Great Moments in Government Energy Policy Failure

So, why do we have all these "dirty" coal plants?  Market failure?  Industry greed?  Nope -- Carter-era government policy.  For you younger folks, here is a law you may have never heard of:

The Powerplant and Industrial Fuel Use Act (FUA) was passed in 1978 in response to concerns over national energy security. The 1973 oil crisis and the natural gas curtailments of the mid 1970s contributed to concerns about U.S. supplies of oil and natural gas. The FUA restricted construction of power plants using oil or natural gas as a primary fuel and encouraged the use of coal, nuclear energy and other alternative fuels. It also restricted the industrial use of oil and natural gas in large boilers.**

In other words, all new fossil fuel-powered boilers had to be coal-fired (which in a year or so, after Three Mile Island, translated to all new boilers since nuclear was essentially eliminated as an option).  Yes, this may seem odd to us in an era of so much environmental concern over coal, but something coal opponents don't tell you is that many of the exact same left-liberal-government-top-down-energy-policy types that oppose coal today lobbied hard for the above law several decades ago.  Here is a simplified timeline:

1.  Government energy policy sets price controls that create artificial shortages of oil and gas

2.  Government-created shortages of oil and gas lead to this law, with government demanding that all new fossil fuel-powered electric plants and boilers be coal powered.

3.  Government mandates on coal use create environmental concerns, which lead to proposals for taxes and bans on coal power.

4.  The need for government action against coal is obviated by a resurgence of oil and gas supply once government controls were removed.  However, in response, government beings to consider strong controls on expansion in oil and gas production (e.g. fracking limits).


** I got involved with this because I worked in an oil refinery in the 1980's.  We had to get special exemptions to run our new boilers on various petroleum products (basically byproducts and waste products of the refining process).  Without these, the law would have required we bring in coal to run our oil refinery furnaces.



  1. Ted Rado:

    The USG screws up everything. 535 people, plus the administration, seem to believe that being elected bestows limitless expertise on them. If the energy industry was left alone, natural economic forces would encourage oil and gas drilling, nuclear power, and coal use, in proportion to their economic viability. Nobody wants to get sued (a la BP) so they try to get it right.

    A few EPA regs make sense, such as removing particulates and acid from flue gas. Giving the EPA power beyond a very limited scope is nonsense (Regulate CO2). Politicians rather than sound economics and engineering will determine what is done.

    The collective judgement and skill of 300 million people far exceeds anything the USG has to offer.

    By the way, the air over steel mills, the Ohio River, Lake Erie, etc were all cleaned up way before the advent of the EPA. If there is a serious environmtal problem, it will be dealt with without USG micromanagement. The threat of lawsuits apparently galvanized people into activity.

    In the meantime, the march toward an elected dictatorship goes on. Soon, I will need as permit to use the men's room.

  2. LarryG:

    geeze, that law was repealed in 1987 - that's 25 years ago. Keep in mind also that ANY law requires BOTH houses of Congress to agree PLUS POTUS. No POTUS creates law.

    A more accurate "timeline" would show that air quality, regardless of fuel source drove subsequent policy including non-attainment in urbanized areas that was due to several factors, two of which were coal use and automobile emissions.

    I love how these little stories get 'spun' by leaving out significant chunks of history and using a broad brush to show the govt is "bad".

    There could be a legitimate debate over what our air quality should be but demonizing the govt does not solve anything..

  3. Mark2:

    I understand the argument with NG, but oil's cost per BTU has always been much higher than coal (something like 5X higher). Even if all restrictions were removed, oil would not gain market share except in very specific circumstances (backup power, power in remote areas )

    This is where all those eco, put up a windmill and we will reduce oil imports fall apart. Oil is way to expensive, and too useful in other applications to be used for electrical generation.

  4. Tim:

    The timeline for this just doesn't pan out. The construction of coal fired power plants in the U.S. peaked in 1974 and largely declined from that point until just a few years ago. From 1990 until 2008 almost no new coal plants were built at all. This is one of the major reasons we are now stuck with so many old plants built between 1960-1975.

    During most of the 1990's the only new plants that were permitted fired natural gas. Many new combined cycle gas units came online only to be idled as natural gas prices skyrocketed. Now that gas is cheaper due to new techniques, these investments are all running again, but the price of natural gas may not stay this low.

  5. John Moore:

    Don't forget that congress also required plants fueled by western low-sulfur coal had to use the same scrubbers as those using high-sulfur coal - so Robert Byrd's coal mining constituents could continue to sell their dirtiest coal.

  6. blert:


    Power plant construction followed electrical demand.

    Ramping power rates in the Seventies caused the prior high growth rate to flat-line. ( We had been growing like Red China. )

    As we exported our heavy industries to Red China, et. al. the national power grid lost a LOT of base-load consumption -- aluminum smelting being at the top of the list. ( It was a monster consumer - number one year in and year out. )

    If you had visited the Department of Energy in the Carter Era you would've been deluged with missives to shift the ENTIRE nation over to coal -- especially to include coal to gasoline projects funded by the Feds. ( Total money pits, too. )

    The older plants had been seriously upgraded to modern standards, emissions wise, so they're no longer 1960s designs. Rather like the B52 they've been rebuilt, stepwise.

    Further, these smaller plants have decent load following traits. This has kept them economic for all these years.

    ( Nuclear, solar, wind, and big coal have lousy load following traits. )


    As related above, the plants, once built, stayed in use.

    Our heaviest users shut down during the last twenty years -- to re-open overseas. This was especially true for the electro-chemical industry. ( Aluminum, magnesium, sodium, potassium titanium metals, chlor-alkali plants [ pool acid, bleach and lye ] -- copper electro-winning [ and others ] -- the plating industry, generally [ went to Red China ] and so forth.

    A tremendous amount of Chinese fuel use is merely displaced American demand. We import the fuel as a manufactured item. At the top of this list would be PV arrays. They still take more energy to make than they produce. (!)

    You never hear that in the MSM. But then, they're economic and technical innumerates.

    [ Polysilicon is an energy pig even worse than aluminum. ]

  7. tomw:

    Yes, let's have 535 citizens who were mostly NOT educated in science and engineering decide our future electrical generation mix. Poly-sci majors as a rule are not rocket science candidates. In addition, they refuse to listen to people from the industry, instead determined to 'bring home the bacon' or do back-scratching and log-rolling {forget what that one means} to get their constituents extra federal funds, or actually get them self election contributions.
    What a country!{system.}