EPA and the Coal Industry

Coal-fired electric power plants today produce more than 50 percent of the electricity in the U.S. at low cost. Inexpensive electricity is essential to maintaining a dynamic competitive U.S. economy and our standard of living. All coal-fired power plants operate in conformance with stringent federal and state regulatory requirements. Most of these plants are capable of base-load (24/7) operation with high reliability. The coal mining, fuel transportation and transmission infrastructure investment, supporting existing plants and some future plants, is in place. New coal-fired power plants are essential to the future of the U.S. base-load power supply... Most of the U.S. coal-fired plants are 30-40 years old and have been upgraded to meet emissions regulations. However, only about 25 percent of these older plants have been retrofitted with scrubbers, and only a few plants are equipped with the most effective flue gas cleanup systems technology now available for new power plants. While the average net energy conversion efficiency of these plants is about 32 percent, the next generation of new plants can increase this net efficiency to 40 percent or higher with improved technology, thereby reducing coal consumption and emissions in proportion. This benefit will significantly increase the kWh produced per pound of coal burned, with fewer emissions. In the next decade, new base-load and mid-range generating capacity will be needed to replace older plants and to support U.S. economic growth... Public and media acceptance for new coal-fired power plants is necessary, particularly at the state and local level. These new power plants provide jobs and economic stimulus at most plant sites. Local acceptance has been common, but outside groups can adversely influence media and public acceptance. Factual information must be continuously supplied to the media and the public to make them better informed. - ASME International, The Need for Additional U.S. Coal-Fired Power Plants

Coal and the Climate Bill

Originally Published on May 21, 2009

Charleston Gazette - Virginia Congressman Rick Boucher — a major friend of coal — outlined these pro-coal amendments pretty clearly on Monday, during his opening statement on the committee markup hearings.

Boucher Opening Statement on Markup of American Clean Energy and Security Act

ENERGY AND COMMERCE COMMITTEE
American Clean Energy and Security Act Full Committee Markup
MAY 18, 2009

I am pleased to report that following six weeks of continuous and intensive negotiations with Chairman Waxman and Chairman Markey, I have now reached an agreement with them on the principles for greenhouse gas control legislation, and as a result I will be supporting the measure before the committee and urge other members to do so as well.

It is now inevitable that federal controls on greenhouse gases will be adopted. The Supreme Court ended the debate on whether there would be controls when it effectively mandated three years ago that the Environmental Protection Agency regulate greenhouse gas emissions unless the Congress regulates first. Virtually all interested parties, from the coal industry and electric utilities to the environmental community would prefer that Congress adopt the regulations rather than have them be adopted by the EPA. Accordingly, I have been working with Chairmen Waxman and Markey to advance the goals which I think are important to achieve in control legislation. These goals are the preservation of coal related jobs, the facilitation of growing coal production, and keeping electricity rates affordable in regions like Southwest Virginia where most of the electricity is coal fired. The compromise we have now achieved is a major step toward meeting these goals.

Our agreement will provide to electric utilities 90 percent of the emission allowances they will need without charge. The provision of free allowances will help to keep electricity rates affordable.

Our agreement provides 2 billion tons annually of offsets that will enable electric utilities to invest in agriculture and forestry, including tropical rain forest preservation, as a means of meeting their emission reduction requirements under the law. Therefore, by using offsets, electric utilities can continue using coal while at the same time reducing greenhouse gas emissions.

Under our agreement, separate legislation I have introduced to accelerate the flow of federal funding for the latest generation of carbon capture and storage technologies, will be enacted into law. Under that measure, $1 billion annually will be devoted to the development of these technologies for a ten year period, and estimates are that with this funding they will be available and reliable in 2020. This technology development is essential to achieving our long term goals for greenhouse gas controls while at the same time preserving coal jobs, allowing increased coal production and keeping electricity rates affordable.

