The Energy Question Episode 54 – Michelle Bloodworth

 

David Blackmon [00:00:05] Hey, welcome to the energy question with David Blackmon, I’m your host, David Blackmon. And here with me today is an old friend, not an old friend, but a long-time friend, Michelle Bloodworth, with who we used to work together on some projects back in the day, and she’s one of the best people I ever worked with on anything.

David Blackmon [00:00:25] And so I was just thrilled to have the opportunity to interview you today Michelle, Michelle is the president and CEO of America’s Power, Trade Association based in Washington that interviewed represents a lot of America’s coal industry. So, Michelle, Welcome to the show.

Michelle Bloodworth [00:00:46] Well, thanks, David. I really appreciate the opportunity and I miss our old times together. And I’m certainly going to make a trip to Texas so we can catch up but I have just as much respect for you as and vice versa. So I’m happy to be here and really looking forward to the conversation.

David Blackmon [00:01:05] Be sure and wait until October or so before you come down here. It’s a little warm right now.

Michelle Bloodworth [00:01:09] Okay. I still remember the rodeo.

David Blackmon [00:01:12] Oh, my gosh. Yeah. Well, the Houston Rodeo Houston Livestock Show and rodeo for folks who don’t know is one of the greatest events in the state of Texas every year. And we have the opportunity, a group of us to go to that many times together and it really was a lot of fun.

Michelle Bloodworth [00:01:31] I’m sure was.

David Blackmon [00:01:33] Well, before we get into the question and answers about what’s happening in the coal sector of the energy space in America, just take a few minutes to talk about America’s Power, what you do, what your mission is, and who your members are.

Michelle Bloodworth [00:01:49] All right. So America’s Power is the only National Trade Association that solely focuses on coal, electricity, and its supply chain. And our members span across the coal supply chain. So we have electricity generators, co-producers, transportation companies, and equipment manufacturers. We advocate both at a federal and state level on behalf of coal electricity. So we only focus on coal electricity, although our members span the coal supply chain.

Michelle Bloodworth [00:02:23] America’s Power was formerly known as the American Coalition for Clean Coal Electricity but we’ve been around for about 30 years, and we certainly support a diverse set of reliable, affordable, and energy-secure resources because we feel like that’s necessary for economic growth and also for national security.

Michelle Bloodworth [00:02:44] We certainly support the grid transition, we support a gradual grid transition, we think we need all resources that includes all fossil fuel, coal, nuclear and natural gas, also wind and solar. But as you know, as we try to electrify the economy, we’re going to need all these existing resources and more and we certainly don’t need to eliminate kind of this administration’s emphasis on eliminating all fossil fuels.

David Blackmon [00:03:14] Yeah, I mean, we’re going to need everything we definitely will need more of everything, a lot more of it to to meet these crazy goals that the administration setting out for electric vehicles and all this other stuff that they’re trying to subsidize into existence.

David Blackmon [00:03:31] I, of course, spent a lot of time reviewing my guest websites and what are the factoids on your website talks about the fact that today the coal fleet generation fleet consists of about 400 units now in 42 states.

David Blackmon [00:03:50] And I’m just curious, what was the size of that fleet? You know, we all know that President Obama started the war on coal back during his first term. What was the size of that fleet before the war on coal generation was begun?

Michelle Bloodworth [00:04:07] So that the coal fleet peaked in 2011, we had about 317,000 megawatts of coal generation, about a thousand generating units. Certainly fast forward to today, we have about 400 units and we’re down to 188,000 megawatts, which is a drop of about 41% of the entire coal fleet.

David Blackmon [00:04:34] Wow. I guess probably the majority of that’s probably been replaced with natural gas but of course, a lot of it also with renewables, wind, and solar. Right?

Michelle Bloodworth [00:04:47] Right.

David Blackmon [00:04:47] But most of it’s been a natural gas generation that’s probably replaced it.

