Another Costly EPA Rule

November 8, 2013

The Environmental Protection Agency (EPA) released a revised proposed rule to limit greenhouse gas emissions from new power facilities. This is the most recent component of the president's "Climate Action Plan," and follows two prior greenhouse gas rules that regulated the fuel economy of heavy-duty trucks and cars. Though this rule is not considered "economically significant," it will be devastating to new coal construction, say Catrina Rorke, director of energy and environmental policy, and Sam Batkins, director of regulatory policy, at the American Action Forum.

The limits on coal are based on estimates of emissions from facilities employing partial carbon capture and storage (CCS). The CCS requirement for new coal is a controversial red line for the industry.

  • Despite EPA's claims, the United States does not have an operational commercial-scale power facility operating CCS that serves as an industry-wide example.
  • Demonstration projects have been underway for a number of years, but the size of these facilities and the emissions stream they capture do not provide adequate evidence of the feasibility of CCS.
  • Furthermore, CCS is not yet fully commercialized, nor has it been proven effective or economical.
  • The economic significance of this rule may be misstated when considering the full implications for the power supply.

Though EPA claims this regulation allows for further investments in this technology, there is little evidence to suggest the market is ready for a leap of this magnitude. Of course, commercial-scale CCS will never be economical until we start building out facilities. The true challenge is to advance the coal industry along the CCS cost and knowledge curves. An excessively strict near-term regulatory regime will hamstring the investments and innovation that can keep clean coal in our energy toolbox, especially as market conditions and other regulations are already decreasing its economic viability.

Regulations that make it difficult to adequately power the grid may undo many of the advancements that have helped us reduce our daily impact on the environment. Surely, this is not the intent of greenhouse gas-limiting policies.

Source: Catrina Rorke and Sam Batkins, "Greenhouse Gas Standards for New Facilities Present Significant Technology Challenges," American Action Forum, October 18, 2013.

 

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