EPA’s proposed Carbon Pollution Standard

On March 27, the EPA released its draft rule to control greenhouse gas emissions from power plants. The rule will only apply to new, fossil fuel fired power plants that generate electricity for retail and that are larger than 25 MW. The proposed rule does not apply to existing units, including units that undergo modifications to meet other air regulations. [1]

The rule will limit carbon dioxide emissions from new power plants to 1,000 pounds of CO2/MWh. The EPA states that new natural gas combined cycle plants should meet this standard without any new controls. New power plants that would burn coal would need to also built in a technology to limit the CO2 emissions, such as integrating carbon capture and storage. [2]

This rule was based on the 2007 ruling by the Supreme Court in Massachusetts v EPA that greenhouse gases are air pollutants under the Clean Air Act. The EPA was thus mandated to determine if greenhouse gases threaten public health, which they did in December 2009. [2]

In the two weeks since this rule has been released, the battle lines have already been drawn. Those against the new EPA regulations are claiming that it is the “war on coal”, and that the rule will raise electricity prices for everyone. [3] While the climate science debate is still a debate, it seems as though the rancor had decreased, as there were no new regulations to protest. That is, until this new EPA regulation.

Many of the articles protesting the regulations due to the anticipated effect on electricity prices once again incited the debate, with one op-ed in the Orange County Register (reposted in many other small newspapers) stating, “Carbon dioxide is a trace gas necessary for life. It is not a pollutant. Its emissions have scant, if any, relationship to global temperatures, which have been flat for a dozen years even as CO2 levels dramatically increased.” The op-ed equates the new EPA rule with an overreach by the government to combat the disingenuous claim of global warming. It goes on to claim that the rule is a “tax on all human endeavors.” [4]

However, there are reports from various sources that the new rule will have little impact, if any, on electricity prices and on the coal industry. [5] Many experts have noted that, as long as natural gas prices stay low, there will be no demand to build new coal plants. Additionally, those low natural gas prices depress the overall cost for electricity, as natural gas, in most markets, represents the marginal wholesale electricity price. Because of this, the rule will also have no real impact on CO2 emissions, as it will force no great changes on the electricity industry. [5, 6]

In fact, many electric utility companies that rely heavily on coal have commented on the new rule, stating that it will have no impact on their business. AEP has stated that they had no plans to build new coal plants; Duke Energy has said that the rule “means nothing” to them. [7, 8] 

What the rule does represent is the first step by the government to actually take action to combat climate change, as the US Congress has no appetite to do so. It will shape the future generation mix; if demand rises and utilities must meet that demand, they will be unable to do so with coal generation unless carbon capture and storage becomes economically and technically viable.

[1]http://yosemite.epa.gov/opa/admpress.nsf/bd4379a92ceceeac8525735900400c27/9b4e8033d7e641d9852579ce005ae957!OpenDocument

[2] http://epa.gov/carbonpollutionstandard/pdfs/20120327factsheet.pdf

[3]http://www.bostonherald.com/news/opinion/editorials/view/20120401the_epas_war_on_coal/srvc=home&position=recent

[4] http://www.ocregister.com/opinion/energy-347063-administration-plants.html

[5] http://mediamatters.org/research/201204020012

[6] http://www.economist.com/node/21551545

[7] http://www.greenbiz.com/blog/2012/03/27/3-utilities-arent-worried-about-epas-emissions-proposal

[8] http://www.nationaljournal.com/domesticpolicy/first-major-climate-regs-from-obama-epa-sure-to-heat-up-political-debate-20120326?mrefid=freehplead_2

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1 Comment

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One response to “EPA’s proposed Carbon Pollution Standard

  1. The Clean Air Act was first established in 1970 and “authorized the development of comprehensive federal and state regulations to limit emissions from both stationary (industrial) sources and mobile sources”. (1)
    Although those that protest against this new regulation on carbon emissions decreed it as an overreach of the government, the Clean Air Act had given the government much freedom to draft legislation to regulate harmful pollutants in various ways. I have also read on the Americans for Tax Reform website that they believed the carbon tax to be detrimental to the health of the economy and that “it is nearly impossible to endorse regulation that taxes carbon emissions” without minimizing job loss or setting back growth rate potentials. (2) The website provided many names of organizations and companies that have analyzed the new regulation and found it to incur millions of dollars lost as well as jobs. After reading your post, I begin to wonder if these projected losses were calculated under the assumption that the particular companies will be expanding and building new coal plants in the near future. As you said, many energy corporations do not think the regulation will have much effect on them since they won’t be needing to expand or build new coal plants.

    I agree with you that while natural gas is cheap and only getting cheaper, building a natural gas powerplant rather than coal plant is smarter fore-planning. As Dr. Webber has said in class, the focus should be on increasing the efficiency and changing the behavior rather than finding an alternative or expanding the energy production capability. If we are unable to sustain the Earth, what good will hoarding energy do for us?

    (1) http://epa.gov/oar/caa/caa_history.html
    (2) http://www.atr.org/epa-regulation-carbon-harm-economy-a4438

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