Less than a month into the Trump administration, Ted Thomas told his colleagues that everything was not as peachy as it may have seemed.
“In the past three weeks, to me as a Republican appointed by a Republican governor, I’m not reassured by the progress the Congress and the administration are making,” Thomas said at a meeting of electricity regulators. “If they don’t get it together, we’re going to have a different administration in four years, and that’s when folks might wish they had the Clean Power Plan.”
Thomas is chairman of the Arkansas Public Service Commission, which regulates the 24 electricity utilities that operate in the state. His quote attracted national attention because it was, in effect, exactly what climate advocates wanted to hear: that the disappearance of the Clean Power Plan would not alter states’ plans to remove coal power plants from their fleets.
This week, President Donald Trump ordered a formal review of the Clean Power Plan, the Obama administration’s most significant second-term climate policy. The Clean Power Plan aimed to cut greenhouse-gas emissions in the power sector by 32 percent by the year 2030 (as compared to their historic peak in 2005).
It was a familiar scene, and likely the one that Americans picture when they think of energy policy. The president—surrounded by smiling coal miners—gave a short speech, sat down at a small desk, and signed an executive order that formally began to dismantle Obama-era federal energy and climate directives. “My action today is the latest in a series of steps to create American jobs and to grow American wealth,” he said.
It’s a scene demanded by broadcast news and future campaign ads. But it’s also a bit of a charade. Especially with the Clean Power Plan now on hiatus, the federal government does not command the nation’s energy policy. The decisions on the ground, the ones about land and cement and steel, are made by power company executives and state utility board members.
They are made, in other words, by people like Ted Thomas.
I talked to Thomas last month in anticipation of Trump reviewing and weakening the Clean Power Plan. “I have a unique position that I think is in the center, that is almost solitary,” he told me. “In that, A, I offered a declaration in support of the litigation against the Clean Power Plan; B, I publicly criticized Senator McConnell’s ‘just say no’ strategy; C, I think that carbon emissions are correlated with global temperature increase, and humans are causing enough of it that it’s a public policy problem; but D, I also think that identifying a problem isn’t enough. You have to identify a solution and have a straightforward problem about what it costs.”
Thomas is also a career Republican. “I’m a former Republican legislator, who was appointed by a Republican governor, and I was actually a former Republican political consultant,” he told me. “So I’m fairly established as a Republican.” (He was also budget director when Mike Huckabee was the state’s governor.)
He agrees with Bill Gates that the best solution to climate change is ultimately technological. “We need technology—which thrives in market capitalism, so we need that—but we need the right policies that accommodate whatever emerges as the price winner,” he said.
But he also has a distinct view of carbon-dioxide emissions—or at least a view closer to the long-term actuarial analysis of utility companies. Because a future Congress or White House will likely impose a policy like the Clean Power Plan, carbon dioxide is a price risk, he says. If he doesn’t move coal out of the fleet now, Arkansas customers may have to pay more for electricity in the future.
“Life is pretty good right now, in utility world,” he said. “Costs as a percentage of personal income are at a multi-decade low, and that’s driven by low [natural] gas prices.”
He continued. “I like low costs, I want to keep low costs, so I have two big risks. One of them is [natural] gas prices going up, and the other one is federal carbon policy. With an administration that at the moment really doesn’t appear to have its act together, that increases carbon risk, because if there’s a backlash in four years, we’re going to have carbon policy. And it will probably be a lot more stringent than the Clean Power Plan.”
Thomas’ best way of avoiding carbon risk is looking into any other fuel source and diversifying, he said. Arkansas is also making policies now for multiple fuels in case any non-gas, non-coal option suddenly catches on. “When these things flip, when they become economic and people start throwing money at them, we want to be deploying—and not litigating policy for two or three years,” he said.
“The public policy that comes from most of the right is too into fossil fuels, mostly the sellers. I represent the buyers, who are the ratepayers,” he said. “On the left, what you have are policies that are designed to control carbon but there’s never any analysis or support that actually changes the temperature.”
“We’re not pandering to the wind guys, the nuclear guys, the solar guys, the oil guys, the gas guys—which is all you see coming out of Washington,” he added.
Hundreds of utility leaders like Thomas will decide the fate of America’s nuts-and-bolts energy policy under Trump. Economic forecasts predict that the ongoing trends will stay true, but there is considerable doubt around the margins. Experts can’t predict, for instance, how many marginal coal plants (especially in more conservative or mining-dependent areas) will stay open.
The answer may determine whether the United States meets its commitments under the Paris Agreement. The Clean Power Plan was the main mechanism for ensuring the United States kept its promise under that pact, and even though those rules are under review, some of their predicted consequences have already happened.
According to the latest U.S. government data, emissions from the power sector are already 21 percent below 2005 levels. That’s due to coal plants being replaced by natural-gas plants.
“Fundamentally, the [coal-plant] retirements we’ve been seeing haven’t been driven by the Clean Power Plan. The first compliance date was 2022. We’re seeing these record retirements because of market factors,” said Rachel Cleetus, the lead economist at the research-and-advocacy group the Union of Concerned Scientists. State-level policies and cheap wind and solar energy also play a role in driving coal plants out of business.
“You want to know how you bring the coal jobs back? Ban fracking,” Thomas told me. “The chief economist of the Heritage Foundation, Steven Moore, was trying to articulate the position that the problem with coal was Obama regulations, and not gas. When you talk to utility professionals, there are more of them who think Elvis is still alive than believe that. That shouldn’t be in the policy discussion—much less the leading voice.”
And Cleetus and Thomas agree that the United States can’t decarbonize just by switching to natural gas, though they arrive there by different paths. Thomas is diversifying his power sources out of a worry that gas prices will eventually go up. And Cleetus worries that leaked methane—an extremely potent greenhouse gas in the short term—will do considerable damage to the warming climate.
“Getting to the situation of an over-reliance on natural gas is really problematic. Not only does it create methane emissions, it creates this long-term permanent infrastructure,” Cleetus told me. “Those will eventually become stranded assets,” she said—assuming, that is, that America ever gets around to regulating greenhouse gases at all.