ADAPTING TO COAL PLANT CLOSURES: A FRAMEWORK FOR UNDERSTANDING STATE RESISTANCE TO THE ENERGY TRANSITION.

• Author: Righetti, Tara

1. INTRODUCTION 958 II. THE DECLINE OF COAL GENERATION 960 III. SOCIAL AND ECONOMIC IMPACTS OF THE ENERGY TRANSITION 962 IV. COMPARISON OF ENERGY TRANSITION POLICIES IN THE ROCKY 964 MOUNTAIN REGION A. Compel: Policies that Accelerate Long-Term Industrial and 965 Energy Transitions 1. Industrial Transitions and Economic Development 965 2. Securing Markets for Renewable and Low Carbon Energy: 967 Renewable Portfolio Standards B. Ease: Economic Policies to Address Short-Term Impacts of 969 the Energy Transition 1. Securitization 970 2. Just Transition Policies: Workforce Redevelopment and 973 Local Impact Support C. Resist: Economic Policies to Resist the Transition and 975 Preserve Existing Markets V. UNDERSTANDING ENERGY-TRANSITION RESISTANCE IN WYOMING 980 VI. CONCLUSION 990 I. INTRODUCTION

   Throughout the United States, coal-fired power plant generation (coal plants) are rapidly retiring or announcing plans to do so. (1) Significant additional retirements are anticipated through 20 25 (2) as a result of shifting social, political, regulatory, and economic conditions. (3) Although core to decarbonization policies, early coal plant retirements pose significant impacts to states, ratepayers, and communities with resource-dependent economies. (4) Coal plant retirements may result in a variety of social and economic challenges. These challenges include managing the residual economic value of coal plants that have been retired early; economic redevelopment of coal assets and the communities where they are located; and significant declines in tax revenue, job losses, and workforce displacement and retraining. (5)

   Faced with ongoing coal plant retirements and, in some instances, the closure of coal mines, states have adopted a variety of approaches to address the economic and distributive impacts of coal asset retirements. (6) These policies are aimed at transforming state economies, workforces, energy markets, and communities. (7) Policies may intend to accelerate the transition to renewable and zero-carbon electricity, ease local and statewide impacts of the energy transition, or resist the transition through policies designed to defer retirements and avoid detrimental impacts to state and local economies. In each case, state policies reflect a series of choices that consider the interests of ratepayers, utility shareholders, impacted communities, and other stakeholders.

   While the forces motivating the reduction of coal in the national generation fleet are common, the responses among states can be quite different while rationally motivated. This Article examines the policy responses to the energy transition in the four states along the eastern edge of the Rocky Mountain region: Colorado, Montana, New Mexico, and Wyoming. Each of these states has coal assets that are slated for early retirement and economies that are supported or even dependent on, to a greater or lesser extent, resource extraction as well as generation. (8) Legislative responses are tailored differently depending upon the anticipated positive or negative economic impacts predicated to result from the energy transition. This Article categorizes and differentiates these approaches as those that compel, ease, or resist the driving forces of energy transition at play within each state. In so doing, this Article provides a compelling window into the distributive impacts of the energy transition and the forces underpinning energy transition resistance.

   The closures and retirement of coal generation assets are both pivotal to the decarbonization goals of the energy transition and a consequence of decades of changing social and economic conditions. Part II of this Article examines the drivers of coal asset retirements, including economic competition from other sources, regulatory uncertainty, and climate policy. Part III then provides an overview of the social and economic impacts of early coal asset retirements to workers, communities, utility ratepayers, and, at times, state revenue. These drivers of change and associated impacts have compelled states to enact new energy transition policies. Part IV applies the aforementioned framework to compare and contrast energy transition policies in the four states, categorizing various attributes as either compelling, easing, or resisting the energy transition. Part V examines the underlying drivers of state resistance to energy transition through the lenses of economic analysis and just transition. Part V also identifies state and federal policy opportunities to address the disproportionate impacts of the energy transition in states like Wyoming, where economic impacts resonate well beyond the immediate communities affected and cannot be addressed through community and workforce policies alone.

