RPC Reg Spotlight April 18, 2012

 

Regulatory Action in the Spotlight:

 

Limits on Greenhouse Gas Emissions from New Power Plants

 

Adverse Effects:

 

  • Implements elements of cap-and-trade to end construction of new power plants.
  • Rule singles out coal industry.

 

Response of the Obama Administration:

 

On March 27, 2012, the Environmental Protection Agency (EPA) announced a proposed rule (RIN 2060-AQ91) entitled “Standards of Performance for Greenhouse Gas Emissions for New Stationary Sources: Electric Utility Generating Units.”  The rule seeks to set “new source performance standards for emissions of carbon dioxide (CO2) for new affected fossil fuel-fired electric utility generation units (EGUs).”  In 2009 the EPA found that EGUs are “causing or contributing to climate change” and therefore endanger public health.  This regulation will be limited strictly to new fossil fuel-fired EGUs.  In order to comply with this rule, the EPA foresees new coal or petroleum-fired EGUs to use carbon capture and storage (CCS) technology to reduce CO2 emissions by 50 percent.

 

This rule from the EPA would set the first-ever national standards limiting greenhouse gas emissions from new power plants.  In a statement released at the same time the rule was unveiled, EPA Administrator Lisa Jackson stated, “We’re taking a common-sense step to reduce pollution in our air, protect the planet for our children, and move us into a new era of American energy.”

 

 

Impact on the United States:

 

Coal currently generates almost half of U.S. electricity.  This proposed EPA rule would stipulate that not more than 1,000 pounds of carbon per megawatt-hour of energy produced may be emitted into the atmosphere.  That figure is close to the carbon emissions emitted by natural gas power plants, but it is about half the amount produced by coal power plants.  Sierra Club Executive Director Michael Brune said the new regulation “will make it nearly impossible to build a new coal plant” and that the rule marked “the end of an era.” 

 

 

In Closing:

 

This rule is a clear attempt by the Federal government to stop any effort to build new coal-fired power facilities in the United States.  While this proposed rule does not provide any new guidelines for existing power plants, several recent EPA rules (CSAPR, Boiler MACT, Utility MACT) do address existing power plants, imposing an estimated cost of $16.3 billion.  These actions fulfill a promise made by President Obama when he stated in a January 2008 interview with the San Francisco Chronicle, “So if somebody wants to build a coal-powered plant, they can; it’s just that it will bankrupt them because they’re going to be charged a huge sum for all that greenhouse gas that’s being emitted.” 

 

Though the Obama administration was unable to pass “cap-and-trade” legislation when Democrats controlled the White House and both chambers of Congress, this is an obvious attempt to implement the same policies through federal agencies.  It is estimated that the U.S. has 261 billion tons of recoverable coal reserves which would be a 235-year supply at current rates of use.  By singling out coal as a dangerous energy source, the EPA has targeted an industry that is historically the most affordable source of power fuel, directly employs 136,000 people, and needs 50,000 new employees over the next decade to meet increasing demand and replace retiring workers. 

 

 

Relevant Legislation:

 

The House of Representatives passed on April 7, 2011, by a vote of 255-172, H.R. 910, the “Energy Tax Prevention Act of 2011” which sought to prohibit the EPA from promulgating any regulation concerning the emission of greenhouse gases to address climate change.  On March 28, 2012, the House Committee on Energy and Commerce held a hearing entitled, “The American Energy Initiative: A Focus on Legislative Responses to Rising Gasoline Prices.”  Present at that hearing was Gina McCarthy, the EPA Assistant Administrator for Air and Radiation.  Committee member Rep. John Shimkus questioned McCarthy, saying “You’re not admitting the burden that is taking down coal-fired power plants today…So you’re already taking the ones out today, through current regulation, and you’re going to take out the next generation of coal through greenhouse gas [regulation].”