Legislation aims to strengthen coal industry
Coal industry looks to legislators for solutions
From tax holidays to more research money, legislation aimed at preserving North Dakota’s coal industry is finding some traction in the 2021 Legislature.
This session has seen more than the usual number of energy-related bills, with coal particularly at the forefront. The announced closure by Great River Energy of its Coal Creek Generating Station near Washburn in the second half of 2022 has raised an alarm for the coal industry, which is looking to the Legislature for ways to strengthen coal’s place in the state’s energy mix.
“The state’s primary role in helping protect our baseload generation industry is a combination of regulatory burden and tax policies,” said Sen. Jessica Bell, R-Beulah, who has introduced several energy-related bills. “Regulatory relief or advantage for baseload, coupled with a tax break, is a good place for the state to start in providing assistance. Small changes like these can help reassure we have reliable, affordable electricity into the future. The Clean and Sustainable Energy Future Act is a great start in prioritizing carbon capture utilization and storage technology, lifting it from the testing to commercial phase.”
Bell refers to House Bill 1452, which creates a new chapter in state law relating to a clean sustainable energy authority and a clean sustainable energy fund. The bill was amended in the House Energy and Natural Resources Committee and now is before the House Appropriations Committee because of the proposed $40 million appropriation for the creation of the energy fund.
Rep. Matt Ruby, R-Minot, a member of the House Energy and Natural Resources Committee, supports HB 1452.
“This bill is a great step to continue innovation and best practices across the entire energy spectrum. Membership of this commission includes representation of both fossil fuels and renewable energy to ensure each industry has a chance at these funds. This is an investment into the future of North Dakota’s biggest industry and I believe it will be a great benefit to the state,” Ruby said.
Scott Skokos, executive director for Dakota Resource Council, said his organization is not opposed to the clean coal technologies being proposed but questions their feasibility and whether government money should be used to pay for development.
“We look at some of these bills as kind of last-ditch efforts,” he said. “This is a move by the North Dakota majority party and elected officials to go all-in on carbon sequestration and lower emissions, rather than looking at a future strategy to potentially diversify the energy portfolio of the state.”
DRC’s view is rather than resist change, North Dakota needs to do transition planning for communities to prepare for the day when coal plants close, Skokos said.
“Rather than waiting until the industry is gone to then pick up the pieces and figure out the transition, to start thinking through them now,” he said.
Wayde Schafer, organizer for the state chapter of the Sierra Club, said the concern over HB 1452 is $40 million.
“It’s not clear where this money will go – if it will go to projects that actually promote renewables and alternative fuels,” he said. He has similar concerns about the five-year coal conversion tax holiday in House Bill 1412.
“If we are going to put tax money into anything, it should be renewable and alternative fuels,” Schafer said. “There’s a general feeling in North Dakota that fossil fuels are just fine and we can keep putting all our eggs in that basket. The real danger is that while other states are really promoting renewable resources, clean energy, they are going to have that market sewed up by the time we figure out that’s the way to go in the 21st century. We are still focusing on energy sources that were the mainstay at the turn of the last century.”
HB 1412 provides a five-year moratorium on collecting 60% of the current tax on the conversion of coal to electricity by power plants. Political subdivisions and lignite research would not see their tax collections cut, but the state could lose about $15 million annually in revenue, according to estimates provided by bill sponsor Rep. Jeff Delzer, R-Underwood.
“There is additional work to be done in ensuring that our traditional, reliable sources of energy can compete on a level playing field, but this is a strong first step,” Delzer said about the bill in a joint statement with Rep. Dave Nehring, R-Bismarck, both from District 8, where Coal Creek and Falkirk Mine are located.
HB 1412 received a 13-0 Do Pass recommendation from the energy committee and passed the House 85-6. It now is in the court of the Senate Finance and Taxation Committee.
“This exemption will have minimal effects on the state’s budget, and a large positive effect on the coal industry’s future,” Ruby said. “I believe this is a good short-term solution to help the industry stay viable after the regulation changes that have come from the current (Biden) administration.”
HB 1412 is among bills at the top of the Lignite Energy Council’s watch list.
Jason Bohrer, council president, called it a direct shot in the arm for the economic competitiveness of the coal industry.
“This bill is very much about providing a short-term opportunity to make sure that our power plants are repositioning themselves for the changed economic and energy landscape. So we think it’s a good opportunity,” Bohrer said. “The exciting part for us is that there are opportunities here as well as challenges, but the window is quite small and it’s closing quickly.”
He said those opportunities include carbon capture technology, although the challenge is to make the technology economical.
“And that’s where the state incentives are coming in,” Bohrer said.
“Legislators have recognized that it’s a critical time in the industry and they have to act. But they have to act big this legislative session. We need big solutions,” he added. “Legislators recognize that you can’t just mess around the margins of the industry right now. You need to take a big bite at the challenge and you need to be convinced that the industry itself is willing to make sacrifices and work together and invest in research and development.”
“The hurdles in this session are not as high as they’ve appeared to be in previous sessions,” Delzer and Nehring agreed. “Many in our state, and in our Legislature are aware of the potential pitfalls to our grid, our regional economy, and our state economy, if we continue to kick the can down the road.
“The urgency is real. Traditional energy sources are under attack, grid reliability is becoming more of an issue every day, electricity prices are spiking regularly in areas that haven’t addressed the issues, and the economic stability of North Dakota is potentially at risk,” they said.
Bell, who works as environmental manager for North American Coal Corp., said there is no one way to solve the puzzle the electrical generation and distribution industry finds itself in.
“This situation has been created over decades, impacted by state and federal policies favoring the development of wind and solar generation in the name of ‘renewable generation’ and ‘green energy.’ The time to end those policies have long-since passed, and we find ourselves in a situation now where we need to unwind the distortion in price in the market and develop policies that reassure when it’s cold, as it has been this past week, our electrical generators can be relied upon,” she said. “Any impact our policy has will be a little step in the right direction.”