Report: EPA Climate Rules Plant Seeds Of An Energy Crisis

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Michael Bastasch DCNF Managing Editor
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Environmental Protection Agency regulations aimed at retiring coal-fired power plants are sowing the seeds of a U.S. energy crisis, according to a new report.

Agency emissions rules are setting the stage for higher energy prices and potential brownouts and blackouts across much of the country.

“Current policies for electrical generation threaten the abundant, reliable and affordable electricity Americans have come to rely upon; they drive coal out as a source of electrical generation, creating heavy reliance on natural gas,” according to a study by Dr. Roger Bezdek, president of Management Information Services, and Dr. Frank Clemente, a professor at Pennsylvania State University.

Current EPA regulations are slated to shutter 60 gigawatts of coal-fired power generation in the coming years, mostly by 2016. But new agency rules aimed at cutting carbon dioxide emissions from power plants will accelerate coal plant closings and threaten grid reliability and raise energy prices.

“In sum, policies that erode the U.S. coal fleet are placing the reliability, affordability, and security of America’s electric supply system at risk,” write Bezdek and Clemente in their study, which was prepared for the free-market Institute for Energy Research IER).

“Prudence requires an immediate moratorium on coal power plant closures and planned closures should be reversed where possible,” the authors warn.

Last winter, families in New England and parts of the Midwest saw their energy prices skyrocket because the regions’ natural gas pipeline infrastructure was not able to get enough fuel to where it needed to go. Cold weather also caused problems with pipelines and at gas plants.

What kept the lights on? Coal-fired plants, many of which were slated for shutdown because their operators found it too costly to comply with stricter EPA rules. The utility AEP said it was running 89 percent of its coal capacity slated for shutdown next year at full bore to keep the lights on for its customers.

“Gas-based electricity prices increased 1,000 percent as coal and oil plants scheduled for closure picked up the load,” write Bezdek and Clemente. “Without coal, parts of New England, the Midwest, and other regions would have experienced brownouts and blackouts that would have been economically disastrous and would have compromised public health and safety; in many instances it could have been life threatening.”

New England’s energy woes, however, were only a glimpse of what could happen if EPA rules are allowed to close more coal-fired power plants, according to the report. Not only in terms of grid reliability in winter, but because environmental activists who successfully lobbied the Obama administration to shutter coal plants are looking to curtail natural-gas production as well.

“In the next phase, natural gas will be driven out as well,” warn Bezdek and Clemente. “This will affect natural gas availability for direct use and power, making electricity more expensive and scarce to Americans and hurting economic growth.”

Natural gas prices have historically been much more volatile than coal prices, and can rise significantly when supply is constrained, as evidenced by last winter. But gas is also heavily relied upon for heating homes during the winter, as well as generating electricity, meaning supplies may not be able to keep up with demand if coal is phased out.

The report lays out possible electricity prices increases for states that rely heavily on coal power. In Indiana, electricity rates could increase more than 50 percent by the end of the decade due to coal plant closures. The same goes for Missouri, Ohio and West Virginia.

Michigan, Iowa and Wyoming, for example, could see electricity rates rise by up to 40 percent above what they would otherwise be, due to coal plant retirements.

“This report offers fact-based evidence to illustrate why the United States should not abandon coal as a primary source for electricity,” said Tom Pyle, IER’s president. “The EPA’s latest proposal will send electricity prices through the roof — inflicting the most harm on the elderly, the poor, those on fixed incomes, businesses, families, schools, and hospitals.”

“Our electric grid has been called the most complex machine ever made. When Americans flip a switch they expect their lights to come on,” Pyle added. “The Obama administration’s anti-coal policies threaten our electric grid and our way of life by promoting policies that deliberately cut one of our most abundant, affordable, and reliable sources of electricity.”

Republicans and some Democrats in Congress have introduced legislation to rein in the EPA’s attempts to force the closure of coal plants. But, so far, Congress has been unable to pass any such bill, and even if they did it would likely be vetoed by President Barack Obama.

This week, the Obama administration unveiled a series of events to highlight the one-year anniversary of the president’s announcement of his climate agenda. The events will also highlight the economic impacts of global warming.

Coincidentally, a report by the group Risky Business says that global warming will cause hundreds of billion of dollars in damages from sea-level rises, heat waves and falling crop yields. The report even warns it could get so hot in some regions of the country that it may not even be healthy for humans to remain outdoors.

“Climate change is nature’s way of charging us compound interest for doing the wrong thing,” said liberal billionaire and environmentalist Tom Steyer, who co-chairs Risky Business. “The longer we wait to address the growing risks of climate change, the more it will cost us all. From a business perspective, given the many benefits of early action, it would be silly to allow these risks to accumulate to the point where we can no longer manage them.”

Steyer is a major Democratic donor and former hedge fund manager turned environmental activist who gained favor with the environmental left after pouring millions of dollars into opposing the Keystone XL pipeline and backing pro-climate policy candidates. He recently pledged to spend $100 million to make global warming a top issue in the elections this fall.

Last year, Steyer came under fire for still having holdings in his former hedge fund, Farallon Capital, which held stock stock in Kinder Morgan — which was trying to build a pipeline that would have competed with the Keystone XL pipeline.

Steyer still held investments in his former company and was opposing Keystone. Steyer’s handlers now say he will be completely divested out of fossil fuels by the end of this month.

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