Wed June 5, 2013
Will the EPA's Proposed Greenhouse Gas Rules 'Ban' New Coal Plants?
Kentucky Governor Steve Beshear is asking the Environmental Protection Agency to rethink proposed regulations on greenhouse gases emitted from power plants.
Beshear sent a letter to acting EPA administrator Bob Perciasepe last week. In the letter, Beshear says the agency’s proposed rules to limit emissions would effectively ban new coal-burning plants and raise electricity rates. He wrote:
“Our ability to continue growing our economy depends on affordable, reliable power—and this can only be guaranteed if our nation truly has a diversified portfolio that includes coal. Asking some states to dramatically alter their potential sources of fuel for generating electricity puts their citizens at a distinct economic disadvantage. However, by allowing the electric sector to employ advanced technologies, combined with state and federal research and development efforts targeted toward newer, cleaner coal-fired power generation, the nation as a whole wins.”
The EPA’s greenhouse gas rule stems from a 2007 Supreme Court decision. The court ruled that greenhouse gases—like carbon dioxide—are pollutants that are harmful to human health, and are therefore subject to regulation. Former EPA Administrator Lisa Jackson signed the endangerment finding in 2009, and the proposed standards would limit all new power plants to emissions of 1000 pounds of carbon dioxide per megawatt hour of electricity produced. Existing power plants won’t have to comply, at least for now.
But the rule hasn’t been finalized yet. It was actually supposed to be finalized in April, but it now delayed. And this means that companies planning to build power plants don’t know what regulations they’ll have to comply with. Rodney Andrews of the University of Kentucky’s Center for Applied Energy Research says this sort of regulatory uncertainty is hurting the coal industry in Kentucky.
“Every time the EPA has been ‘we’re going to do a rule on this, we’re going to do a rule on that,’ there is no fixed target for anybody to plan around,” he said. “Coal-fired power plants are very expensive. It’s not as expensive as, say, a nuclear plant, but it’s still very expensive.”
So when utility companies have to make long-term plans for power generation, Andrews says they’re more likely to play it safe and build a natural gas plant.
Andrews says any certainty—even if the EPA finalizes the greenhouse gas rule—would be preferable for the industry. Tom FitzGerald of the Kentucky Resources Council agrees, but he says the current uncertainty and shift away from coal is about a lot more than these greenhouse gas regulations on the horizon.
But FitzGerald says even if the EPA listens to Beshear and other critics and abandons the greenhouse gas regulations (which, because they’ve determined it’s a pollutant, they’re required to regulate), utilities won’t necessarily be lining up to build new coal plants.
“I think it causes the utility to consider whether to invest in additional coal-fired capacity that will be around for 30 or 40 or 50 years, when there is a great likelihood that there will be some level of responsibility for carbon management during the lifetime of that facility, and you may end up with a stranded asset,” he said.
There are also other market factors, like declining reserves in Appalachia that are more expensive to mine, and cheap natural gas prices.
To meet the standards the EPA is proposing, new coal plants would have to install some sort of carbon capture equipment. Andrews says the technology exists, but that doesn’t mean a coal plant with the technology could still afford to compete.
“We’ve got technologies to allow coal-fired power plants to be as clean as they need to be,” Andrews said. “But it will raise the rates of electricity. And so what pain threshold are we willing to accept there?”
Andrews says this could make it so expensive to burn coal that no one will want to do it anymore. This could lead to more use of natural gas and other alternatives. But either way, Andrews says electric rates will rise, which will affect Kentucky manufacturers and ratepayers.
But FitzGerald says there’s a cost to not implementing the regulations, too. Someone will bear the burdens of pollution and climate change, whether it’s ratepayers, the coal industry or people downstream.
“Now, the flip side is, do we just do nothing?” he asked. “I wonder if that is what the governor is proposing. Because the National Research Council, the National Academy of Science, the Interagency Climate Change Adaptation Task Force, recognizes that each year we delay means more significant and catastrophic weather events, means more drought and more heat waves, means more disruption of agriculture, challenges in every single sector. And those, in fact, are costs that are being borne in many cases by people who aren’t in a position to protect themselves from those costs. So doing nothing is not an option.”
People are already paying more to fight the effects of a warming world. Droughts are leading to smaller crop yields, which raises food prices. Superstorm Sandy—which climatologists say was likely made worse by climate change—cost the federal government $60 billion. FitzGerald argues that these costs should be taken into account when looking at greenhouse gas regulations, too. Andrews agrees, but says he's "agnostic" on climate change and cautions that adaptation to climate change might be a better use of resources. "The climate's going to change no matter what we do. Who decided that the climate we had 20 years ago was perfect?" he said. "Are we putting our money in the right places? Are we looking at the real cost benefit analysis of what this does to our citizens?"
But both FitzGerald and Andrews agree that there could be modifications made to the proposed regulations—like allowing more time to comply with the new rules—that would reduce the effect to the coal industry and electricity providers.