Throughout the course of the negotiations, I have been in continuous discussions with a number of stakeholders including the coal industry, electric utilities and the United Mineworkers, and we are broadly in agreement that the legislation that is the product of our compromise should now move through the Energy and Commerce Committee to be considered in the full House of Representatives.

We also are in agreement that further improvements in the legislation should be sought after it is approved by the Energy and Commerce Committee, and I am committed to seeking those additional improvements. One key improvement which I believe to be necessary is a change in the level of greenhouse gas reductions that will be required by 2020. Chairman Waxman's initial proposal was a 20 percent reduction based on 2005 levels by 2020. Our agreement for purposes of committee consideration sets the level at 17 percent. I continue to believe that a 14 percent reduction would further our goals of preserving coal jobs, increasing coal sales, and keeping electricity affordable, and I will continue to promote in future steps within the legislative process a 14 percent target for emissions reductions for 2020. In addition, I remain concerned about the short length of the phase out of the electricity sector allowances after 2025, the remaining discount on international offsets which emerges after 5 years, and other matters.

Despite these reservations, and my commitment to seeking additional improvements, I do support moving the legislation through our full committee. I will be voting yes, I encourage other members to vote yes and to work constructively with Chairmen Waxman and Markey as this measure goes to the floor of the House, and also, hopefully, with our Senate colleagues as it is considered there and in conference.

Let me just say a word about our negotiations. They have been intense, but they have been collegial. They were well structured and methodical, and they have proven ultimately to be successful. And I want to commend Chairman Waxman and Chairman Markey for a superb process in which they accommodated my concerns, they solicited my views, they listened to our arguments, and they were willing to make sure that our core needs were met. I very much appreciate that process and their cooperation in this effort, and I am pleased that we have achieved agreement on many key matters.

The National Mining Association Blasts Waxman-Markey Climate Change Bill

May 20, 2009

NMA - NMA opposes H.R. 2454, the American Clean Energy and Security Act because it does not promote economic and energy security. While NMA recognizes changes to the original draft of the legislation are intended to reduce harmful economic consequences of the legislation, these changes are not sufficient to produce a balanced and responsible policy for addressing climate change concerns.

To be effective, climate change policies must address global emissions and accelerate the development and commercial deployment of advanced clean coal technologies such as carbon capture and storage (CCS). The bill mandates sharp near-term emission reductions before this technology can be deployed. The result will be devastating losses of high-paying mining jobs, higher energy costs for businesses and the exporting of American business and jobs to countries that do not require similar greenhouse gas emission reductions.

In addition to assuring that emission reductions are compatible with the commercial availability of the enabling technologies, an effective and balanced climate policy must include:

Effective cost containment measures, such as a safety valve, to protect against spikes in energy costs that will drive business and jobs overseas;

Sufficient and reliable funding and incentives to accelerate the development, demonstration and broad commercial deployment of advanced coal technologies such as CCS;

A comprehensive legal framework governing carbon capture and storage liability in order to provide the certainty needed to attract investment;

Measures that maintain the global competitiveness of U.S. manufacturing and mining industries; and

Clear and comprehensive preemption of all federal, state and local laws addressing greenhouse gas emissions.

America's families, communities and businesses cannot sustain higher energy costs, additional job losses and further weakening of our economy during these difficult times. We urge Congress to oppose H.R. 2454.

A total of 59 new coal-fired power plant projects were canceled last year... But what is truly ironic is that environmental opposition to new coal-fired plants is actually causing a massive increase in carbon emissions in the U.S. In fact, each new plant that’s canceled or abandoned in North America not only directly increases carbon emissions but also delays the adoption of clean coal technologies that could make the fuel more environmentally palatable... Modern plants consume far less coal to produce the same amount of energy... Nonetheless, this line of reasoning has little traction with environmental and consumer groups that oppose new plant construction. Therefore, building even the most efficient coal plants is problematic for utilities. But what’s bad for the environment is a big positive for coal demand. The U.S. will continue to rely on the existing base of coal-fired facilities; the average coal plant is already about 30 years old. These plants burn more coal to produce the same measure of electricity... Growth in coal-fired capacity in the developing world will offset any plant construction delays in the U.S. And every coal plant that’s canceled or blocked in the U.S. spells more coal burned in older coal-guzzling plants. - Elliott H. Gue, Coal Investors Take Their Lump, International Business Times, May 19, 2008