Michelle Bloodworth [00:04:53] Correct. Until probably certainly with all the subsidies for wind and solar. Obviously, the penetration of wind and solar is also increasing, putting pressure on all thermal resources as well because of those subsidies.

David Blackmon [00:05:08] So out of those 400 generation units that exist now, how many are slated to be retired over the next few years?

Michelle Bloodworth [00:05:18] In 2030, we expect 80,000 coal plants to have announced retirement. We track coal retirements very closely, but those are public announcements. But unfortunately, we expect those retirements to be even greater because of EPA regulations that certainly are going to put tremendous pressure on the coal fleet and all fossil fuels, which is why many are talking about how we’re headed for a reliability crisis.

David Blackmon [00:05:52] Yeah. Yeah. And of course, we’ve experienced that quite a lot here in Texas. I think when you and I were working on the project we worked on 12 years ago now, we had something over 30 remaining coal units in the state that were operative at that time and that number has been cut in half. And we haven’t built the needed natural gas capacity to replace it with reliable 24 seven energy. And so we’ve had these experiences the last few years with real severe issues around reliability and there’s it’s really no secret why that’s happening, is it?

Michelle Bloodworth [00:06:36] No, I mean, it really defies common sense it defies the physics but right now our energy strategy is really being driven by buyers’ preferences and wishes rather than realistic considerations. And, you know, in the past, electricity experts and even past administrations, have all recognized the need for thermal generation and fossil resources, including coal.

Michelle Bloodworth [00:07:06] You know, there’s certainly a lot of discussion about the coal fleet there’s a lot of challenges to the coal fleet. But also, even though we support wind and solar, they are intermittent and they’re dependent on the weather.

Michelle Bloodworth [00:07:21] There’s a lot of reasons why we need a coal fleet and again, we support an all of the above, a genuine all of the above. But the coal fleet has a lot of attributes that until we have other technology, maybe someday hydrogen, maybe carbon capture, maybe advanced nuclear, but we don’t have long-duration battery storage.

Michelle Bloodworth [00:07:42] And so we still need resources like coal that have those attributes, you know, coal the coal fleet has high capacity, accredited capacity, 90%, you know, it’s five times more dependable than wind, and it’s twice as dependable as solar because you need five times more megawatts and you still don’t have the same attributes that the coal fully.

Michelle Bloodworth [00:08:07] And like you said, the coal fleet does provide fuel security, so most coal plants have at least two months of on-site staff to help them. And so when you have certainly when we had storm Uri here in Texas and we had just recently had Storm Elliott, the coal fleet was able to help when natural gas supplies were disrupted there were a lot of challenges in PJM that’s the largest grid operator in the United States and an ISO house has the largest amount of coal.

Michelle Bloodworth [00:08:41] And so coal was able to provide 40% of the incremental electricity demand. Certainly when the weather got really, really cold, because it does have onsite fuel, and certainly wind and solar also had their challenges, especially during the 23rd and the 24th.

Michelle Bloodworth [00:09:01] You know, the coal fleet also provides optionality, you know, when either the weather is resources that are dependent on the weather and they’re not available or again, when either natural gas is not available or too expensive.

Michelle Bloodworth [00:09:16] And I would agree with you that, you know, each coal plant that goes away puts more and more pressure on the natural gas infrastructure.

David Blackmon [00:09:24] Right.

Michelle Bloodworth [00:09:24] So coal can also help to complement natural gas until there is adequate infrastructure and certainly we’re seeing a lot of permitting issues and challenges, as many utilities are also saying, well, you know, I don’t I’m getting so much pressure to build renewables, You know, I don’t want to put the money into fossil fuel plants that may not be here, given the Biden administration’s goals of 2035.

David Blackmon [00:09:52] Yeah. And you mentioned long-term storage for solar and wind a minute ago and, you know, we hear a lot I hear it all the time from proponents of renewables, and I don’t have anything against renewables as long as they’re properly managed.

