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The Inescapable Impact of Innovation

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Nevelyn Black's picture
Writer, Independent

Nevelyn Black is an independent writer with a background in broadcast and a keen interest in renewable energy.  In the last few years, she transitioned from celebrity interviews and film shoots...

  • Member since 2017
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  • Aug 5, 2021


By now you’ve heard about the semiconductor chip shortage but perhaps you haven’t calculated the long-term effects and the inescapable impact it is having across all industries.  Semiconductors enable functions such as high-computing, operations control, data processing, storage, input and output management, sensing, wireless connectivity, improved efficiency and power management.  Did you catch that last one? Power management systems have been and will be impacted by this shortage.  Because the utility industry, as a whole, has become more and more dependent upon digital processes and components, technologies like IoT, artificial intelligence, augmented and extended reality, blockchain, specialized sensors, integrated circuits, improved memory, and enhanced processors are all imperative to daily operations.  They are inter-connected and powered by semiconductors which are necessary for the modern-day energy sector. This crisis is a result of the pandemic, inadequate investments in wafer capacity, supply chain disruption, rising demand from new technologies and work from home products. Wafer capacity refers to the limited number of chips that can be fabricated per disc before being cut into individual chips. Perhaps that’s a story for another time but acknowledging the import of the situation and putting it into simpler terms, the Biden Administration called the much-in-demand semiconductor chip the new universal currency.  


What’s in your Wallet?

Until now, China has had a monopoly on mining and processing the minerals used to produce these advanced products at a low cost.  According to the International Energy Agency, the U.S. extracts about 13 percent of rare earth elements, while China extracts 60 percent.  Current projections by the U.S. Department of Energy, state the $5 billion global rare earth elements market will grow by 40 percent in the next five years. However, with a global shortage, countries around the world are rushing to develop new supply chains.  The U.S. Department of Energy has awarded millions of dollars to fund rare earth minerals extraction research, processing and support for a homegrown market in rare earth elements.  Could this be an opportunity for one the nation’s hardest hit by coal plant closures?  Glenn Jeffries, D-Putnam, 8th District, West Virginia Senate Rep believes its an answer to very real problem.  Appalachian communities are suffering due to coal’s decline. Coal mining in Boone County, West Virginia, employed half of the county in 2008 but since then, both coal mining and employment have dropped by 80 percent.  To address the potential of mineral extraction, researchers at West Virginia Water Research Institute, a program of the Energy Institute at WVU, are working to turn acid mine drainage from coal mining into a rare earth extraction resource.  They are conducting a study for the National Energy Technology Laboratory on how to develop a national supply chain of plants in coal and metal mining areas based on the technology. They’re confident the plants could create significant skilled jobs and produce at least 400 tons of rare earth elements each year.  The Appalachian Region is home to seven of the top 20 producing coal mines in the country. Those mines have provided countless jobs and economic stability to several communities so any steps in a different direction will have a ripple effect.  Biden’s Interagency Working Group prioritized southern West Virginia as the area most in need of federal investment because of its high dependence on coal and coal power-plant jobs.  Addressing the need for support, Secretary of Energy Jennifer M. Granholm traveled to West Virginia to discuss efforts to ‘empower and uplift coal and power plant communities.'  The DOE has since announced its $300 million investment plans for the nation.


On the World Scene 

While the energy sector is embracing renewables, globally many still rely on fossil fuels. According to new data, Singapore, Australia, South Africa, Luxembourg and the Netherlands are the most reliant on fossil fuels while Norway, Brazil and New Zealand are all world leaders in renewable energy.  Referring to the intermittency of renewables, IEA executive director Fatih Birol tweeted, ”Fossil fuels fill most of the gap.” The IEA expects renewables to serve only half of the projected growth in global demand for 2021 and 2022.  They also projected a rebound in coal that would surpass pre-pandemic levels in 2021, even reaching an all-time high in 2022.  Despite their optimism, coal power generation is down and coal plant closures continue. From 1950 -2008, coal power generation provided approximately half the nation’s electricity but is now on a steady decline, producing only 23 precent of U.S. electricity in 2019.  Since 2009, 142 plants have retired generators or closed entirely, mainly concentrated in Appalachia, the Southeast, the Illinois Basin, the Midwest and the Four Corners region.  Out of the 237 coal-fired plants that remain, 69 have announced retirement dates, some as early as 2025.


Comfortable Being Uncomfortable

Albeit uncomfortable, change can be a good thing.  ‘Get comfortable being uncomfortable.’  The phrase is being applied across industries, meaning, get used to being in situations outside of your comfort zone.   There are about 20 million people who are potentially about to be very uncomfortable.  That is the number of people that work extracting fossil fuels, which is about one percent of the global workforce.  Granted a large portion of the workforce may be close to retirement anyways but for those of prime working age, training for new careers will be required.  One labor leader stated, “We need to think about the individual workers who lose their jobs. We need to provide robust support over time to keep folks whole and empower people to make choices about their futures.”  Regions, responsibilities and personnel are diverse, so admittedly, there can’t be a one -size-fits-all approach. 


The Master Plan

According to Granholm, "The President has created a working group on coal and power plant communities. So, what we want to do is to direct investments into communities like that so that they can see the benefit of what the future would be for them. We also want to make sure that those communities that empowered us in the past are helping to manufacture the products that will power us in the future, as well.” The Interagency Working Group, established by President Biden, will promote job-creating investments in communities already suffering from coal mine and power plant closures.  Additionally, changes to bankruptcy rules were made that urge coal companies to make good on their commitments to workers and environmental remediation.  Stricter rules could have prevented what happened in 2019 to Blackjewel miners in Kentucky.  The company abruptly filed for bankruptcy and everyone’s last paycheck bounced.


Facing the Facts

Electric utility, Northern Indiana Public Service Co. (NIPSCO) is making the switch.   Ironically, Indiana consumes 6.5 percent of all coal used in the United States—topped only by Texas and North Dakota—and it ranks seventh in the country when it comes to coal production.  Despite being known as a coal state, NIPSCO submitted plans to close its fossil-fuel facilities, including two coal-fired power plants. It will instead utilize renewables to generate power for its 460,000 customers.   They are not alone.  A number of utilities are transitioning from coal to renewables, for financial reasons or to meet new environmental regulations.  “Utilities may not have any philosophical attachment to fossil energy, but they have investments that only earn them a return if they’re used and useful.  They’re quite fearful of those plants having to retire before they’re fully paid off.” says Jim Lazar, retired economist who formerly served on the Regulatory Assistance Project, a nonprofit focused on a transition to a clean, reliable, and efficient energy system.  It’s true, utilities face a unique challenge in transitioning from fossil fuels to renewables.  However, new analysis from Morgan Stanley indicates coal-heavy utilities and their shareholders have everything to gain from a federal clean electricity standard. American Electric Power (AEP), once the largest U.S. coal utility, covering West Virginia’s Appalachian coal country, recently announced a plan to reduce its carbon emissions 80 percent by 2030 (in line with the American Jobs Plan 2035 goal).  Director of Electricity Policy for Energy Innovation, Michael O’Boyle concluded a Forbes article saying, ‘With budget reconciliation and a bipartisan infrastructure bill hanging in the balance, investor-owned electric utilities would be wise to jump into the game.’

Would you be inclined to agree with him?  What are the long-term effects of closing coal plants and the end results for communities that depend on them? A federal plan to help utility companies and individual coal workers is underway but it might not matter if we can’t get those semiconductor chips.


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