Obama Promised Audience: Will Destroy Coal Industry

November 2, 2008

Right Across the Atlantic - Speaking to the San Francisco Chronicle in January 2008, Senator Barack Obama said that he would put a new “cap and trade system in place that is as aggressive, if not more aggressive, than anybody else’s out there” if he would become president.

Every single person who would want to “build a coal-powered plant” would be able to do so, Obama said, but his new system would “bankrupt them.”

“What I’ve said is that we would put a cap and trade system in place that is as aggressive, if not more aggressive, than anybody else’s out there,” Obama was recorded as saying. “I was the first to call for a 100% auction on the cap and trade system, which means that every unit of carbon or greenhouse gases emitted would be charged to the polluter. That will create a market in which whatever technologies are out there that are being presented, whatever power plants that are being built, that they would have to meet the rigors of that market and the ratcheted down caps that are being placed, imposed every year.”

This would mean, Obama went on to explain, that “if somebody wants to build a coal-powered plant, they can; it’s just that it will bankrupt them because they’re going to be charged a huge sum for all that greenhouse gas that’s being emitted.”

He repeated: “So if somebody wants to build a coal-powered plant, they can. It’s just that it will bankrupt them.”

You can listen to Obama say it himself below:

The Senate Climate Bill Gives EPA Authority Over Both Old and New Coal Plants

June 3, 2010

Grist - ... Currently, the Clean Air Act can regulate new (or substantially modified) coal plants through the New Source Review program, one of its most contentious and litigated provisions.

The American Power Act, like the House climate bill passed last summer, contains statutory performance standards for new coal-fired power plants. They must sequester 50 percent (if permitted before 2020) or 65 percent (if permitted after 2020) of their CO2.

So new coal plants are getting regulated regardless. But what about the old ones?

Here's where the American Power Act actually has an advantage. There's an Easter egg in it, which has gone almost entirely unremarked since the its debut: the bill amends the Clean Air Act to give EPA authority to set performance standards for existing electrical generating units, i.e. old coal-fired power plants.

What coal-plant performance standards might look like under the American Power Act:

The power to implement performance standards for existing coal plants is a Very Big Deal. Big coal utilities are very likely to try to kill this provision.

How would performance standards for existing coal plants work? Ultimately it would be at EPA's discretion. The relevant part of the Clean Air Act -- Sec. 111(d) -- says that authorities are permitted to take into account "the remaining useful life of the existing source to which such standard applies," and remaining useful life turns out to be a pretty potent notion. You can imagine EPA proposing something like the following: For plants with 5 years of remaining useful life, performance standards only require some tweaks to operational efficiency. For plants with 10 years of remaining life, standards might require biomass cofiring or fuel switching. For plants with 20 years of remaining life, standards could be the same as the ones for new coal plants (50 percent CO2 sequestration by 2020).

Or whatever. The point is, EPA could use this provision to finally start the clock ticking down on the old, dirty coal plants that have so long vexed enviros (to say nothing of the people made sick by their pollution). It isn't the ideal way to address existing coal plants, but with a smart EPA and a willing administration, it could make a big difference.

While we're on the subject of existing power plants, there are other measures in the bill to accelerate the transition away from dirty coal, namely "financial and regulatory incentives, including expedited proceedings" for projects that shut down, retrofit, or switch fuels in old power plants. Depending on how powerful those incentives turn out to be and how performance-standards are implemented, the American Power Act could add up to a pretty decent way of taking on old coal. That's something enviros have been seeking for decades.

