Everything you need to know about the EPA’s proposed rule on coal plants

EPA Administrator Gina McCarthy said during a news conference on Monday that "the high costs of climate inaction" are affecting American children and families today and it is important to limit carbon pollution. She proposed new regulations for a "clean power plant." (The Associated Press)

The Environmental Protection Agency on Monday proposed a rule designed to cut carbon dioxide emissions from existing coal plants by as much as 30 percent by 2030, compared with 2005 levels. The regulation has prompted heavy lobbying from industry and environmental groups, and the ensuing battle promises to become, as the Natural Resources Defense Council Climate Director Peter Altman put it, “the Super Bowl of climate politics.”

Why is the EPA regulating greenhouse-gas emissions from power plants?

Under President George W. Bush, the agency argued that Congress never intended to regulate carbon dioxide and other greenhouse gases under the Clean Air Act, so it lacked authority to do so. In 2007, the Supreme Court disagreed, ruling in
Massachusetts v. EPA that the law was “unambiguous” and that emissions came under its broad definition of “air pollutant.” It ordered the agency to determine whether greenhouse-gas emissions endanger public health or the environment. The EPA issued an “endangerment finding” in December 2009 that laid the groundwork for the power-plant rule it proposed Monday.

Why target existing power plants?

Existing power plants are the largest source of the nation’s carbon dioxide emissions, accounting for 38 percent. (The transportation sector comes in second, at 32 percent.) Much of this pollution stems from aging, coal-fired power plants.


Regulating power plant carbon emissions

The EPA says the average age of the nation’s coal fleet is 42 years, meaning that most of them aren’t nearly as efficient as new coal plants, although many have been updated. Some were built when Dwight D. Eisenhower was president, said Exelon chief executive Christopher Crane.

Of the 983 coal-fired units operating as of December at 523 plants, 63 percent are at least 40 years old, said John Coequyt of the Sierra Club.

The regulations also could ­affect natural-gas-fired power plants, which emit about half as much greenhouse gas as coal plants. The EPA said that natural-gas-fired combined cycle plants in the United States are 14 years old on average.

How will the regulations be implemented?

After the EPA finalizes its proposal in mid-2015, it will give states a year to design their implementation plans. It will let states meet emission targets for power plants in several ways, including through plant upgrades, switching from coal to natural gas, or by improving energy efficiency or promoting renewable energy “outside the fence,” meaning outside the plant site. That approach will give states greater flexibility in designing plans to meet the EPA’s targets.

Many industry groups are insisting that the EPA must limit itself to much more modest efficiency gains that could be made in the plants. The Oklahoma attorney general has vowed to file suit against the EPA’s regulations.

If a state does not come up with an effective implementation plan, the EPA can impose a federal plan.

Climate gauges

Temperatures at sea, on land and on ice all point to a warming trend over the past century, according to several indicators in the government's National Climate Assessment.

PLOTTED FROM MULTIPLE DATA SETS

Sources: NOAA's "State of the Climate in 2012," National Snow and Ice Data Center. Graphic: Bonnie Berkowitz and Patterson Clark - The Washington Post.

What is the role of energy efficiency?

The new regulation will provide an impetus for energy-
efficiency measures to flatten out or lower electricity consumption. A March report by the American Council for an Energy Efficient Economy looked at efficiency programs in 20 states from 2009 to 2012 and found an average cost of 2.8 cents per kilowatt-hour — about one-half to one-third the cost of alternative new electricity resource options, the group said.

Moreover, energy-efficiency measures sidestep criticism that some regulation opponents make about wind and solar power: that they lack adequate storage technology and can strain the grid.

“It’s cheaper to save electricity than it is to generate more,” said Rodney Sobin, director of research and regulatory affairs at the Alliance to Save Energy. And, he said, energy efficiency “en­hances” the reliability of the grid by reducing the load on it.

Who are the winners and losers in this fight?

