Statewide View Column: Closing Down Coal Gives China’s, India’s Iron Industries An Edge
The following article was written by me, and it originally appeared in the Duluth News Tribune.
Xcel Energy recently made headlines by announcing it wished to close down its coal-fired power plants 10 years before they were previously scheduled to retire. However, it would be nothing short of a disaster for Minnesota’s mining industry, both present and future, if Minnesota Power pursued a similar path by closing the coal-fired Boswell Energy Center at a time when China and India are greatly expanding their use of coal.
Mining requires an enormous amount of energy. In fact, the MinnTac mine in Mountain Iron reportedly uses more electricity and natural gas than the entire city of Minneapolis, and only the coal-fired Boswell Energy Center can provide the affordable, reliable, around-the-clock electricity needed to keep Minnesota mines competitive in a global marketplace.
This is crucially important, because although Minnesota produces approximately 75% of the iron ore mined in the United States, this accounts for only 2% of global iron ore production. In contrast, data from the United States Geological Survey (USGS) show China and India account for 13.6% and 8% of global iron ore production, respectively.
Electricity constitutes about 25% of the cost of iron produced in Minnesota; and due to Minnesota’s relatively small market share, any increase in the cost of energy hurts the ability of our Minnesota mines to compete with countries using low-cost coal. China and India understand this, which is why they are building an enormous number of coal-fired power plants to satiate their appetite for affordable electricity.
How many coal plants? China is building approximately 198,600 megawatts of coal, and India is building nearly 94,000 megawatts, according to CarbonBrief. For context, this is the equivalent of China building 185 Boswell Energy Centers and India building 87. It goes without saying that each of these 272 new coal plants will emit carbon dioxide.
Despite claims that wind and solar are now the cheapest forms of energy, the facts dictate otherwise. Federal Energy Regulatory Commission data show the Boswell Energy Center generated some of the lowest-cost electricity in the state, producing electricity for $32 per megawatt hour. In contrast, new wind, without taxpayers’ subsidies, costs between $38 and $48 per megawatt hour, meaning wind costs approximately 19% to 50% more than electricity from the Boswell Energy Center.
Furthermore, these cost estimates for wind do not account for the massive multibillion-dollar transmission investments needed to connect distant wind facilities to the grid or the cost of maintaining the coal and natural gas plants needed to generate electricity when the wind doesn’t happen to be blowing.
The high cost of renewable energy has already negatively impacted Minnesota iron miners. Electricity costs for iron mines have increased by 60% since 2007 when the state mandated that 25% of our electricity come from renewable-energy sources.
Unfortunately, Gov. Tim Walz’s proposed 100% carbon-free energy mandate would make Minnesota mines uncompetitive with mines in China and India.