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Mark Trahant
ICT

These are thorny questions. What do tribes do now with their coal? What about the country? And what’s the best transition plan that will preserve at least some of the best paying jobs in rural communities?

Globally, the stage is set. The United Nations has been clear about the need to “dismantle coal infrastructure” and phase out that fossil fuel over the next eight years.

“The only true path to energy security, stable power prices, prosperity and a liveable planet lies in abandoning polluting fossil fuels, especially coal, and accelerating the renewables-based energy transition,” UN Secretary-General António Guterres said in Australia this month.

In other words there is no possible route to reach greenhouse gas emission targets unless coal is no longer mined and processed. And not every government, or company, is on board with that notion. 

There are some 25 tribes that have some form of coal reserves, power plants or mines. On top of that the Associated Press reported in 2012 that 10 percent of all U.S. power plants operate within 20 miles of tribal nations, impacting nearly 50 tribal nations.

The shift away from coal is a big story.

Navajo Nation President Jonathan Nez, at a conference on coal transition, called the challenge “unprecendented” and it’s coming faster than anyone expected. “We would like to continue our role as an Arizona energy generator,” he said, “but through the renewable energy projects that will make our shared clean energy future possible.”

The problem is how does a government unwind its current coal operations – and the jobs that it provides. And just as important: What resources are available to make that transition work?

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At a hearing in Kayenta Tuesday President Nez asked the Arizona Corporation Commission to support the Just Transition agreement with Arizona Public Service that includes $100 million for economic development for those impacted by the closure of the Navajo Generating Station last year. The commission is holding four public hearings on the reservation.

A news release from the tribe says the $100 million would be paid over a decade and go toward general economic recovery, plus an additional $10 million dollars for electrification efforts on the Navajo Nation, and a promise to purchase 600 megawatts of renewable energy. The deal also calls for jobs for those workers willing to move to other power plants.

Nez asked the commission to approve the agreement as soon as possible because inflation is already decreasing the value of the $100 million.

Then even $100 million is a fraction of the economic activity being lost. A report in 2019 by the Institute for Energy Economics and Financial Analysis said the Navajo Nation would have to cut spending by 23 percent of its full fiscal year funding because of the closure of the Navajo Generating Station. The Hopi Tribe had to make even deeper cuts because 85 percent of its public-service budget was based on coal operations.

A key finding from that study: “Importantly, the federal government helped create NGS through spending programs and policy moves that underwrote construction of the plant and creation of the mine at a time when coal-fired electricity generation was growing. Now, with the pending shutdown of the plant and the mine, the federal government can and should play a major role in the regional transition away from coal and could even use the Hopi-Navajo situation as a springboard for a national coalfield reinvestment initiative.”

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There are a lot of reasons why the United States and other governments should be investing in this transition. A June 1 report by the International Monetary Fund says there is a significant cost-benefit because coal emits roughly 2 times as much carbon into the atmosphere per unit of energy production as natural gas, and roughly 1.5 times as much as oil. “On this basis alone, a cost-benefit analysis would indicate that it is most economically efficient to begin the energy transition by phasing out coal,” the report said.

What if $100 billion was set aside for the transition? The report cites two reasons why that should happen. First, it would finance green energy and second, it would compensate local economies that are now reliant on coal.

Nez, in an interview with ICT, went through the numbers. “You know, with the closure of the Navajo Generating Station, a coal fired power plant on the Navajo Nation, was providing power to Southern Arizona, Los Angeles as well.” That demand is slowing because power companies are more interested in buying renewable energy. That’s also impacting the Navajo Nation with plants in New Mexico, as well as the source of the coal in Black Mesa.

“So once the generating station closed, the coal mine had to close,” Nez said. “And so how do we [replace] the $30 to $50 million that was coming into the nation? How do we bring in new revenue?”

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One answer is renewable energy. The coal industry has another answer, business as usual.