Several constituencies will welcome the administration’s proposal. Environmentalists consider the regulation the most important step President Obama can take to address climate change, and they have put him on notice that they consider this a litmus test for his second term. Renewable-energy producers from the solar and wind sector stand to benefit from the regulation because it would provide utilities with a greater incentive to invest in carbon-free electricity sources. Some utility companies that have a low-carbon fleet with natural gas or nuclear-powered plants — including Exelon, PG&E and Calpine — also favor strict limits on greenhouse-gas emissions.

By contrast, the coal industry and its allies — including lawmakers from West Virginia, North Dakota and other states — oppose the proposal. So do many business groups, such as the U.S. Chamber of Commerce and the National Association of Manufacturers, which have argued that the rule would boost electricity prices and raise the cost of doing business.

Rep. Shelley Moore Capito (R-W.Va.), who hails from a coal-mining state, sent a letter to Obama on Thursday suggesting that he scrap the proposal.

“I urge you to consider the impact that your administration’s existing coal plant rule will have on the people of my state of West Virginia who want to go to work, provide for their families and produce affordable energy that powers our economy. I urge you to think of the impact that higher electricity prices will have on senior citizens and others on fixed incomes,” wrote Capito, who is running for Senate. “Washington should not pick winners and losers in the energy economy.”

Will the EPA’s regulations really increase electricity bills?

The Chamber released a report recently saying that the rule would cost businesses more than $50 billion a year; the Natural Resources Defense Council (NRDC) has estimated that it would save money overall; and the EPA’s analysis asserts that benefits would outweigh the costs, either because of avoiding climate change costs or because of the public health benefits that come from shutting down coal plants.

The American Wind Energy Association, which also supports the EPA rule, recently published a study that found that consumer rates declined over the past five years in the 11 states that use the most wind, while rates increased collectively in all the other states during that same period.

What would be the public health benefits?

The EPA estimates that the new rule would cut traditional air pollutants such as sulfur dioxide, nitrogen oxides and soot by 25 percent, yielding a public health benefit of between $55 billion to $93 billion when it is fully implemented, with 2,700 to 6600 premature deaths avoided and 140,000 to 150,000 asthma attacks a year avoided. The cost, by contrast, would be $7.3 billion to $8.8 billion.

The EPA said that for every $1 invested, Americans would reap $7 in health benefits.

If the EPA rule reduces the use of coal, it also would reduce emissions of conventional pollutants that contribute to asthma, other lung diseases and heart attacks, according to a joint study by the Harvard School of Public Health and Syracuse University Center for Health and the Global Environment.

“Carbon pollution standards for existing power plants would not only help confront the challenge of global climate change, they would confer substantial local and regional benefits by reducing power plant emissions of these major co-pollutants by up to 27 percent for sulfur dioxide and mercury and 22 percent for nitrogen oxides” by 2020, the study said. It said the greatest benefits would come in the Ohio River Valley and the Rocky Mountain region.

“Ecosystems would also benefit from decreases in air pollution and atmospheric deposition of sulfur and nitrogen,” the study added. “Reduced ground-level ozone will increase the health and productivity of crops and timber.”

The EPA estimates that the public health and climate benefits of the rule would outweigh the costs by anywhere from 8 to 1 to 12 to 1 by 2030.

What are the political implications of this proposal?

The draft rule faces certain congressional opposition and has become hotly contested on the campaign trail. Last week, Senate Minority Leader Mitch McConnell (R-Ky.) blasted his Democratic challenger, Alison Lundergan Grimes, for accepting $2,000 in donations from NRDC President Frances Beinecke and her husband, Paul Elston, given the NRDC’s support for carbon limits.

Grimes’s camp shot back, asking McConnell if he will return the $2,000 from Texas Business for Clean Air founder David Litman, whose group opposes building new coal-fired power plants in Texas on grounds that they would exacerbate air pollution and climate change.

Steven Mufson covers energy and other financial news.
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