The nation’s top coal producers, in comments filed with the U.S. Environmental Protection Agency on the CO2-reducing Clean Power Plan for existing power plants, said the proposal would cost too much and do too little.
Arch Coal (NYSE: ACI), one of the largest U.S. coal producers, filed its own comments today expressing deep and serious concerns about the EPA’s proposed Clean Power Plan. “Already promulgated regulations are expected to drive the shut-down of as much as 20 percent of America’s coal-based fleet, which is the primary source of base-load power generation in the United States,” said Deck S. Slone, Arch’s senior vice president of strategy and public policy. “That’s an unprecedented change to America’s power system in what constitutes the blink of an eye in energy markets – creating enormous potential for market disruptions, supply shortages and rate spikes.”
Slone added: “Now, before this current round of closures has even run its course, EPA is preparing to step on the regulatory accelerator once again with the proposed Clean Power Plan. Such a move threatens to ratchet up the risk still further. The grid is already showing signs of strain, as we saw last winter when large sections of the U.S. were pushed to the brink by bitterly cold weather and surging power demand.”
In addition to increasing the likelihood of “rolling blackouts or cascading outages,” in the words of one regional transmission organization, the Clean Power Plan is expected to drive double-digit increases in electricity rates in most states, said Slone. Given the long lead times and high capital costs required when adding capacity, the damage associated with another wave of power plant closures could take years to address and reverse.
“Along with the huge risks it poses to the grid and the economy, the Clean Power Plan is also likely to prove counterproductive to the EPA’s stated objective of addressing global climate concerns,” Slone continued. “Every serious forecast projects that fossil fuels will supply more than two-thirds of the world’s primary energy needs through mid-century and beyond. As a result, low-carbon fossil fuel utilization technologies will be indispensable to any real effort to stabilize greenhouse gas concentrations in the atmosphere. But the EPA is proposing a rule that will undermine new power sector investments in coal as well as natural gas even as it slows economic growth and damages U.S. competitiveness.”
“As the Administration has acknowledged, the proposed Clean Power Plan won’t have any discernible impact on greenhouse gas concentrations,” Slone said. “There is a way forward for addressing climate concerns, and that is through robust investment in advanced technologies for coal and other fossil fuels. We strongly encourage the Administration to withdraw its proposal and move towards a more rational and effective approach.”
Coal industry association dives into the fray
National Mining Association (NMA) President and CEO Hal Quinn, who speaks for the nation’s big coal producers, on Dec. 1 urged the EPA to withdraw this plan. “The nation’s electric grid will become far less diverse and reliable, and far more costly, with this proposal to replace lower cost sources of electricity with more expensive and less reliable sources,” he said. “In asking the states to implement this proposal, EPA is demanding their complicity in raising the cost of a vital energy source for all Americans.
“A growing chorus of experts – from grid managers and regulators to energy economists and utility executives – has warned EPA of the costly consequences for American households and industries from this reckless gamble with the nation’s grid. They find EPA’s proposal unrealistic, unworkable and dangerous. The plan would place at further risk the reliable functioning of an electricity grid that the agency has already seriously weakened with its earlier regulations.”
Said the NMA comments filed with EPA: “EPA has calculated what it considers to be the ‘best system’ for each state to attain these mandates. Under EPA’s ‘best’ system, coal generation in general would decline dramatically and indeed would be zeroed out in 12 states. To replace the lost coal generation, EPA makes a series of extravagant assumptions about the availability of replacement resources. Natural gas combined cycle generators would operate at a 70% capacity factor, even though only 10% operated at that level in 2012, a year of exceptionally low natural gas prices. All ‘at risk’ nuclear would keep operating without any defined plan as to how that is to happen, and all under-construction new nuclear would be presumed to come on-line on time despite the long history of delays in nuclear development. Renewable generation would grow at unprecedented rates in many states, with East Central states presumed to increase renewable generation by 17% and southeastern states by 13% each year. And in EPA’s most heroic assumption, on a national-average basis, electric consumption would decline by 10% by 2030 as compared to a business-as-usual scenario—requiring that consumption levels would be little higher than today and indeed would drop between 2020 and 2030—even though the country will add more than 2 million people per year and presumably the country may even regain robust levels of economic growth.”
Incidentally, those states with “zeroed out” coal capacity would be Alaska, Arizona, California, Connecticut, Maine, Massachusetts, Mississippi, Nevada, New Hampshire, New Jersey, Oregon and Washington.