There are so many crises generated by the Obama administration that it’s easy to lose sight of some. But in just a little over a week a probable new one will be unleashed when the EPA announces rules for existing coal power plants, to go with the rules for new plants that were announced last January:
The January proposal sets carbon-emission limits for new power plants fueled by natural gas and coal. It also requires new coal-fired plants to use carbon capture and sequestration (CCS), a technology not in use by any commercial-scale power plant in the US.
In comments filed this month responding to the January proposal, the American Coal Council cited an Energy Information Administration estimate that the capital cost of a new integrated combined-cycle coal plant with CCS would be $6,599/kw.
That’s more than capital requirements for new hydro, onshore solar, wind, and nuclear plants and more than six times the capital cost of a new gas-fired combined-cycle generating plant without CCS, according to ACC.
Even before EPA’s January proposal, low gas prices were discouraging construction of coal-fired capacity. The proposal essentially makes coal-plant construction unlikely regardless of the gas price.
It also gives the coal business reason to expect rugged treatment of existing plants.
The January proposal affects growth. The June proposal will affect cost. If those costs are high, as they probably will be, a recent trend of coal-fired plant closures will accelerate.
Yes, gas-fired capacity will make up much of the loss. But the oil and gas business should welcome none of this.
EPA won’t stop with coal.
This process is happening through the EPA rather than Congress for two reasons. The first is that Obama can’t convince Congress or the American people to approve, so he’s going around both in his favorite manner, though a government agency. The second is that a month ago the Supreme Court gave him the green light to do it that way.
This course of action regarding coal is something Obama has been intent on for many a long year. No one on earth who’s been paying a particle of attention should be surprised, least of all those in a coal-producing states like Pennsylvania who voted for him despite that fact (the first map is of the results in the 2012 election, and the second is the coal-mining counties of PA):
In one of the debates in 2012 Obama falsely presented himself as being a friend of fossil fuels, but that should have fooled no one. Obama had stated his plans for coal back in January of 2008, in an interview which came to light a few days before the 2008 election and which I wrote about at that time in a post entitled “Obama’s lump of coal.” Here’s an excerpt:
But he is advocating an extreme pro-environmental and anti-industry position nonetheless. Rather than banning new coal plants de jure, he plans to drive them out of business de facto, because the environmental requirements of his policies would be so stringent that new plants would be unable to comply and the penalties for noncompliance would be catastrophic. In other words,, any new plants would have to pay penalties so Draconian that they would be bankrupted—and the listener is left to wonder whether even older plants might be required to retrofit in order to comply, and be forced out of business as well.
Obama’s plan is that market forces would dictate that, as new coal production would become impossible, people would be forced to quickly fill in for the lack of power by developing the wonderfully clean alternative sources of energy that he is so sure would be available if only the will were there. We have no way of knowing whether it would work out that way, of course. But in the meantime we could be sure that the economic costs would be very high, as Obama unapologetically states.
This is his position on nuclear power as well…
So the plan was very, very clear very very early in the game, before Obama’s first term.
In the interim, however, a funny thing happened: shale fracking technology has improved and expanded enormously, and with it the ability to extract a lot more natural gas than before. Natural gas is cleaner than coal, and so despite the very strong objections environmentalists have to fracking, natural gas is what Obama and others have come to suggest could be a “bridge” fuel in the interim, until some other sources magically become practical and plentiful. Note that word “magically”; my point in using it is that it is very hard to replace fossil fuels, and nuclear power (which could probably do so to a large extent) doesn’t have the environmentalists’ blessing either.
One of the largest American shale deposits (known as the Marcellus Formation) is located in certain states that also have historically mined coal, such as West Virginia and Pennsylvania, as well as New York and a few others. But New York has banned fracking for years, and there’s been a long-term “temporary” ban in New Jersey as well, and other states may follow suit because of the perceived threat to groundwater, whether they have major shale deposits or not.
New Jersey is not as yet a big candidate for fracking anyway. But in Pennsylvania, where part of the Marcellus Formation lies and where fracking is big, there’s a fairly strong (though so far unsuccessful) movement to ban it as well.
The entire campaign against the coal industry is predicated on the theory of human-caused global warming. Whatever you think about the truth or falsehood of such claims, let’s focus on that word “global” in that warming equation. American coal production and use is actually a fairly minor factor in what may or may not be happening as a result of fossil fuel use worldwide. Unless there’s a worldwide approach, and especially unless India and China are onboard, this is almost inconsequential.
What’s more, burning gas may not really be as much of an improvement over coal as some say. And yet the overall cost of the new coal regulations is probably going to be high, even with the gas alternative.
Depending on the source, this is expected to cost the energy industry anywhere from $6 to $20 billion annually- all costs that will be passed on to utility customers… The Heritage Foundation estimates that once fully implemented, these regulations will cost the country 800,000 jobs- 280,000 in manufacturing alone. Jobs in the coal mining industry are expected to decline by 43%. Because converting plants to natural gas would be a better option for compliance, more of that commodity would be diverted to power plants and the price of natural gas would rise an estimated 42% unless production increased. But, environmentalists are blocking that option with their opposition to fracking.
More here from the Coal Council (which of course is hardly an objective group) about the possible drawbacks of natural gas:
The American Council for Clean Coal Electricity said EPA’s proposal would effectively ban new coal generation, since it will require a technology that is not widely available.
“Banning new coal-fueled power plants is bad energy policy for our nation because it will result in an overreliance on natural gas for new base load generation — a fuel that has a long history of price volatility and deliverability challenges,” ACCCE wrote in its comments.
ACCCE said the rule, also known as New Source Performance Standards (NSPS), would actually discourage CCS development, because companies would no longer have an incentive to build new plants. The group asked that EPA withdraw its proposal and write a new one based on emissions from new plants that do not use CCS.
The National Mining Association (NMA) urged EPA to rescind the proposal, for fear that it would reduce diversity in power supplies.
“EPA’s approach risks overreliance on one power source and jeopardizes the reliability that is inherent in having a diverse energy portfolio,” the NMA said. “NMA cautions EPA to proceed with great care in this rulemaking as it is merely step one of the agency’s plans for regulating the power sector under the [Clean Air Act] to reduce CO2 emissions.”
The Electricity Reliability Coordinating Council said the new rule could be a way to eliminate coal electricity, which would make power less reliable.
“The proposed rule is an example of regulation at its worst in that it attempts to direct market forces with only the vague hope of being able to deliver real benefits,” ERCC said. “Unfortunately, the costs of the proposed rule are very real in terms of limiting future electricity generation options, with consequent potential threats to electric reliability, affordability, and all of the economic and health harms that are associated with those results.”
I freely confess that I’m no expert on energy sources and how they work, either scientifically or economically. But my guess is that out there among my readers there are some who know a great deal about it. You can enlighten us in the comments section.