Gov’t Report Details How EPA Regs Will Kill Coal


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Michael Bastasch DCNF Managing Editor
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If you’re unsure of what impacts pending EPA regulations will have on the U.S. coal industry, look no further than a new government study showing huge declines in coal production and use as power plant fuel.

More importantly, government forecasters predict the U.S. economy could take a $1.4 trillion hit by 2040 because of the EPA’s pending power plant regulations.

The Energy Information Administration (EIA) forecasts the EPA’s “Clean Power Plan” will more than double projected coal-fired power plant retirements in the next five years, from 40 gigawatts to 90 gigawatts, and coal production could collapse more than 30 percent in the next decade.

“All major coal-producing regions (West, Interior, and Appalachia) experience negative production impacts in 2020,” EIA predicts in its report on the impacts of the EPA’s global warming rule. EIA also warns that electricity prices will increase faster due to EPA rules.

The EPA will soon finalize rules to regulate carbon dioxide emissions from new and existing power plants. Agency rules governing existing power plants, the so-called “Clean Power Plan” (CPP) have garnered the most criticism.

CPP aims to reduce CO2 emissions from power plants 30 percent below 2005 levels by 2030. Coal state lawmakers and the industry have heavily opposed the rule, saying it will cause massive amounts of job losses and cause energy prices to rise. EIA’s new report confirms at least some of these worries.

“Retail electricity prices increase most in the early 2020s, in response to initial compliance measures,” EIA notes. “Increased investment in new generating capacity as well as increased use of natural gas for generation lead to electricity prices that are 3% to 7% higher on average from 2020-25.”

Some parts of the U.S. will see prices fall slightly by 2030, but other regions that rely more heavily on coal power will continue to be burdened with higher energy prices. EIA found that in “Florida and the Southeast, the Southern Plains, and the Southwest regions the projected electricity prices in 2030 are roughly 10% above baseline.”

EIA says mandated energy efficiency improvements will help reduce consumer energy bills in some parts of the country even though the actual price of electricity might be higher. The EPA also claimed its rule would increase energy efficiency and help drive down energy bills after the rule jacks up electricity prices for the next 15 years.

More importantly, EIA found that the EPA’s plan will hurt the U.S. economy. EIA found that “the reduction in cumulative GDP over 2015-40 ranges from 0.17%-0.25%.”

The EPA, however, argues the CPP will lead to between $55 billion and $93 billion per year in health benefits by 2030 along with up to $8.8 billion in “climate” benefits. But if EIA is right that the EPA’s rule could reduce GDP by one-quarter of one percent by 2040, the costs could very much outweigh the benefits. EIA estimates the cumulative costs of the CPP to be as high as $1.4 trillion by 2040.

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