EPAs One-Two Punch to Coal, Let the Market do the Rest

As one of the nation’s largest producers of pollution and carbon emissions, the vastness of coal’s contribution to the nation’s power supply has left them a champion of the economic and political realm with a lot of weight to throw around. Not long ago the EPA stopped dancing around the ring and decided to throw some weight behind an overdue advance on the coal industry. It is easy to forget that the EPA’s prime function is neither research nor public awareness (though both are important). It provides “protection” as an agency of enforcement.

The first blow came from the EPA initiating new pollution standards for power plants. Any standard that strives to decrease pollution will naturally come down hardest on the plants that pollute the most—an honor routinely held by our coal burning infrastructure. Of the +/-600  coal plants that we have in the country, the median construction date is 1966 with approximately 1/3 being built before 1960. While a new combined cycle natural gas plant could operate at 60-66% efficiency (perhaps more with co-generation) some of these ancient coal plants peeter by at about 30%, which means we’re getting more pollution for the same amount of net power.

While it may be too soon to make long term predictions, the first responses have been positive—just not for coal. Utilities have begun the closings of older coal facilities around the country. Examples like Chicago are heartening where the new regulations were paired with local constituents and bold politicians to expedite the scheduled closing of two local power plants. They will not be the last to shut their doors. Pollution standards are proving to be the weight that helps tip the scales for the costs of keeping older plants open.

While the industry was still reeling from the first round, the second hit was announced last week when Lisa Jackson confirmed that the EPA will release new regulations for limiting the carbon emissions of new power plants. The new standards will require new power plants to emit less than 1,000 lbs of CO2 per megawatt-hour. As Time Magazine’s Bryan Walsh points out, the number is not a shot in the dark. New natural gas plants are clocking in at just under that level while coal plants can operate at upwards of 1,800 lbs/MWh. The new law will effectively prohibit new coal power plants without the use of carbon capture or sequestration technology (in the unlikely event that said technology proves to work).

For the goal of a more sustainable society, coal represents one of the highest priorities for change. Though it’s true that coal produces a staggering amount of CO2, Intercon readers may notice that I don’t often linger very long on climate change. The reason is because climate change is only one of many reasons that display the outmoded nature of coal and the dangers it poses on our society. Less coal plants would mean cleaner air, cleaner water, a decrease in asthma related illness, fewer compromised mountaintops and ecosystems. Coal power deserves a warning label on your power bill.

Aligned with a Valuable Ally

Despite all of the political baggage that comes with regulations coming down from the EPA, their assertive stance on our national energy portfolio is not to blame for the recent decline in coal power production. We have a much larger (and arguably stronger) force to thank for that: the free market, notably natural gas. The evolution of technology allowing for the harvesting of more fuel from shale gas formations has driven the price of natural gas to historic lows, making it the fuel of choice for new power plant construction. Walsh points out that even before the EPA regulations were in place, construction has started on only one new coal power plant throughout the Obama administration and it is an experimental plant testing a carbon sequestration system.

EIA coal numbers

After peaking in 2007, coal demand in the U.S. has been declining for years according to the Energy Information Administration (EIA). Further predictions point to a 5% decline in coal usage in 2012 from 2011 to a total of 884 million short tons, levels not seen since 1995. Conversely, demand of natural gas in the power sector is pegged to grow 9% and provide nearly 25% of the country’s power. The EIA had predicted a slight rise in 2013, but that was before the release of the new EPA standards. The strength of natural gas is driving the retreat of coal. The EPA is only fanning the flames.

Is the Downtrend Here to Stay?

We can only hope. Is the coal industry up against the ropes? Maybe not yet, but they are certainly being herded towards the corner. Aside from a continued low price of natural gas (all but essential for coal’s demand to continue to wane) the defining factor could be the result of the upcoming elections in November and the state of the EPA afterwards. If President Obama is reelected, the coal industry could continue to be pressured for four more years. On the other hand, a Republican President could swiftly strip the teeth from the EPA and undo all it has managed to accomplish over the past three years.

As many green building proponents point out, our built environment accounts for around 35% of our country’s energy use and 65% of our electricity consumption. Every effort that to make both our new buildings and our existing buildings more efficient can help us depress the energy demand and help buy time for renewables to gain ground in cost competitiveness.

Image Credit: northjersey.com , eia.gov

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