‘Energy reality’

Not everyone agrees that coal should be retired as an energy source. Betsy Monseu, the chief executive officer for the American Coal Council, writes in the 2022 magazine that coal is energy reality. She complained about a recent Senate hearing looking at energy options. “Should we be surprised that coal received little mention?” She asked, then later answered in the context of gas versus coal. “This is disappointing and concerning as it seems to disregard coal’s leading global role in power generation and the importance of coal-gas market competition.”

But that global view also clearly calls for an end date. As the International Energy Agency recently reported: “All scenarios that meet climate goals feature a rapid decline in coal use. It is the most carbon-intensive fuel, predominantly used in a sector – electricity generation – where renewable energy options are the most cost-effective new sources in most markets.”

Indeed it’s because there are other options available that most utility companies are refusing to even purchase power sourced by coal. (Over the past decade more than 50 coal companies have gone into bankruptcy because of this shift.)

The latest was last week: Idaho Power announced it would speed up its shift from coal by converting a plant in Wyoming to natural gas. The move is six years ahead of schedule. The company says: “We have plans to end all participation in coal plants by the end of 2028.”

This is the new normal.

Sometime soon the U.S. Supreme Court is set to decide West Virginia versus the Environmental Protection Agency. That case will review the power of the EPA to regulate carbon pollution from power plans, focusing on how much authority that Congress delegated.

Conservatives argue that Congress must explicitly give the government agency the authority to regulate on issues of “vast economic and political significance.” A ruling against the EPA could impact other government agencies, and make it even more difficult for the United States to take actions to limit greenhouse gas emissions.

“Specifically, if investors and utilities believe, as the D.C. Circuit has said that the EPA has the power to impose emission reductions,” West Virginia argues, it “will naturally favor renewable and natural gas facilities, which will inevitably result in reduced utilization and, eventually, retirement of coal-fired generation.”

But in some ways that case is about the past. Global markets, and power companies in the United States, have already moved on. Especially when it comes to coal.

The International Monetary Fund makes the case for a significant investment to leave coal in the ground. “The ‘social stranded asset value’ is large and positive when the resource is left unexploited, but negative when exploited, the opposite of how fossil fuel reserves are currently valued,” the fund’s study found. And money spent on energy transition costs “are not a handout; they are an investment with an enormous social return that far exceeds the cost.”

It’s market forces that could impact tribes as coal owners. The value of reserves will continue to decline, and in the case of the Navajo Nation, the idea of stranded assets. The Navajo Nation owns Navajo Transitional Energy, the third largest coal producer in the U.S. The coal company employs some 1,400 people and ships more than 50 million tons of coal per year from the Navajo Nation, Wyoming and Montana.

“Of course we have not totally closed the door on using coal. I'm sure many others are the same. You never know the future. There may be better technology, updated technology, that we can use coal,” Nez told ICT.

He said other nations, like China, are still burning coal. "You know, if, if there's a way that we can transport it, maybe south into Mexico, and out those are opportunities that, of course we're, we're looking at."

Nez said there is also the opportunity to develop a reclamation projects or perhaps explore the use of so-called clean coal technology.

“But what we're trying to do is develop a transition, you know, right. And to let others know that you can't just close a power plant just like that.” The challenge he said is to keep the revenue stream, find money to retrain workers, and then make the transition from “closing a power plant to something more greener.”

Indeed one asset the Navajo Nation has is access to the grid. The green energy that is developed can be transported to markets in Southern California and even Texas.

“We've been having a large discussion about renewable energy projects,” Nez Said. “We have two solar farms on the Navajo Nation, a hundred percent owned by the Navajo people, managed by the Navajo Tribal Utility, and we are looking at other solar facilities on Navajo because there's a high demand all around us for clean energy all the way into Los Angeles. And so we are embracing this change.”

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Mark Trahant, Shoshone-Bannock, is editor-at-large for Indian Country Today. On Twitter: @TrahantReports Trahant is based in Phoenix. The Indigenous Economics Project is funded with a major grant from the Bay and Paul Foundations.