.
So last time you and I talked it was just at the
beginning of the Trump Administration and
there have been no appointments made in fact
the moratorium on coal had not even been
lifted so we are a year later down the track
what has changed?
Well definitely from the federal policy level we
are seeing a more favorable outlook on coal. So
it is not just been the coal moratorium but also
we have seen positive movement when it
comes to resource management plans through
the BLM or removal of BLM's master leasing
program that they had initiated and other
things that really were impediments that I think
to advance in coal leasing in particular. We
have also seen a relook at EPA's regional haze
initiatives specifically I don't know if you recall
that EPA rejected the state's implementation
plan for regional haze and that really pertains to
two of our very large power generations
systems. Hunter and Huntington and under the
federal plan which they then wanted to invoke
we were looking at 700 million plus dollars of
new investment for those plans. The state then
basically challenged that as did Rocky Mountain
Power our large investor on utility here in the
state and said they wait a minute the state
came up with a cost effective plan that achieved
what the federal regulations required under
regional haze. So what we have now with the
new administration is a relook at the states
implementation plan as cost effective solutions
so generally from the federal level its good
news right. But we have to look at when it
comes to coal its really about demand and
supply. It is also about costs in revenues. So
let's talk a little bit about demand and supply
just in the energy space generally. What we see
right now is kind of a levelling out of domestic
energy demand partly driven by the fact that
we have changing weather considerations but
overall demand is lower and we have become
energy efficient and in terms of supply we have
new renewables coming on. At the same time
when we look at what is happening in terms of
costs we have fuel prices for natural gas
declining so that means cheaper electricity for
natural gas maybe compared to coal and on the
revenue side for coal they are really seeing
some challenges in terms of what they are able
to get for energy sales for the reasons that we
have mentioned so fuel costs being a driving
factor more renewables being a driving factor
and policy which certainly impacts costs has
moved in a favorable direction and I think it
remains to be seen whether or not it moves up
favorably enough in light of these other factors.
That does address the issue of the commodity
prices. Natural gas has tended to be a little bit
more volatile in prices than coal. We are seeing
this supply thing handled can that volatility
come back to natural gas that might further
make coal a bit more attractive?
Well that is one thing that we always talk about
when it comes to natural gas is really the
volatility in pricing. Long term contracts for
natural gas are still pretty limited because it is a
hard commodity to predict in terms of pricing.
You and I have talked before about the fact that
it's always a risk to put all of our eggs in one
basket when it comes to resources. Today
natural gas makes up about 34% of our energy
portfolio domestically or our electric generation
portfolio coal is about 30% still domestically
renewables about 13% maybe a little less and
nuclear about 20%. We are seeing a changing
mix favorable natural gas profile but I think we
certainly need to be mindful of keeping a
balanced portfolio nationally.
We have consume our first 5 minutes we are
going to take a quick break here on the County
Seat and we will come back and continue our
conversation with Dr. Nelson its always
fascinating to talk to you. We will be right back.
Welcome back to The County Seat we are
talking with Dr. Laura Nelson today and we
have covered the federal and regulatory
environment and I do want to ask one other
question on that we have this reprieve from this
pressure on coal and administrative level but
that could change in 8 years could it not?
Sure.
Does that affect the decision by some to say
let's look at our future power generation by
coal because of that uncertainty.
question. What I was talking about earlier
because when we look at a generation resource
we have to compare the revenues to the costs.
The policy piece is just one part of the costs you
have maintenance and you have the fuel costs
and we have said natural gas is cheap relative to
coal and the emissions profile associated with
natural gas is pretty favorable too compared to
coal. This does not mean that coal is bad just
different. What we need to be doing right now
is an opportunity to take that message about
coal and the environment being incompatible and
continue on this path of talking about coal as
part of the all of the above energy mix can
actually drive environmental enhancements. In
fact there were some reports that came out
recently that were paired by the National
Energy Technology Lab in 2015 that had not
previously been released and one of the things
it talked about was the importance of
innovation in the coal space continuing to drive
the efficiencies in coal and the environmental
improvements in coal because we are going to
need that as part of an overall robust energy
mix. Back to our don't put your eggs in one
basket.
Exactly. So do you feel from your perspective
that there is in that spectrum some
improvement that can still be made as far as
coal and its environmental impact?
