A couple of years ago, I was reminiscing with one of the most-tenured legislators in North Dakota about the history of the lignite industry. He told me he was proud of the support he has given to the industry over the years and how the lignite industry has “rewarded” the state with good paying jobs and its relative consistent production of coal and electricity. Many families and landowners have profited because electric utilities and mining companies invested $18 billion to create an industry that provides jobs to thousands in the state. And the taxes paid have helped the state – especially in lean years when crops were poor and the oil industry struggled because of a global glut of oil.
I’ve thought about the industry’s heritage a lot recently since this New Year has begun. A lot of uncertainty and changes seem to lie ahead, as changing market conditions and anti-coal policies encroach more and more on lignite’s place in the energy mix.
The lignite world is not in its current position by accident—billionaire activists, radical environmental groups and leftist politicians have conspired against our industry—but where we can go from here will continue to depend on our ability to innovate and engage with state and local leaders to implement pro-coal policies and program. I think it’s important that we look at the past decade and see how the Council – and its members – have been working to prepare for this day and the days ahead.
It was in October 2012 that the Lignite Energy Council’s Board of Directors formally adopted the “Enhance, Preserve and Protect” blueprint, but the ground-work was being established at strategy sessions even earlier. With President Obama in the White House, the hand-writing was on the wall that “business as usual” wouldn’t be good enough. More investment would be needed for research and development, the focus on government affairs would need to be sharpened on federal regulators – especially the Environmental Protection Agency – and the public relations efforts would be reborn. Partners for Affordable Energy would expire and be replaced with the Coalition for a Secure Energy Future. Its mission would be to earn political capital while focusing on specific audiences.
I arrived on the scene in July of 2013 and inherited a team of veterans both at the Council and our board of directors. Our chief obstacle was the Clean Power Plan, an Obama-era regulation that sought to close half of the lignite industry. Thanks to a lawsuit from the states – including North Dakota – the Supreme Court stayed the CPP in February 2016. In November of 2016, a new president was elected and onerous regulations on the industry began to be repealed.
However, we stuck to our game plan, which included finding an economical method to capture CO2 from existing power plants (Project Tundra) and building a new near-zero emissions coal-based power plant (The Allam Cycle).
Right now, it appears that Project Tundra, which would retrofit Young Station II with carbon capture technology, is further along. Minnkota and their partners are in the midst of a FEED study before a go/no go decision is made. Just last week, after months of prodding from our Congressional Delegation, our members and the LEC, the IRS finally issued guidance on its revised 45Q tax credit, providing additional clarity on what is needed to begin construction. We are clearly miles ahead on R&D from where we were in 2012, and each year we have been able to grow our pot of R&D dollars with the help and support of forward-looking state policy makers.
But implementing new technology is only part of the solution. Electricity markets have been skewed with heavy subsidies and cheap natural gas. Attributes of lignite power, like resilience and dispatchability, are often undervalued in the market. Our Board of Directors has authorized us to join the Midwest Independent System Operator (MISO) and participate as a formal stakeholder in a MISO Advisory Committee sector to provide a strong voice for additional value for coal-based electricity. After several months of labor, the hard work of a coalition led by the LEC was rewarded when MISO’s Advisory Council voted in favor of a proposal to create a new “affiliate” sector, which would provide the organization with unique market perspectives regarding reliability, cost allocation, resource availability and long-term planning. This is an important step forward for the Lignite Energy Council and other companies and associations – such as chambers of commerce, mining companies and trade associations – to having a “seat at the table” during this time of energy transition. Further action is needed by the MISO board and that should occur in late March.
Finally, we’ve also seen the Minnesota landscape become even less favorable to coal—from the NextGen Act in 2007 to the proposed Clean Energy First legislation just last year. We’ve redirected resources and put boots on the ground in the Minnesota legislature to better coordinate and implement wise energy policies for the state, and even begun a Political Action Committee. With the reality being that a significant part of the electricity we generate gets moved into Minnesota, our ability to influence public policy in that state remains critical.
I could go on and provide more details and developments but let me circle back to the conversation with the legislator. I remain optimistic about the lignite industry for many reasons but one of them is the support we have from North Dakota’s elected officials – both at the federal and state level. North Dakota has an enormous 800-year reserve of minable lignite. It is in the best interests of the state and its citizens that we continue to monetize those reserves for the betterment of all.
Lignite is the common denominator that keeps us together as an association. Whether we are utilities, mining companies or contractor/supplier members – we achieve more when we work together.
Jason Bohrer
President and CEO