U.S. Proposes Historic but Lax Carbon Regulations for Fossil Fuel Power Plants (Part 2 of 2)

Last week I wrote about the Environmental Protection Agency’s (EPA) new proposed standard for carbon dioxide (CO2) emissions from fossil fuel power plants. The long-awaited regulation would limit emissions to 1,000 pounds of CO2per megawatt-hour (MWh) of electricity produced, essentially guaranteeing that no new coal power plants will be built in the U.S. without carbon capture and storage (CCS) technologies.

Almost 30 percent of U.S. greenhouse gas emissions come from coal power plants. Image source: epa.gov

Almost 30 percent of U.S. greenhouse gas emissions come from coal power plants. Image source: epa.gov

In an effort to minimize opposition to the proposed standard, the EPA emphasized the limited negative impact on industry, as utility companies are already choosing to invest in natural gas rather than coal plants for new capacity. This is due mostly to abundant new reserves of relatively cheap shale gas extracted through hydraulic fracturing.

So just how accurate are the EPA’s claims that the proposed regulation is in line with industry business-as-usual? Other projections of future coal plant construction support the overall claim that the industry was already moving away from investing in new coal power.

The U.S. Energy Information Administration (EIA) projected there would be “virtually no new coal in [the] reference case [scenario] following several CCS demos.” The EIA reports that there are 9.3 gigawatts (GW) of new coal capacity currently planned by 2015, and none thereafter. Nearly all of this new capacity will be built within the next 12 months and will therefore be exempt from the proposed CO2 standards. Any plants scheduled to begin construction in more than a year will need to include CCS technologies in order to comply with the 1,000 pounds of CO2 per MWh limit of the proposed EPA regulation. Power plant emissions can be averaged over a 30-year period to meet the regulations, so it is also possible for power producers to build coal plants in the near-term provided they install CCS systems in the future.

The EIA further predicts that only another 0.9 GW of coal capacity (in addition to what is currently planned by 2015) would have been built by 2020 absent the new regulation, and just 0.3 GW more by 2035. Some of this new projected capacity will likely be avoided due to the EPA standard – the rest will, again, need to include CCS.

The total 10.5 GW of planned and unplanned coal capacity additions projected by the EIA is a relatively small fraction of the 178.2 GW of total projected capacity additions that will come online by 2035. The 10.5 GW of additional capacity is also much less than the 33.1 GW of coal capacity retirements estimated by 2035, most of which will occur before 2015. Projected coal capacity additions account for only about one percent of U.S. current installed capacity of 1,000 GW (including more than 300 GW from coal).

A Barclays study found that the proposed carbon standard would reduce future coal capacity additions from 6.6 GW to 2.2 GW – the equivalent of adding about ten fewer coal power plants of nearly 500 MW each. While ten fewer coal plants is certainly a positive step, this number is small when compared to the more than 700 coal power plants already operating in the U.S. which will remain unaffected by the standard.

Jim Rogers, president of Duke Energy, one of the largest utilities and coal electricity producers in the U.S., echoed these projections saying that over “the next two decades, we do not plan to build another coal plant,” adding that as a result, “the regulations are not relevant.”

As I wrote last week, the proposed regulation is a historic step, as it marks the first time CO2 emissions have been regulated in the U.S. However, by most accounts, the energy choices mandated by the standard would have taken place even in the absence of the EPA regulation. In order for the EPA CO2 regulation to be meaningful, it is essential that the current proposed standard be strengthened over time and expanded to cover existing power plants.

Shakuntala Makhijani is a Climate and Energy Research Associate at the Worldwatch Institute.

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