Absolutely. Utah and I shared this with you
before has very efficient power plants top 3 in
the country I think ways we can continue to
learn better use coal generation are already
taking place one has to do with ramping how
we can move coal fired generation up and down
to move with new resources like renewable
resources come on so that is one thing that we
can do and one thing we are seeing occur and
they act more like a natural gas plant makes
them more completive perhaps for the long
term with natural gas. Also I do not think we
are given our best effort nationally to carbon
capture and ultimately sequestration
technologies we have just spent probably close
to a decade not investing in coal innovation as a
nation so I think there is bandwidth that we
have not realized yet so I think it's time to focus
on that compatibility between coal and the
environment.
comes to my mind is coal burning and spewing
old black smoke from the movies from the 30's
well there is one application for carbon and the
other I see carbon fiber and I see all these
technologies coming out that carbon capture
does it have an afterlife?
Maybe I will address this in a couple of different
parts. One is we have seen a lot of coal
retirements in the last few years with most of
them occurring in 2015 and 2016 but we have
to remember that our coal fleet is pretty much
the oldest fleet in the country so these were
those older smaller less efficient maybe not as
environmentally sound facilities. Most of those
are retired in 2015-16.
Like the Price plant in Castledale, Carbon
County.
Sure you know there are still some retirements
on the books through about 2020. It remains to
be seen whether all of those retirements occur
or not but remember we are already dealing
with an older fleet. It is natural for innovation to
come in and replace that older fleet. That's
okay so the black smoke is definitely a thing of
the past and absolutely want to highlight that
what you see can bring out of coal plants today
really is steam. So I think it's important to say
that. Back to the innovation piece if we look at
carbon capture and sequestration carbon
capture there is already a use for that captured
CO2 in commercial operations so there is
already a market and we can continue to look at
infrastructure and build up for enhanced oil
recovery or for other uses in manufacturing for
that CO2 that is in fact captured. If we are
looking at longer term if we have a sequester
the carbon that is something we have to
continue to evaluate what does that look like
over time and what are the best places for that
long term sequestration to occur. So I hope the
three general parts of your question. Let me
know if I missed anything.
We have done well we are going to take a break
because the half hour just evaporates and we
will be right back in just a minute.
Welcome back to The County Seat we are
talking with Dr. Laura Nelson from the
Governor's office of energy development. We
left on the note of innovation and uses for coal
and part of that obviously is rare earth minerals
that are in high demand particularly for some of
the other sources of electricity generation that
also can come from coal. You brought a show
and tell today.
I did I want to give you this gift advancing Utah
coal. This is a report that the office of energy
development prepared and released last year
and I have to say we did not do it in isolation we
always do it with our partners we also worked
with Carbon County to establish the advanced
coal research group that were involved in the
development of this report one of the key
things that Utah is doing to drive continued
utilization of coal as I mentioned is part of the
overall all of the above energy mix that is
important for energy and the environment is
looking at how we can continue to be
innovative. We have carbon capturing,
sequestration technologies that have been
developed right here in Utah that are
continuing to progress and looking at pilot
scenarios we have opportunity for coal to
liquids technologies and we have also have a
couple that you may not think of if you are only
focused on the energy side of coal one is
converting coal into carbon so carbon fiber and
one is extracting rare earth minerals from coal
so coal to carbon is important as we look at our
overall energy mix because carbon creates
lighter materials so a car built out of carbon is
going to be a lot lighter than a car built out of
steel and it is going to be more energy efficient
so it's a win win.
That's true it is a win win.
Wind and solar definitely use a lot of rare earth
minerals and those rare earth metals are
typically found in Asia most of them in China
and the extraction process around the mining of
these rare earth minerals is not environmentally
neutral there are definitely some impacts. So
just like with anything we need to look at how
we can diversify our access to those rare earth
minerals in Utah we are looking at how maybe
coal can serve as a source of rare earth minerals
which would one help diversify impacts and two
help to increase the security of access to those
materials.
Right.
I do want to talk about the reliability coal factor.
I had this thought come to my head how many
power supply sources could easily be disrupted
in creating electricity for the grid and to me coal
plants are the only place where I see fuel on
ground ready to go in the hopper. Can you
address for us.
I think that the concern over fuel disruptions or
fuel volatilities not misplaced. We do need to
look at how are we going to insure reliability or
reliance over time especially as we see them
more of these intermittent resources come on
so let me talk about reliability and the context
of how we move electrons around. We need
transmission lines to do that and we have found
it takes a long long time to build transmission.
So as we continue to see those transmission
projects delayed there is a chance we will see
more congestion in what I will call the pipeline.
