Presidential Race Vital to Coal's Carbon Emissions, EPA Ruling Part of Coal's Concerns

Location: New York
Author: Ken Silverstein
Date: Monday, April 2, 2012

The 2012 presidential election will determine whether the country continues to travel its current route or whether it takes a different direction. No issue is more notable than the future of coal-fired electric generation that now comprises about 45 percent of the market.
The Obama administration delivered a potentially fatal blow to coal this week, announcing a proposal that any new coal-burning facility would have to emit 43 percent less carbon than current coal units. That means that they would have to be as clean as today’s natural gas plants -- a move that would effectively ban any coal plant that does not have carbon capture and sequestration. And because those technologies are a still a distant dream, don’t expect any new such plants to be built -- unless a new team takes over the White House.
“There’s a war on coal going on,” says Nick Akins, chief executive of American Electric Power. “If we move away from this practically overnight, it is not good for the economy or reliability. It has to be a rational transition. We are putting pollution controls on our plants. We are retiring 6,000 megawatts of coal by 2014. All were running at 60 percent capacity during peak.”
Akins, who spoke at the EnergyBiz Leadership Forum, acknowledges that natural gas-fueled facilities will replace those units being retired. Interestingly, AEP had been focused on sequestering carbon in a geological formation located in West Virginia. But it has postponed that project, with Akins noting that there was no “enabling legislation to get it done -- something to encourage investment.”
Part of coal’s problem is the regulatory environment. And part is the economic landscape. Natural gas cost less now than it has been at any time since 2002, at just over $2 per million Btus. Just like coal, there’s an abundance of the fuel given that new drilling methods can access those shale deposits embedded in rocks. Beside that, natural gas release half the carbon than that of coal.
Under the proposal that is now out for public comment, coal facilities can’t emit more than 1,000 pounds of carbon dioxide per megawatt-hour -- something that would require those plants to do better than the current 1,800 pounds. By comparison, natural gas facilities release about 800 pounds for the same measure. If enacted, this new rule would mean no new coal plants would go up unless they had carbon capture and sequestration capability.
Existing Plants
The rule would not affect any current plants or those that are about to put shovels in the ground. The older coal units, however, must still comply with the new rules tied to mercury and sulfur.
“We have no plans to address existing plants and in the future if we were to propose a standard, it would be informed by an extensive public process with all stakeholders involved,” says EPA Administrator Lisa Jackson.
Just recently, the U.S. Energy Information Administration said that coal used for electric generation fell to about 39 percent for the last two months of 2011. That is the lowest it has been since 1978. As a percentage of electric generation, it is expected to decline even further while natural gas is projected to grow.
While the prospects for an affirmative congressional vote on carbon emissions were strong when Obama was elected, they came crashing down after the 2010 midterm elections. For its part, the environmental community is standing tall but remains puzzled why the White House refuses to tackle carbon emissions associated with existing coal facilities.
The answer is twofold: First, the U.S. Supreme Court has said that EPA can regulate greenhouse emissions if it has determined that they are harmful to the environment. EPA has made such a finding and it has put forth rules that would try to limit those releases from all sources, including the current coal plants -- a move under legal challenge right now.
Second, it’s an election year. Scott Segal, executive director of the Electric Reliability Coordinating Council, says that he has little confidence that EPA won’t backtrack and attempt to regulate carbon from existing coal plants. Just wait until the election is over, he says, adding that placing coal’s future in the hands of carbon capture and storage is a highly speculative bargain.
“Requiring coal-based power plants to meet an emissions standard based on natural gas technology is a policy overtly calculated to destroy a significant portion of America’s electricity supply,” adds Hal Quinn, who heads the National Mining Association. Coal, he adds, is an effective hedge against volatile natural gas prices.
Even before EPA’s latest pronouncement, coal’s future had been limited to overseas markets in China. The proposed regulations merely facilitate the market forces now present and which favor natural gas. Political change could slow down the pace of regulations but it will do little to temper the current economic trends.

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