CEI Experts: New EPA Rule Could Mean End of Coal-Fired Plants in US

WASHINGTON, D.C., Sept. 20, 2013 – If the carbon dioxide emissions standard for power plants proposed by the EPA today is enacted, the United States will have built its final coal-fired power plant, say experts at the Competitive Enterprise Institute.

The proposed standard for new electric plants would, for the first time, place uniform national limits on the amount of carbon dioxide future coal and natural gas power plants are allowed to emit. It would mandate use of carbon capture and sequestration technology for coal plants that is not commercially available and will be extremely expensive even if it does become available in future decades.

The EPA’s analysis of the economic impacts concludes the new rule will have no costs and no benefits.  Myron Ebell, director of CEI’s Center for Energy and the Environment, disagrees.  “EPA is correct in its analysis that its proposed rule will have no benefits but incorrect in claiming it will have no costs,” Ebell said. “During the several years it will take to finalize the rule and then overturn it in federal court, no electric utility will invest in planning or building a new coal-fired power plant. American consumers and manufacturers will be denied the benefits of the low-cost electricity produced by coal.”

The United States has the largest reserves of coal in the world, and nearly 50 percent of its electricity comes from coal-fired plants. As a result, American families and manufacturers now enjoy the lowest-cost electricity of any major economy. If this rule takes effect, that coal will be sold to overseas customers, who then will have access to lower-cost fuel, erasing a key American competitive advantage, Ebell said.

Marlo Lewis, Senior Fellow in the Center for Energy and Environment, said this rule changes the game in a substantial way.

“It’s far cheaper to build a natural gas power plant that meets a 1,000-pound of CO2/megawatt hour standard than a coal plant that meets the 1,100-lb CO2/MWh standard,” Lewis said. “Like the rule EPA proposed in April 2012, this is an outright fuel-switching mandate. It is still based – though not as brazenly – on the absurd premise that a gas turbine is a ‘system of emission reduction’ ‘adequately demonstrated’ for a coal boiler. Meet the new reg, same as the old reg.”

The EPA’s first attempt to regulate carbon dioxide emissions from new coal and gas-fired power plants was withdrawn in April after it became clear the rule would be overturned in federal court. The rule proposed today makes only cosmetic changes and, according to William Yeatman, Fellow and assistant director of the Center for Energy and Environment at CEI, still has multiple legal defects.

“The rule as proposed is unlikely to survive judicial review,” Yeatman said. “In particular, EPA’s explanation for how carbon capture and sequestration can be achieved industry-wide falls woefully short. The agency relied on ‘crystal ball’ reasoning, which is forbidden by the courts.”

The EPA also appears to be swimming against the global tide on greenhouse gas regulation. Since 2010, the Waxman-Markey cap-and-trade legislation has died in the U. S. Senate, Canada has withdrawn from the Kyoto Protocol and Australia has just elected a new government committed to repealing the carbon tax.