ANALYSIS: EPA regulations come with pain

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Michael Bastasch DCNF Managing Editor
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The Obama administration has decided to clamp down on carbon dioxide emissions from power plants and is reportedly going to propose emissions standards that would ban the construction of new coal-fired power plants.

The environmental benefits are less clear.

“Despite the significant cost of these rules, there are no real benefits to the environment,” Scott Segal, director of the Electric Reliability Coordinating Council, told The Daily Caller News Foundation in an email.

As part of President Obama’s plan to tackle global warming, the Environmental Protection Agency has been directed to impose limits on new and existing power plant emissions, which could cripple the coal industry if finalized.

The Wall Street Journal reported last week that the EPA’s new carbon dioxide emissions rule would effectively ban the construction of new coal-fired power plants unless they utilize carbon capture and storage (CCS) technology — which the coal industry argues has not yet been proven on a commercial scale.

“These are carbon emissions rules not designed to produce local air quality benefits,” said Segal, which heads a coalition of energy companies and utilities that support coal-fired electricity. “Therefore, the fact that these rules are being advanced on a unilateral basis means that continued coal use in develop from Asia to Europe means there will be no real impact on global warming.”

Emissions limits will have little to no environmental impact, according to the EPA. The previous draft of the EPA’s rule said that “this proposed rule is not likely to produce changes in emissions of greenhouse gases or other pollutants although it does encourage the current trend towards cleaner generation [of energy].”

The agency also claimed that there would be no compliance costs for the rule as the EPA doesn’t project “new coal-fired [power plants] without CCS to be built in the absence of the proposal.” The agency said that no new coal plants will be built because of low natural gas prices and higher building costs compared to natural gas plants.

The Energy Information Administration reports that none of the 136 power plants slated to open or expand this year burns coal, and only two of the 127 power plants set to open or expand next year will burn coal.

“It’s a circular logic as far as we’re concerned,” Luke Popovich, top spokesman for the National Mining Association, a mining industry group, told TheDCNF. “Certainly natural gas prices have played a role in fuel switching, but nothing like what EPA would be proposing.”

Popovich added that the EPA’s projection that no coal plants will be built is misleading because EPA regulations are what have caused the high number of planned coal plant retirements.

“Some have suggested that low gas prices prevent new coal facility construction, not EPA regulations,” Segal said. “However, low gas prices are a market condition which can change over time or rapidly, and the market can react if our portfolio is diverse and includes coal. The proposed carbon standard would make that current market trend permanent by government fiat.”

Is CCS technology even an option?

Environmentalists and the EPA contend that coal plants can become compliant under the EPA’s new emissions standard by installing CCS technology, dismissing the notion that it’s too expensive.

“The idea that pollution control technology is too expensive to implement is a familiar theme,” said Megan Ceronsky, attorney with the Environmental Defense Fund, told the New York Times. “It’s not a novel response to an environmental regulation.”

“The prospect of declining CCS costs, in conjunction with the possibility of continued availability of additional funding mechanisms (e.g. demonstration funding such as Department of Energy (DOE) grants, tax credits (for investment and/or EOR), State incentives such as clean energy standards), and sale of other usable products such as CO2, sulfur and hydrogen based products, indicates that CCS may well be sufficiently accessible in the near term to the few coal-fired power plants that are expected to commence construction,” according to the EPA.

The EPA cites the Kemper Energy Facility in Mississippi as proof of CCS technology being proven. The Kemper plant converts coal to gas which is burned to generate power. Carbon dioxide can be more easily captured from the gas and stored or sold to oil and gas companies for use in enhanced oil recovery.

The Kemper facility has not been completed yet, however, and there is no coal plant in operation that demonstrates this technology, meaning the EPA is vulnerable to legal challenge. The coal industry contends that the EPA could be in breach of the Clean Air Act by mandating that coal plants use technology that has not been commercially proven.

“What we have seen implies that EPA will rely on carbon capture and sequestration (CCS) as the basis for establishing their limits,” Segal said. “Basing standards on highly-subsidized, non-commercial scale and even non-built facilities is contrary to the spirit and plain language of the statute.”

Local solution to a global problem

Critics of the Obama administration’s plan to tackle global warming argue that limiting U.S. carbon emissions will do little to stop global temperatures from rising, especially when demand for coal globally is on the rise.

With more than 280 coal plants slated for shutdown, mining operations have been looking abroad to satisfy rising global demand. In March, U.S. coal exports set a monthly record as the country shipped 13.6 million short tons of coal abroad, with the top five destinations being China, the Netherlands, the United Kingdom, South Korea and Brazil.

“We’ve had record-breaking years in succession exporting coal,” Popovich said. “It’s ironic that we’re the country with the most coal, and we have a government that doesn’t want to use it.”

In fact, while the U.S. moves away from burning coal, the developing world is rapidly expanding its coal-fired capacity. Of the 1,200 coal plants being proposed worldwide, 76 percent of them are in India and China. Only 36 of the 1,200 proposed coal plants are being built in the U.S., according to the environmentalist group World Resources Institute.

“Further, as energy costs increase in the US, and manufacturing assets move overseas to areas less sensitive to energy efficiency, carbon emissions might even go up as a result of the rules,” Segal said. “Certainly, if we have to import more goods back to the United States as we lose manufacturing capacity, carbon emissions will increase.”

The EPA did not respond to a request for comment.

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