Centrally Planned Energy: Bad for the Economy, Bad for the Environment

Jason Scott Johnston

Economics, United States

Obama's climate policy wrecked coal, and his renewable subsidies hurt efforts to replace it.

On Earth Day, the United States will sign the Paris Climate agreement. In terms of the actual climate policy already implemented by the Obama administration, however, the events of the previous week were much more important. Peabody Energy, the world’s biggest privately owned coal producer, declared bankruptcy, and SunEdison Corporation, the world’s largest solar-energy developer, entered into prebankruptcy negotiations. These bankruptcies are direct consequences of Barack Obama’s climate-change policies.

The Obama administration has relentlessly levied environmental regulatory actions to massively increase the costs and speed the end of coal production and its use for electricity generation.

Following the bankruptcies of Arch Coal, Alpha Natural Resources, Patriot Coal, and Walter Energy, Peabody’s Chapter 11 filing represents the final step in a death spiral in the coal industry that has seen a loss of $30 billion in stock market value and more than thirty thousand jobs.

A similar catastrophic decline has occurred in the coal-fired-electricity-generating sector of the economy. Adding up announced and planned plant closures, the Institute for Energy Research has estimated that utilities are in process of retiring coal-fired electric generating units that once provided over 72 GW of generating capacity, enough to provide electricity to every home west of the Mississippi, excluding Texas.

The fall of coal can, it is true, be traced in part to the rise of cheaper and cleaner natural gas. But there can be no doubt whatsoever that the primary aim of the raft of new Clean Air Act regulations promulgated by the Obama administration was to end the production and use of coal. He promised this in a 2008 interview with the San Francisco Chronicle, saying “So if somebody wants to build a coal fired [electricity generating] plant they can. It’s just that it will bankrupt them.” From the recently repromulgated rule limiting mercury emissions, through the Cross State Air Pollution Rule targeting sulfur dioxide, nitrous oxide and fine particulate emissions, to the Clean Power Plan limiting carbon dioxide, the cumulative effect of Obama administration rules targeting coal-burning electric utilities has been precisely those promised bankruptcies.