HELENA — Industry officials and state regulators have started to look at how to reach the carbon-cutting goals set for Montana, which faces the nation's most stringent cuts under President Barack Obama's climate change plan.
However, coming up with a realistic scenario at this point is difficult. Obama wants to reduce emissions 32 percent by 2030, but much about his Clean Power Plan is still unknown, including how an emissions credit program aimed at easing the blow to states will work.
"There's an awful lot of uncertainty about what the state is going to do," said Janet Peace, senior vice president for policy and business strategy at the Center for Climate and Energy Solutions. "Modeling this is kind of a best guess of what they might do."
State utility regulators have analyzed combinations of power plant closures, efficiency programs and renewable resource development to reach the Environmental Protection Agency's target to reduce the rate of carbon dioxide emissions in Montana by 47 percent.
A recently released study by the University of Montana's Bureau of Business and Economic Research envisions meeting the EPA target by closing the second-largest coal-fired plant west of the Mississippi River, which could cripple the economy and lead thousands of residents to leave the state. The study is funded by utility NorthWestern Energy, which is suing the U.S. government to block the Clean Power Plan from going into effect.
Both the state Public Service Commission and NorthWestern studies come with caveats, but they have added fuel to a politically charged issue expected to be a major factor in the 2016 elections.
A central issue is the effect the cuts will have on the Colstrip power plant, a 2,000 megawatt coal-fired plant in Rosebud County that provides electricity to Montana and the Pacific Northwest. Every scenario that has emerged so far considers closing one or more of the plant's four generating units, turning the issue into a question of what will happen to those workers and the state's economy.
Both studies say closing Colstrip's two oldest generating units won't be enough to reach the EPA's target cuts for Montana. The scenarios they consider to make the required cuts go in much different directions from there.
The NorthWestern study says closing 2½ Colstrip units would achieve the target, but it's not economically feasible to operate the remaining units, so the entire plant would have to be shuttered in 2022.
The immediate effect would be the loss of more than 7,000 jobs at the plant, in related industries and in government, along with hundreds of millions of dollars of lost income and revenue and thousands of people leaving the state, the study predicted.
It doesn't account for other variables that the EPA says are meant to lessen the blow to industry, such as the purchase of emissions credits and trading between states. The study does not consider energy efficiency measures on both the power generation side and the consumer end, which would reduce generating demand and contribute to meeting the EPA target.
The study also does not factor in reductions by other coal-fired plants and dismisses new renewable energy projects. Colstrip is by far the largest coal-fired plant in the state, but there are others, including the Corette plant whose previous decommissioning will count toward the target.
Peace said the NorthWestern study doesn't factor in what is happening now in the coal market. A boom in natural gas availability already is putting a lot of pressure on coal assets, she said.
"This plan lays all the blame on the Clean Power Plan and doesn't say what's going on with coal competition," she said.
A Colstrip shutdown is realistic, given that the company does not yet know what an emissions credit market or pricing will look like, NorthWestern vice president of supply John Hines said.
"We fully acknowledge there may be other outcomes," Hines said. "It's certainly not the only scenario, and others will likely be developed over time, but this is a realistic scenario."
The state commission said the final plan will likely blend a number of policies and resource decisions, and it is impossible to say now how any particular utility will be affected.
Montana's plan isn't likely to be due for three years, if it can justify a two-year extension by the September 2016 deadline. Democratic Gov. Steve Bullock appears intent on using that time to craft a plan after forming an advisory council.
Republicans are looking at the Clean Power Plan as ammunition in their campaign to unseat Bullock next year, with likely opponent Greg Gianforte accusing the governor of "waving the white flag." The issue may be the single biggest threat to Bullock's chances for re-election, Carroll College political scientist Jeremy Johnson said.
Bullock said in a statement addressing the NorthWestern-funded study that Colstrip plays an important role in Montana and the state needs to work together to find a solution.
"The federal government's decision to penalize Montana more than any other state was wrong, but we do not agree that this report is the only window into what Montana's future looks like," Bullock said.