2. THE DECLINE OF COAL GENERATION

   In response to a variety of economic, regulatory, and policy challenges, utilities throughout the United States have increasingly opted to retire coal generation assets. (9) Over the past decade electricity demand has been lower than anticipated, making competition among energy sources keener. (10) Low natural gas prices and comparably lower costs associated with building natural gas generation facilities have been the primary reason for the decline of coal. (11) Looking forward, renewables pose an even greater threat to remaining coal generation as a result of diminishing operating and construction costs combined with federal and state incentives to make new capital investments. (12) In many parts of the United States, renewables are now the lowest cost form of new generation relative to both new natural gas projects and existing partially or fully depreciated coal plants. (13) As utilities invest in more intermittent renewable generation, coal is additionally disadvantaged as as result of its' limited operational flexibility to adjust output relative to other thermal sources, which undermines the incentive to retain coal assets. (14)

   In addition to market challenges, coal plants are subject to regulatory costs and risks. Following the United States Supreme Court in Massachusetts v. EPA, (15) the Environmental Protection Agency (EPA) implemented a suite of regulatory programs intended to limit atmospheric emissions of GHGs, including C[O.sub.2] from both stationary and mobile sources. (16) Compliance with these programs, and future regulatory mandates, may pose significant additional costs to coal plants. (17) Renewable energy sources do not emit criteria pollutants that are regulated under the Clean Air Act (18) and, thus, do not face the same costs related to post-combustion emission control. (19) As a result, renewables enjoy an additional and unpriced regulatory advantage over existing coal generation.

   Although not a principal driver of early coal retirements thus far, decarbonization policies further discourage continued operation of coal plants. On the first day of his term in office, President Biden announced his goal for total decarbonization of the United States electricity market by 2035. (20) The Paris Agreement, (21) federal tax-subsidy programs for renewable resources, (22) and regional, state, and local low carbon fuel and electricity standards have guaranteed markets for renewable generation and have further encouraged transitions away from coal. (23) Combined with higher operating, workforce, and maintenance costs, (24) utilities across the country have not invested in the construction of new coal plants, (25) acknowledging the economic advantages to retiring coal units, sometimes prior to the end of their economic lives, and replacing their electrical output with energy generated from natural gas, wind, and solar. (26)

3. SOCIAL AND ECONOMIC IMPACTS OF THE ENERGY TRANSITION

   While there are positive environmental benefits associated with the early closure of coal plants, including the reduction in air pollution, negative social and economic impacts often follow as well. (27) As noted by Professor Ann Eisenberg, "[t]he transition to a low-carbon society will have winners and losers as the costs and benefits of decarbonization fall unevenly on different communities." (28) For some communities, particularly low-income and communities of color, the closure of coal plants is often a benefit. (29) For others, coal-fired power plants have provided a stable source of employment and tax revenue. (30) Citizens, local governments, and even states have come to rely upon these facilities as a driving force in their economies. (31) When coal-fired power plants are retired, jobs are lost and tax revenue goes away, causing economic and social impacts, particularly at the community level. (32) The Pew Center of Global Climate Change has found that the negative impacts of economic transitions like the energy transition "are generally manifested sequentially: businesses are usually the first to feel the pain of economic decline, followed by their workers, and then the local communities where those workers live." (33)

   While the United States economy is large enough that it is not impacted by coal-sector job losses, the impact to regional and local economies will be significant. (34) This is particularly true in rural settings where there are relatively few job opportunities for laid-off workers and where it may be difficult to attract and create new jobs. (35) Due to limited access to metropolitan markets and educated labor forces, rural communities may struggle to diversify their economies. (36) Moreover, these communities may be more dependent on coal assets for their general fiscal health. (37) The loss of coal industry equates to the loss of a major employer and taxpayer, which can jeopardize the ability of local governments to provide public services, administer state programs, provide social and health services, conserve the environment, and strengthen economies. (38) These system-wide impacts ripple through communities, constraining economic adaptation by limiting options...