Because if you are relying more on the natural
gas to back up those intermittent resources
locally you could start to see some real
congestion in pipelines that is just my opinion. I
think real term real time that is an issue that we
are going to have to address I think your bigger
question is really around emergency scenarios.
How do we plan when it comes to reliability
resiliency in the face of an emergency and that
goes back to the need for the all of the above
resource mix and I think Utah demonstrated
that that mix can be affective in providing
resiliency and also reducing greenhouse gases.
In fact we have reduced our greenhouse gases
by 14% since 2008 and we have done it with
coal as part of the mix and we have also done it
without mandates.
Wow, that is impressive that leads me to
another thing while we have this reprieve we
have an opportunity to promote some of these
voluntary things that usually tend to get better
outcomes than required things that causes to
cut back. How does that fit into this mix?
We think that market based incentives really
work and I think that is demonstrated by the
Utah approach we are continuing to see
significant economic growth and so that
greenhouse gas reduction number in terms of
our electric generation mix we have realized
even as our economies continue to grow.
Growth may slow a bit but we are still a growing
economy and so we are going to want to
achieve our environmental goals our energy
goals while keeping energy affordable and that
is one thing that we have done here in Utah and
you can compare Utah to let's say California
where they have had very aggressive
greenhouse gas goals and I think you put our
accomplishments next to theirs and we have
been very successful. I think their reductions
would be in the neighborhood of about 20%
and they are debatable numbers since 2000 and
we are 14% since 2008 both very robust
economies growing economies but their
electricity rates are double give maybe just a
little bit compared to Utah rate so Utah is doing
it at the same time we are keeping energy
affordable.
So basically saying if I have a $70 electric bill at
my house and my house in California it would
be $140 a month.
Yes, pretty much.
Wow.
Depending on the time of year it might be
more.
break right here and going to add a bit to our
last I have a couple of question I want to save
and it will take some time to answer them so
we break early here and be back in just a
minute.
Welcome back to the County Seat we have
been talking about coal and its future in Utah.
We have a few counties that heavily rely on
coal it's been a part of their traditional
economies and these are the ones that the
Deseret news said wake up guys and figure out
something else to do being Carbon, Emery and
Sevier. Those are our coal economies in the
state is there any chance that we can clean up
coal technology and find some way of
proving its value in the next decade while we
have a favorable administration that there
could be new coal power plants that come on
line.
Well that is a tough question. It takes a long
time to plan a permit a coal plant. And you
need the investors there to do it. I would say
one of the biggest challenges right now is we do
not see dollars attracted to investing in new
coal plants. I think one goal that we can
achieve is retention of our current existing
efficient coal fleet and that is going to be
important for resiliency within our electric grid
system. There are ancillary service I will call
them that are provided by coal plants there are
also provided by hydro facilities that are
difficult to realize as these plants go away and if
we do not retain them we are going to see
higher prices period. In fact the reports I
mentioned by the national energy technology
lab already indicated that that is one I think
focus on retention of our very efficient cost
effective plants today. As far as economies go
we are coal has been a main stay of
development and growth I think that we need
to continue to look for the opportunities for
those coal resources and including exports you
and I have discussed that exports are up from
the US 60% in Q 1 of 2017 compared to the
same period in 2016 so global demand for coal
is still there so let's also work on figuring out
these export opportunities and we have seen
resistance at some of our ports I think there are
opportunities there and we have met recently
even with folks from Sichuan province in China
they came here and toured and met with
industry to talk about advance coal those
opportunities are real and those are the things
we can sort through.
Is there a possibility that we can export our
technology alongside of our coal?
Absolutely.
Perhaps improve the overall picture of coal as I
know that other places are not generating the
way we do.
Absolutely it's a combination of great
technology and really good coal that is going to
lead to the win win win for our energy our
economy and the global environment.
Okay very good do you think people are
generally misinformed about coal in Utah? The
general public the folks that may watch this
show?
I think it's a mix bag. Some people have a good
understanding of the value of coal and some
people do not have a full set of facts.
How do we fix that?
We continue the conversation and keep talking
about it.
Does this report have some of that conversation
in it?
I think so folks can go on line and take a look at
it energy.utah.gov/publications.
Excellent thank you so much for taking the time
with us today it's always a pleasure to talk to
you and find your conversations very
enlightening. Coal is still part of the picture and
give a shout out to Carbon county we still think
you have a good future in coal and obviously
the state seems to be taking it seriously and
trying to help you accomplish that. Thank you
for watching they County Seat and joining us
catch us on social media like us on Facebook
and we will see you next week on the County
Seat.
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