Coal industry slams EPA’s CO2 plan for existing power plants

The U.S. Environmental Protection Agency’s recent CO2 proposal for existing power plants is another step in the Obama Administration’s policies designed to eliminate low cost and reliable electricity and replace it with more expensive and less reliable sources, said National Mining Association President and CEO Hal Quinn.

Quinn, who represents major U.S. coal producers, testified July 29 at a EPA public hearing in Washington, D.C., on the CO2-reduction plan, highlighting the flaws that he said undermine the agency’s proposed regulation. 

“By reducing the diversity of our nation’s electricity supply and raising its costs, EPA will create a structural barrier for our economic recovery and future growth,” Quinn said. “Entirely missing in action from this proposal is recognition of the value of generation diversity to the stability of power supplies and prices. Coal-based power plants were vitally important this past winter, supplying 92 percent of the incremental demand for power. When many of these plants are no longer available in harsh winters to come, the nation will literally pay the price for EPA’s flawed rule.

“Higher electricity and gas prices will make U.S. manufacturing less competitive and deprive families of disposable income as they spend more to light, heat and cool their homes,” Quinn added. “In those regions where coal generation serves as the primary source of electricity, retail electricity rates are 30-50 percent lower than the regions where coal generation is a lower share of electricity.

“EPA’s proposal rests on a weak foundation. Among the rule’s assumptions – or ‘building blocks’ – are unrealistic efficiency gains anticipated from coal-based power plants. Prior EPA rules have made these plants less efficient. The present proposal will force many coal plants to run at reduced or sub-optimal levels. 

“The more substantial efficiency gains possible in the coal fleet are taken off the table by EPA’s rule for new plants that requires technology that actually reduces plant efficiency by up to 25 percent. EPA’s assumption of a 1.5 percent growth in year-over-year energy efficiency gains nationwide illustrates the gap between wishes and reality as states with the lowest retail power prices will see the rising cost of the next increment of energy efficiency.

“Similarly unrealistic is EPA’s assumption that gas plants can run at a 70 percent capacity factor. There is no technical or economic evidence that they can sustain generation at this level. EPA’s goal for intermittent, renewable sources is not credible either. These sources are called ‘intermittent’ for a reason: their performance is highly variable daily and seasonally. 

“EPA touts the flexibility it offers states. But as each of these ‘building blocks’ crumbles, the rule places states into a straightjacket forcing them to make increasingly painful and economically risky adjustments to meet target reductions.

“Many questions must still be answered about this rule and its implementation, but there is already one certainty: the costs and risks are real and substantial; the benefits are not.”

Peabody also takes EPA to task on proposed rule

Peabody Energy (NYSE: BTU), the nation’s largest coal producer, wants the proposed carbon rule for existing power plants withdrawn and greater deployment of technology as the long-term solution to improve emissions.

“Using coal for electricity enables people to live longer and better and drives the lowest U.S. electricity costs for any major fuel,” said Fredrick Palmer, Senior Vice President of Government Relations for Peabody Energy, at the Washington, D.C. hearing. “This proposal would endanger human health and welfare by making electricity – one of life’s necessities – scarce and expensive.

“The real endangerment finding is the harm the Administration’s rule will have on Americans – particularly the poor, the working class, the elderly, minorities, small businesses, manufacturing, those grappling with health care or healthy food costs, and a fledgling economy that should be growing jobs at far faster rates.”

Among the issues outlined in Peabody’s testimony:

  • EPA lauds California as an energy model, yet Palmer said that California has exacerbated energy inequality and turned away business based on high renewable mandates and energy taxes. California power prices are 40% higher than the U.S. average, businesses are exiting at a 3:1 ratio, and 700,000 manufacturing jobs have been lost since 2000. 
  • EPA’s proposal is symbolic at best and would have no significant emissions benefit under climate theory. Even an entire shut down of America’s coal fleet – which is not proposed – would result in a 1/20th of one degree temperature change. 
  • The proposal is outside the bounds of law and, if finalized, is likely to be heavily litigated. 
  • Widespread opposition is evident by actions in the U.S. House of Representatives, opposition in the U.S. Senate and state legislative actions.
  • In mid-July, the Republican-controlled U.S. House Appropriations Committee passed a spending bill prohibiting EPA from using funds for carbon standards.
  • In March, the U.S. House passed Whitfield-Manchin to repeal the proposed new source rule and stop related rule actions without Congressional approval. 
  • Forty-one Republican Senators have asked EPA to withdraw the rule, and seven Democratic Senators have written the president about new plant standards.
  • Over 20 states passed legislation or resolutions stating greenhouse gas emissions can only be regulated on a plant-by-plant basis “inside the fence.”

Peabody proposes what it calls a better path that includes: investing in efficiency improvements; deploying advanced supercritical coal plants and supporting greater research and development toward next generation technologies, including carbon capture and storage. U.S. coal used for electricity has tripled since 1970 as key emissions rates have declined 90%, Palmer said. “Greater deployment of advanced technologies will continue this progress,” Palmer said.

“More and more nations are pushing back against harmful carbon policies,” Palmer said. He noted that Australia’s new Prime Minister called that natiom’s recently repealed carbon tax a “useless, destructive tax, which damaged jobs, hurt families’ cost of living and didn’t actually help the environment.” Japan has stepped up support for coal-fueled power plants both domestically and overseas in the aftermath of nuclear power plant problems, and Europe’s renewable strategy is being pared back as the continent is threatened by Russia’s energy security challenge.   

“We must reject the Administration’s harmful carbon proposal and put in place a technology path for long-term improvement in carbon emissions. This is a far better path for a clean, secure energy future,” Palmer said.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.