Of course, enviros have also been defending the Clean Air Act for decades. Tomorrow we'll take a look at the tools that are preempted by the bill and figure out whether they're worth going to the mat for.

Climate Bill Earmarks $500M for Clean Coal 'Admin Expenses'

June 3, 2009

Huffington Post - Rep. Rick Boucher (D-Va.) has been trying for the past year to get Congress to set up an independent corporation dedicated to clean coal development. He introduced the Carbon Capture and Storage Early Deployment Act (HR 6258), which provoked some hearings in 2008, but it went nowhere and died. So this spring he reintroduced the bill, virtually unchanged (HR 1689).

What happened next is further proof of the enormous leverage Boucher wields as a coal state Democrat in shaping national climate legislation.

His bill was incorporated wholesale as pages 52-75 into the American Clean Energy and Security Act of 2009 (ACES), the climate bill Reps. Henry Waxman and Ed Markey are shepherding through the House ...

Utility-first Climate Bill Warms Up in Congress

July 1, 2010

Reuters - Environmentalists and power companies are lobbying U.S. senators to put forward climate and energy legislation that would initially cap greenhouse emissions only from electric utilities, saying it's the last best chance for passing a bill this year.

They site fears that a broader bill forcing manufacturers and the transportation sector to pay for emitting carbon dioxide and other greenhouse gases while the country struggles to emerge from recession would be too difficult this year.

"The reality is that comprehensive economy-wide cap and trade is not going to be passed by the Senate," Environmental Defense Fund President Fred Krupp told reporters on Thursday.

"We are for the broadest possible cap that we can get," which means a bill that limits emissions at utilities first before moving to manufacturers later, he said.

EDF is lobbying Senators Jeff Bingaman, chairman of the Senate Energy Committee, and Olympia Snowe, a Republican, to put forward a utility-only bill. The senators have talked about the idea for months.

"Staff for both senators have had ongoing discussions about the design of a utility-sector cap and trade program, but no decisions have been made on how to proceed," said Bingaman spokesman Bill Wicker.

Senator John Kerry, a Democrat who co-wrote a climate bill unveiled in May, said this week a utility-only bill was one of the ideas being discussed on how to move forward with a bill that would put a price on greenhouse gas emissions.

He was speaking after a meeting hosted by President Barack Obama and more than 20 other senators on the energy bill.

The idea is supported by many companies in the utility business, which emits 40 percent of U.S. greenhouse gas pollution, as long as caps are put on the rest of the economy a few years later.

"We're willing to start early," Jim Rogers, the chief executive of Duke Energy said in an interview, "but we want it tied to an economy-wide because what good purpose is it if it ignores the other 60 percent?"

Rogers said a utility-first bill would have to include a provision to halt or reduce the program if in three or four years caps on manufacturers did not materialize.

Many utilities see carbon limits as inevitable and want the laws to be written so they can invest billions of dollars now on hold into low-carbon energy sources like solar, wind and nuclear power.

Environmentalists said the BP Plc oil spill in the Gulf of Mexico, the country's worst ever, could provide an opportunity to get an energy bill done.

A utility-only bill could be paired with measures to tighten safety and oversight on offshore drilling in a way that would make it hard for many lawmakers to vote against it.

One international energy official welcomed the idea of an utility-only bill, saying it could be a way of beginning to break a deadlock on global efforts to reduce greenhouse gases.

"To start with the electricity sector makes sense," Nobuo Tanaka, the head of the International Energy Agency, told reporters on Thursday. "It is a very good way to start, much better than nothing."

Still, as congressional elections loom in November, time is running short for debate on any complicated bill, especially one that could ultimately raise the cost of energy and household goods. Some Republicans insist even a utility-only measure is a "national energy tax."

EDF's Krupp praised Obama for hard work on climate, including appearing at international talks last year and directing billions of dollars from the stimulus package to clean energy investments.

But he said legislation will only pass if Obama pushes senators a little harder.

"If he doesn't do that, without his leadership then everything he has done so far will lead to nothing."