(Part 3 of EPA Carbon Dioxide Rules discussion)

In recent posts, we discussed the EPA’s new proposed rules that require a 30% reduction in carbon dioxide emissions from power plants by 2030. As discussed earlier, selecting the year 2030 as a target date is an interesting choice in that it locks in, but does not necessarily advance, the existing trajectory of planned retirements of many older coal-fired power plants across the country.

Current EPA rules essentially prohibit new coal-fired power plants so the replacement power plants will most likely use natural gas as fuel. We think the combination of EPA rules for existing and new power plants will result in eliminating nearly all coal-fired power plants from the US generation mix by as early as 2040, including some of the world’s most efficient and cleanest (in terms of traditional air pollution).

We have long advocated for the development of a national energy policy and it appears that we now have one. Unfortunately, the EPA’s “national energy policy” was developed without public debate and, according to a story in the New York Times, appears to have been written primarily by the National Resources Defense Council, an environmental advocacy group.

We don’t know if a better plan could have been developed using the traditional approach of open discussion and debate by all parties including electric utilities and consumers. Given the billions of dollars in compliance costs that will ultimately be paid by consumers, we would think that consumer acceptance of those costs would have been improved by a more open process.

More than anything else, we worry that EPA’s narrow process may have produced rules that have unintended consequences. As an example, we worry that as older coal-fired power plants are retired in Ohio, Kentucky, and West Virginia, and cannot replaced with new clean, high efficiency coal-fired units that use Appalachian coal, then that coal will simply be shipped overseas instead (primarily to Europe and South America). The result would be higher costs for electricity in the US, fewer US jobs and more global carbon dioxide emissions. Without strict limits or an outright ban on coal mining and/or coal exports (neither are currently proposed), we think that scenario could be likely.

Do you have a question or comment about the policy implications of the new EPA rules? Suggestions for future topics? Please submit them to MAC@wemc.com.

To read Part 1 and Part 2 of the discussion, click here.

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