David Blackmon [00:10:11] Talking about, well, you know, if we just back them up with batteries, you know, they can just easily displace thermal energy and nuclear. And but the reality is that right now with technology as it exists, we don’t have long-term storage really of any viable scalable kind for solar and wind, do we?

Michelle Bloodworth [00:10:39] No. And even, you know, Jim Moran recently testified at a Senate Energy Committee hearing. He’s the CEO of NERF. Yeah, he’s responsible for the reliability of the bolt power system. And he made the same comment that, you know, right now we just have for our long duration battery storage and the pace and this disorderly retirement of thermal resources is really elevating you know, two-thirds of the country is at elevated risk of blackout.

Michelle Bloodworth [00:11:08] And he said if these policies also including these environmental regulations, continue and we continue to see thermal resources retiring at a greater pace than we can replace of the same value, the same attributes, essential reliability services, then the entire United States is going to be at elevated risk of blackouts.

Michelle Bloodworth [00:11:33] Also, the U.S. EIA predicted, too, we’ve got about 4000 megawatts of power, you know, short duration, battery storage. But to achieve the Biden administration’s goals, if we’re going to be 100% decarbonized by 2035, we’re going to have to add 350,000 megawatts of battery storage.

Michelle Bloodworth [00:11:56] You know, we’ve seen all of the supply chain challenges, honestly, where China controls a lot of the critical minerals there are challenges with getting those developed here. And again, we just feel like this setting these date certain timelines of given this administration’s goals of 2035, they’re just not realistic and they’re not achievable.

David Blackmon [00:12:20] Yeah and you and I have both been through it in the business world. It’s great to have goals,.

Michelle Bloodworth [00:12:26] Right.

David Blackmon [00:12:26] But in the business world. Management responsible management teams at companies that succeed also talk about the fact that your goals need to be achievable and realistic. And this administration is setting goals that simply are not achievable and realistic, isn’t it?

Michelle Bloodworth [00:12:46] No. And so, you know, there’s a lot of challenges with the grid transition. I mean, just to name a couple of them. So we think about, you know, every recently did a study looking at if we’re going to completely achieve net zero by 2035 and the power sector, we’re going to have to add a million megawatts of wind, solar and battery storage, a million the size of the entire U.S. electricity generation.

David Blackmon [00:13:18] It’s just laughable a lot.

Michelle Bloodworth [00:13:20] And that’s going to cost $1,000,000,000,000. I mean, who are consumers really ready and willing? Do they really understand that that’s just generation, you know?

David Blackmon [00:13:31] And there’s transmission. Right?

Michelle Bloodworth [00:13:32] Right. We’re going to have to double or triple the cost of the transmission. I mean, that could be another trillion dollars. And so, you know, even with the Inflation Reduction Act, consumers are either going to pay that through their income taxes, you know, or they’re going to pay it in high, extremely, high electricity bills.

David Blackmon [00:13:53] Right. Well, one of the points I make a lot is that the IRA, the Inflation Reduction Act, and the infrastructure law also had a couple of hundred billion dollars in green subsidies. And it is a fact that that law, the IRA, was not fully funding all of this. It was a down payment.

David Blackmon [00:14:13] And to actually fully fund all the stuff the administration’s talking about with subsidies and incentives. You’re going to have to have 20 or 30 more bills the size of the IRA. And that’s according to the most modest estimates of the forecast so it’s just it’s crazy.

David Blackmon [00:14:33] Another thing that’s going to have to happen that’s really relevant to your generation, Fareed, to get just to account for the bigger load that EVs are supposedly going to be putting on the grid by 2032.

David Blackmon [00:14:48] We’re going to have to build out 47,000 miles of new high capacity transmission to get all the generation from these big wind and solar projects to the market centers. And I mean, talk about the challenge in expanding the transmission grid like that.

