29 Oct 2013
With its proposed rule to regulate carbon dioxide (CO2) emissions from future coal electric generation plants, the U.S. Environmental Protection Agency (EPA) has launched a new front in its anti-fossil fuels campaign that ultimately will dramatically raise energy prices by making energy scarce. But in its zeal to prevent the construction of new coal plants, EPA has climbed far out on a legal limb, and its proposal is highly unlikely to stand up in court.
The agency is acting outside its authority under the Clean Air Act, which requires it to prove its proposed standards for new coal plants are achievable by demonstrated, cost-effective technology. EPA does not meet this requirement.
EPA would mandate that all new coal plants use technology that captures most of the plant’s CO2 emissions. The CO2 must then be transported via as-yet unbuilt underground pipelines either to oil fields, where it can be used to enhance oil recovery, or – for most of the country that is not located near oil fields – to as-yet undeveloped underground storage sites where it must remain sequestered indefinitely.
This technology shows promise for the future, but no one in the power industry would agree that carbon capture and storage is commercially available today or will be within the next decade. No electric power plant anywhere in the world has ever used the technology at full commercial scale. Thus, no one knows if it will really work at the levels EPA wants. It will also be extremely expensive. EPA’s own projections show that full capture can increase the cost of electricity from a coal plant by 80 percent, in part because fully one-third of the electricity that a power plant produces could be consumed in operating the technology.
EPA also relies on government-supported facilities, like the Kemper County Plant in Miss., to conclude that CCS is demonstrated technology, which is in clear violation of the Energy Policy Act. Projects like Kemper that receive federal assistance “cannot be considered demonstrated” for new source standards under the Clean Air Act. Kemper is still under construction and unfortunately over budget.
Apart from cost and commercial availability, numerous legal issues must be resolved before CO2 can be stored underground over the long-term. Without these rules in place, CO2 storage facilities will not be financed or constructed. And before the CO2 can be stored, the nation must spend billions on a system of CO2 pipelines to transport the CO2 from the power plants either to oil fields or underground storage facilities.
EPA is fully aware of just how extreme its proposal is. In fact, the proposal is the agency’s second attempt at regulating new coal-plant CO2 emissions.
The reality is EPA has more in mind than simply stopping new coal plants. Having already forced about 17 percent of the nation’s coal fleet into premature retirement through other regulations, EPA will soon issue additional CO2 regulations that are intended to shutter even more existing coal plants. And this is just the start, because EPA is guided by the ultimate goal of dramatically reducing CO2 emissions – by 80 percent by 2050. Since CO2 is the inevitable byproduct of combusting fossil fuels (oxidizing carbon), EPA intends to put the country on a path towards all but eliminating fossil fuel use for energy.
But fossil fuels provide more than 80 percent of the nation’s energy. Basic economics teaches that EPA’s relentless assault on energy supply will cause energy prices to skyrocket. And the damage will be more than economic. Higher energy prices are like a regressive tax that disproportionately harms those living on lower or fixed incomes, sapping them of money they would otherwise spend on the necessities of life, like food, shelter, heating, and health-care. Contrary to its mission, EPA’s policies will end up damaging the public health and welfare.
EPA’s proposal comes at a critical time. Energy development has been one of the few bright spots for the economy. It appears that the U.S. has now overtaken Russia as the world’s number one energy producer. It’s not wind and solar that produced this result; it’s traditional fossil fuels – coal, oil, natural gas. Many predict a manufacturing renaissance built on low energy prices. EPA has a different plan.