Stephen L. Kass, a lawyer in New York, is an adjunct professor at Brooklyn Law School and New York University’s Center for Global Affairs and is chair of the New York City Bar Association’s Task Force on Legal Issues of Climate Adaptation.
the Supreme Court’s decision in February to stay President Obama’s Clean Power Plan may lead to a protracted legal battle over aging, unprofitable and environmentally unsound coal plants. But instead of litigating our way out of the problem, there is a simpler solution: The federal government could buy the plants and close them.
The court’s move threatens to not only derail the president’s initiative to curb greenhouse-gas emissions at U.S. coal-fired power plants but also unravel the progress that the United States and 195 other nations made on climate change in Paris in December. If the courts invalidate or delay the Clean Power Plan, some climate activists may turn to a Plan B that would encourage enlightened business leaders and states with large coal plants to support a voluntary version of the Clean Power Plan. But such an effort would be even less effective than the complex and overly cautious Obama plan, which at best would reduce power-plant emissions by 15 percent more than what is expected without the Clean Power Plan and would take 15 years to do that — not nearly enough to meet U.S. commitments under the Paris agreement.
There is another alternative — which I’ll call Plan A — that would avoid the considerable litigation risks of the Clean Power Plan and achieve more quickly and with greater certainty a reduction in emissions at least equal to those of the Clean Power initiative. Under Plan A, the federal government would buy or, if necessary, seize under eminent domain all existing U.S. coal plants and close them over 10 years. Such a use of federal authority is well-established and would not be subject to serious legal challenge. (Plant owners could dispute the amount of compensation offered but not the public purpose of federal action intended to protect the environment.) Plan A would include fair, market-based compensation for coal-plant shareholders and generous severance, relocation and job-training programs for employees, who should not be asked to bear the burdens of emissions reductions. Once authorized by Congress, Plan A could be carried out before the legality of the Clean Power Plan was finally adjudicated and long before it could be implemented. Moreover, since Plan A would set a firm deadline for coal plants to close, it would provide a strong incentive for wind, solar and other renewables to replace the lost coal capacity at rates that are already competitive with coal.
Impossible, you say, since a Republican-controlled Congress would never authorize the substantial sum required to purchase (or seize) the coal plants and provide support to their workers. Perhaps, but consider how Congress would react if coal-plant owners and unions supported such a program and urged their friends in the House and Senate to enact it. This is by no means fanciful. As the recent bankruptcy of coal titan Peabody Energy illustrated, coal-plant owners and institutional investors, as well as their lenders, are locked in to deteriorating assets that are losing the competition against natural gas and renewable energy sources — and facing increased regulation of pollutants independent of climate change initiatives. These parties might welcome a graceful exit from coal. Even unions, faced with declining jobs and wages in the coal sector, might support a well-financed and carefully designed program to enable workers to pay off mortgages, car loans and medical or college bills and prepare for a more productive future in other energy-sector jobs.
The benefits of Plan A would likely exceed its costs. Although it is not possible to estimate accurately the total cost of acquiring all of the several hundred currently operating coal-fired power plants, the Environmental Protection Agency has estimated the net benefits of the greenhouse-gas reductions under the Clean Power Plan at between $26 billion and $45 billion by 2030, not counting the substantial public-health savings from reducing coal plants’ toxic emissions unrelated to climate change. Plan A would achieve these same benefits, only faster and with more certainty. Such savings should go a long way toward making it feasible for the government to purchase or condemn the plants, which are typically almost 40 years old, fully depreciated and only marginally profitable under current and foreseeable market conditions and environmental requirements. Moreover, because Plan A would compensate private owners for the market value of their plants, it would avoid conservatives’ claims of excessive regulation without compensation.
Plan A would permit the United States to fulfill its Paris commitments on a timely basis and insist on similar levels of compliance by other nations. And Plan A could do this while avoiding protracted litigation and uncertain implementation of the Clean Power Plan, helping investors escape the declining value of their coal plants and providing meaningful benefits for workers who are asked to change careers as part of our nation’s commitment to a livable global climate.