Michelle Bloodworth [00:15:08] Well, And, you know, high voltage transmission typically takes 15 to 17 years.

David Blackmon [00:15:15] Yeah.

Michelle Bloodworth [00:15:16] In the United States, we build about on average, 1800 miles of transmission so in order.

David Blackmon [00:15:23] Annually. Every year.

Michelle Bloodworth [00:15:24] Besides. Yeah, that would take more than 60 years yet the gold was in less than ten. It’s just not from an engineering standpoint, it’s just not feasible.

David Blackmon [00:15:37] Well, I wanted to. You guys released the video yesterday, and unfortunately, I’m not able to play it here, but I wanted to give you a chance to talk about what the video was about and what you’re trying to achieve with that.

Michelle Bloodworth [00:15:51] Yes, we’re launching a thank you new Edition initiative called Dependable Power First. And we’re really trying to educate and raise awareness, certainly about. The accelerated loss of dispatchable resources is what it really takes to keep the lights on. Again, all resources are going to be needed, but we don’t need to eliminate any of those.

Michelle Bloodworth [00:16:17] I mean, when you think about how many years supply, we’ve got 300 years supply of coal. We probably got over 70 years of natural gas that has made us energy independent. So to me, for this company country to go backward, you know, we need sir, we all can develop technology and certainly we all want to have a clean environment.

Michelle Bloodworth [00:16:39] But we need to do that through technology and innovation, not in regulatory policies that certainly are going to harm this country and make us uncompetitive from a national standpoint and a global standpoint.

David Blackmon [00:16:54] Well, just so everyone knows, by the time you view this, I’m going to what I’m going to do is in the show notes, post up the link to that video so everyone can have a chance to take a look at it. Another thing I wanted to ask you about is this North American Electric Reliability Corporation’s 2023 Summer Reliability Assessment this is a pretty concerning assessment, isn’t it?

Michelle Bloodworth [00:17:22] I mean, it’s a very concerning assessment and it’s certainly we review closely all of NERCS annual summer reliability assessments and have for probably the past decade. And these assessments, the risk is just continuing to grow and grow.

Michelle Bloodworth [00:17:38] You know, Jim Robb recently told the Senate Energy Committee that our assessments are demonstrating that we are operating closer to the edge when more frequent and serious disruptions are likely to increase.

Michelle Bloodworth [00:17:54] You know, even the CEO of myself, 15 states in the Midwest, as you know, I used to work for my son have arrived here. And they are showing capacity shortfall, capacity shortfall. Given what they think they can get through the Q, what their utilities plan to build not only now but through 2040.

Michelle Bloodworth [00:18:16] You know, PJM CEO also recently said that you know, these state and federal policies, you know, he wished that he hopes that, you know, this administration and EPA will make sure that they do reliability analysis they really understand what these regulations are going to do. And they’re also showing a shortfall as early as 2027, or 2028. And that does not take into account the carbon role.

David Blackmon [00:18:51] Another aspect of this and I’ve interviewed several people who are very concerned about it is even if you could feasibly build a transmission, for example, that many miles of transmission. Right now we have supply chain issues that are really gumming up the ability to get these big projects done.

David Blackmon [00:19:09] One that’s just really bordering on a national emergency now is this shortage of transformers, the high capacity, particularly the high capacity transformers that are an integral part of any transmission project. I mean, I’ve had a couple of people tell me it’s taking years in many cases to source those transformers for these projects I’m sure your members are as concerned about it as anyone, right?

Michelle Bloodworth [00:19:39] No, they are extremely concerned and even those that are developing wind and solar, you know, they’re saying, you know, Michele, we’re short of capacity because of supply chain issues related to wind and solar. And, you know, even in PJM, they’re not there their queue is back at 5 to 6 years you know, and it’s been interesting to watch you know, now a lot of people like to say the word coal.

