The Case for a War on Coal

Moneybox
A blog about business and economics.
June 26 2013 9:31 AM

The Case for a War on Coal

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President Obama's climate change speech went pretty far out of its way to explicitly say that what he's trying to do is get the United States to burn less coal, but that didn't stop coal-fired politicians like Sen. Joe Manchin, D-W.V., from denouncing the White House's alleged "war on coal." Since you can't actually trick coal industry insiders and their political supporters, I often wonder if it wouldn't make more sense for the administration to get more explicit about this. After all, the case for a war on coal is pretty darn strong.

Above is a 2011 Hamilton Project chart that begins to make the case (the "see notes" proviso on nuclear is weird—what the note says basically is that this bar entails ignoring the possibility of catastrophic meltdown). It shows that the only way to consider new coal-fired plants a remotely plausible undertaking is to completely ignore the social costs of burning the coal. By the same token, simply throwing all my garbage into my neighbor's backyard could look like a cheap and appealing alternative to proper trash disposal if I were allowed to completely ignore the costs to my neighbor.

Existing coal plants are a closer call since the private costs of a plant you've already built are naturally quite low. But we can see quite clearly that phasing out existing coal in favor of new natural gas is a clear winner. It's worth dwelling on that for a moment, since it's actually quite extraordinary for the cost of a brand-new infrastructure project to be lower than the cost of continuing to run what you've already built. The moral of the story here is that if you were able to completely ignore political considerations, the case would be very strong for an aggressive and robust war on coal even if you don't care a whit about renewable energy. And, obviously, if you were to wage war on coal, you wouldn't need to shut down existing coal-fired facilities at random. You'd want to specifically target the ones that are dirtiest (highest social cost) or for whatever logistical reasons are the most expensive to operate (highest private cost), and the gains would be very large. And this analysis was actually conducted with an outdated social cost of carbon estimate. If you apply the new higher standard, coal looks even worse.

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The debatable public policy question actually has nothing to do with how aggressive we should be about waging war on coal, it's about how aggressive we should be about trying to deploy renewables. The price of wind and (especially) solar power has been falling dramatically, which you could read two ways. One would be that the U.S. should spend the next several years waging an aggressive gas-powered war on coal and just wait to shift into renewables gear in five or six years when it's cheaper. Another perspective would be that aggressive deployment of renewables is part of the process of driving the costs down.

Disagreement about that tends to take on a quasi-religious aspect that I find hard to parse. The point, however, is that the case on the merits for a war on coal is pretty overwhelming. No new coal-fired plants should be built, and the average existing coal plant ought to be shut down as soon as possible. There's absolutely no politically plausible schedule for cracking down on coal-fired electricity that would be too aggressive.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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