EPA plans to tighten ozone standards and regulate carbon dioxide emissions could end up causing huge problems for states caught in the crossfire, according to an analysis by the free-market Institute for Energy Research.
The Obama administration is about to finalize carbon dioxide emissions restrictions on new and existing power plants. One of the ways states can comply with this regulation is to increase their use of natural gas-fired electricity.
This is where the agency’s overlapping, sometimes contradictory, regulatory agenda makes things complicated, according to IER. A possible conflict could occur when EPA’s plan to tighten ground-level ozone standards is finalized.
“It means it’s going to be tougher and tougher and tougher to produce natural gas, if you can produce it at all,” Dan Kish, senior vice president for policy at IER, told The Daily Caller News Foundation. “And it’s not just gas, it’s oil too.”
The agency wants to tighten ozone standards from 75 parts per billion to between 70 and 65 parts per billion, which is expected to make vast swaths of the U.S. out of compliance with federal standards. States with counties out of compliance with federal ozone standards will be subject to EPA-mandated pollution controls.
IER found that areas out of compliance with federal ozone limits sit atop shale oil and gas formations that “represent half of all U.S. natural gas production and are responsible for almost all of recent production growth that is powering America’s domestic energy boom.”
This could choke natural gas production in states relying on the fuel to meet EPA carbon dioxide limits for power plants, according to IER. States out of compliance would be hit doubly-hard by EPA regulations.
EPA’s so-called “Clean Power Plan” requires states to cut carbon dioxide emissions from existing power plants, using a combination of four building blocks. One of those building blocks is to increase dispatch of natural gas power.
Energy analysts with the Energy Information Administration predict that “natural gas-fired generation increases substantially in the early 2020s as an initial compliance strategy” with the Clean Power. Green energy capacity, from wind and solar, starts to build up after that.
IER warns that tighter EPA ozone standards could restrict natural gas production, driving up costs and making it harder for states to ramp up gas use as coal plants close down. The National Association of Manufacturers, which opposes stricter ozone standards, has warned that “[n]oil and natural gas production could be significantly restricted in parts of the country classified as ‘nonattainment’ areas.”
“It’s the classic squeeze play,” Kish said.
Environmentalists have tended to tout how the Clean Power Plan will phase out coal power and increase wind and solar energy use, but natural gas is going to play a key role for states to comply with federal standards. Even EPA chief Gina McCarthy admitted that “natural gas has been a game changer with our ability to really move forward with pollution reductions that have been very hard to get our arms around for many decades.”
“If less affordable natural gas is available, compliance costs for EPA’s CO2 rule would likely skyrocket,” IER said in its report. “EPA talks about using renewables like wind and solar, but these sources are not substitutes for much natural gas because wind and solar cannot be counted upon to produce electricity when it is needed.”
“The other building blocks—heat-rate improvements at coal plants and energy efficiency mandates—can only go so far. Without natural gas as a ‘game changer,’ states’ options for compliance will be significantly more limited and costly,” IER added.
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