Michelle Bloodworth [00:20:09] But it’s been interesting to watch these grid operators, you know, talk about and really even tell their utilities, you know, guys, this these retirements are just happening at too fast of a pace and we really need to roll back.

Michelle Bloodworth [00:20:22] We have seen about 12 different companies have rolled back retirement dates because of the fact that the shortfall of capacity and also the loss of essential reliability services that gas and coal provide.

David Blackmon [00:20:40] Well, I am talking about coal specifically and the fact that people don’t want to see it because it’s become just like hydraulic fracturing, kind of a cuss word in the energy space. Right. People just don’t want to say it.

David Blackmon [00:20:57] People don’t understand I think very few Americans understand how much cleaner coal generation is today than it was, say, 20 even 20 years ago, really even ten years ago. I mean, talk about how much of the actual pollution that coal plants, the typical coal plant, have been able to scrub out of its operations in recent years with the advancement of technology.

Michelle Bloodworth [00:21:26] I mean, every coal plant is extremely well controlled and coal utilities and generators, I mean, they’ve spent over $100 billion on all types of advanced pollution control equipment. They’re certainly in compliance with all EPA regulations, even on the mining side.

Michelle Bloodworth [00:21:49] I mean, when you think about the supply chain in the mining industry, I mean, that industry is very capital intensive and we need to keep that supply chain healthy. But they’ve invested a lot of money in advanced mining equipment, certainly to reduce the environmental footprint.

Michelle Bloodworth [00:22:06] You know, when I think about all these storms and all these coal miners, they were doing everything they could on Christmas and the day after to make sure that that coal was delivered to that plant. Well, certainly the coal industry supports about 160,000 jobs they’re very good, high-paying jobs. And those workers have a lot of experience and they’re very technology and certainly, they’re all concerned about the environment. But they know that what they do and the importance of coal electricity needs to continue to be a part of this energy mix.

David Blackmon [00:22:38] So one of the big, I think, growth spaces right now, anyway, coming out of the incentives in the IRA is a move by many big companies to move into the carbon capture space. And some people hold out the potential for carbon capture and storage as a means of taking, you know, capturing the remaining emissions that come out of coal-fired power plants. And I wonder what your group how your group views the feasibility of using carbon capture in conjunction with coal generation.

Michelle Bloodworth [00:23:17] Yes. So on. Right now we have four members who are pursuing carbon capture. So we have two coal producers. One of those is looking at a waste coal project in Pennsylvania. Then we have another coal producer who has just been awarded a feed study for the Department of Energy in the West, there’s a Four Corners coal plant it’s an older coal plant that some utilities were trying to close, but it supports, and is a major economic driver for that state and for the community.

Michelle Bloodworth [00:23:53] And so they are pursuing it and then we have two in one in Wyoming and one in North Dakota and we also what we have that we have another one in Illinois. However, you know, one of the reasons why we are strongly opposed to the carbon rule, the Clean Power Plan to point out, is because that technology takes a long time to develop.

Michelle Bloodworth [00:24:20] It has not been widely demonstrated people are pursuing and more support of that. But just one on an average-sized coal plant. That investment is about $1,000,000,000. It typically takes nine or ten years to develop. And, you know, there’s been a lot more investment in wind and solar, say, than in carbon capture.

Michelle Bloodworth [00:24:44] But you’ve also got to have all of the CO2 pipelines you know, you’ve got to be able to have it permitted. Not every coal plant has the geography to be able to install carbon capture. That’s why we feel like we need to let the industry innovate instead of mandate and regulate make certain retirement.

David Blackmon [00:25:02] What a concept.

Michelle Bloodworth [00:25:03] Analogy.

David Blackmon [00:25:07] Oh, and that makes total sense but these politicians don’t seem to have the ability to actually recognize that the people in the industry or the innovators, and they’re the problem. And another thing I write about a lot that I suspect you probably agree with is the fact that everything we’re doing in the United States and we’re doing a great job of cutting emissions and getting pollution, you know, out of our atmosphere, out of our water.

