War on Coal Escalates

Faced with rising gas prices, President Obama recently outlined what he calls an “all-of-the-above” energy policy “that develops every available source of American energy – oil, gas, wind, solar, nuclear, biofuels and more.” You may notice something missing there – coal, America’s most abundant and affordable fuel source. The administration’s “all of the above” strategy is anything but.

This shouldn’t be surprising. In 2008, then-candidate Barack Obama said that as president, he would pursue a “cap-and-trade” program to make electricity rates “necessarily skyrocket” and “bankrupt” builders of new coal power plants. He has never recanted those words.

Yet America runs on coal. We have the world’s largest coal reserves – we’re the Saudi Arabia of coal. Coal fuels nearly 40 percent of U.S. electric power generation. New coal plants typically have lower overall costs per megawatt hour than new wind, solar and nuclear power. And all those shiny new electric cars the president is so fond of run primarily on electricity from coal.

Mr. Obama’s cap-and-trade program crashed on a shoal of popular hostility. Recognizing that, as he put it, he had to find another way of “skinning the cat,” the president decided to circumvent Congress by directing regulatory agencies to implement his green agenda.

The U.S. Environmental Protection Agency (EPA) found a perfect proxy for coal – the mercury that only coal-fired power plants emit. In December, the EPA issued its 2011 Mercury and Air Toxics Standards (MATS) rule, which imposes stringent new controls on power-plant emissions of mercury, acid gases and other hazardous air pollutants (HAPs). According to the EPA, utilities will have to spend $9.6 billion in 2016 alone to comply.

This enormous cost will increase everyone’s power bills. That might make sense if the pollutants subject to the rule posed significant risks to public health. They don’t. The rule is aimed primarily at mercury emissions, but mercury is not a health hazard in the atmosphere. Negative health effects can result when it gets into water and accumulates in the bodies of fish.

The argument goes that pregnant women who eat large amounts of such fish pass on the mercury to the children in their wombs, affecting their intelligence. Yet such an effect has only ever been seen in the Faroe Islands, whose inhabitants eat large amounts of whale blubber containing other harmful substances. A study in the Seychelles, where the diet is much more similar to that of Americans who eat large quantities of fish, found no such correlation. Indeed, the EPA has made no attempt to find any American child whose performance at school has suffered as a result of his mother eating fish.

Even if you accept the highly suspect idea that mercury emissions affect childhood intelligence, the EPA estimates the rule will reduce IQ loss in the children of subsistence fishing households by about 0.002 IQ points – a purely hypothetical benefit too small to be detected. Nonetheless, the EPA has estimated the MATS rule to have an aggregate annual benefit of $0.5 million to $6 million. Remember that the rule’s annual cost approaches $10 billion. The agency does not even attempt to quantify the health benefits of the rule’s reductions in acid gases and other HAPs, which suggests they are too small to notice.

Yet the EPA still claims $33 billion to $90 billion annually in what it terms “co-benefits” – an artful term that refers to accidental unintended benefits. In this case, the accidental benefits supposedly accrue from the reduction in fine particulates from utilities taking action to reduce mercury emissions. Fine particulate matter, however, is already covered by regulations under the Clean Air Act, and 90 percent of the claimed benefits would occur in areas the EPA already considers safe in those terms. As the Economist recently noted, “the EPA routinely claims additional benefits from reducing those concentrations well below levels the current law considers safe. That is dubious: a lack of data makes it much harder to know the effects of such low concentrations.”

The EPA’s justification for the MATS rule is unconvincing. Last month, Sen. James Inhofe, Oklahoma Republican, introduced a resolution to overturn the MATS rule, following the passage of a similar resolution in the House. If the president is serious about having a real “all-of-the-above” energy policy, he should thank Mr. Inhofe.