David Blackmon [00:25:36] But everything we do in this emission space is futile unless you can get China and India and other countries around the world to engage in the same kind of process. And so while we’re, you know, attacking our coal fleet here in the United States, China’s not doing that at all. China is actually pretty dramatically expanding its own fleet. Right?

Michelle Bloodworth [00:26:04] Yes. So China has the largest coal fleet in the world and China has added six times more coal capacity from 2010 to 2022 than the U.S. has retired over that same period. So China is adding more than the entire U.S. coldly.

Michelle Bloodworth [00:26:25] And a lot of people don’t understand. I mean, we could retire every coal plant in the United States. And it would reduce greenhouse. Gas emissions less than 1%. It does not have an impact when you’ve got China adding, you’ve got Japan adding coal plants.

David Blackmon [00:26:43] And a lot of other countries too

Michelle Bloodworth [00:26:44] They’re electrifying their economy and they certainly have a lot of manufacturing. And they think it’s important to have coal for affordable and reliable electricity.

David Blackmon [00:26:56] Well, yeah. And it’s been you know, coal has long been the generation fuel of choice in most developing countries because it’s readily available. It’s affordable, it’s scalable very rapidly. And you know, they think you’re going to turn that around in eight or ten years is just.

David Blackmon [00:27:18] And there’s just nothing that’s truly viable universally to displace it and so it’s just the whole thing is just very poorly organized and thought out and I just I’m afraid we’re kind of headed for a bit of an energy crisis in the years to come as we move too fast to destroy the energy system we have without having truly viable alternatives to fill in the gaps.

David Blackmon [00:27:50] But I don’t want to close in a negative light. Okay. We’re running up against time. And as a last question, just talk about where you think we go from here. What do you view as an offer optimistic outlook for the future in the coal space?

Michelle Bloodworth [00:28:12] Yeah, well, coal still provides 20% of the electricity, so it still provides an important mix. We are seeing we work a lot in these wholesale electricity markets and we are seeing market reforms to really value the attributes. MISO identified six coal provides five natural gas provides a lot of those as well, and those are the attributes that the resources that are replacing them do not have. And those are the ones that they’re more concerned not just only now, but into the future.

Michelle Bloodworth [00:28:47] And so we see if those attributes are compensated. That certainly is going to help avoid premature coal retirements. We are also working with our friends in Congress. We don’t feel like the EPA has done a reliability analysis.

Michelle Bloodworth [00:29:06] And so we’re just asking that EPA and that Congress ensure that that reliability analysis with the experts like Nurk and PJM. And so that that’s done before not only the carbon rule, but the five other environmental rules that we feel could cause an unavoidable reliability crisis.

Michelle Bloodworth [00:29:28] But we also there’s a spirit but Senator Barrasso has also introduced on in permitting reform that would ensure that that reliability analysis is done, but also that it would give a timeline and a date certain for these grid operators it’s hard for them it takes a long time to do market reforms because stakeholders all have different opinions.

Michelle Bloodworth [00:29:54] And we think that legislation with date is certain requiring that they identify and value those attributes certainly will help both natural gas, nuclear and coal. And in some ways, to me, it’ll help also develop technology, we hope, like CCS. So there certainly will be a coal fleet in the future.

David Blackmon [00:30:20] Well, that’s good to know we’re going to need it we can’t have energy security without it. I think it’s pretty clear and I can’t thank you enough for being my guest today. Michelle, it’s so great to see you.

Michelle Bloodworth [00:30:30] Thanks, David. It’s so good to see you, too.

David Blackmon [00:30:33] And that’s it for this Episode of The Energy Question. I want to thank the Sandstone group for hosting our podcast, the U.S. Oil Gas Association for sponsoring it, and our extraordinary producer, Eric Parel thanks for all you do. This is David Blackmon signing off for now.

 

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