Obama’s announcement sent the news media and politicians into a frenzy, with vast proclamations about these regulations shutting down a large number of power plants, increasing electric costs, and killing the coal industry. But these proclamations are exaggerated. The new regulations are unlikely to cause any significant retirements of existing coal-fired power plants (the largest emitters by far), and at best, will lead to no more than about a five percent reduction in power plant emissions once fully implemented around 2020.
Let me explain why.
The Clean Air Act - which governs EPA’s ability to issue these standards - and more than forty years of federal court and EPA decisions interpreting the Act leave EPA’s hands tied.
Unfortunately, the CO2 control technology options for coal-fired power plants are limited. The only options are to improve the efficiency of the plant, switch to lower emitting fuels like natural gas, or sequester the CO2 underground (which involves separating the carbon from the exhaust stream and piping it to underground storage reservoirs, sometimes hundreds of miles away). There are no add-on scrubbers that remove CO2.
The Act gives EPA two different types of technology standards that it can set. EPA can set blanket emission standards, called new source performance standards, which uniformly apply to all sources covered by them. And EPA can also impose emission standards on new or significantly modified sources on a case-by-case (or power plant by power plant) basis.
Now here’s the rub. According to the Clean Air Act, the case-by-case technology standards must be more stringent than the blanket, uniform ones. This is important because Obama’s plan calls for EPA to issue the uniform standards for new and existing power plants. Yet EPA has already approved the more stringent case-by-case standards for a number of existing and planned coal-fired power plants, and they haven’t amounted to much, generally requiring modest efficiency improvements that are relatively inexpensive and achieve at most a five percent reduction in emissions.
For example, a case-by-case standard for CO2 was set for the Wolverine Power Supply Cooperative, Inc.’s proposed 600 MW coal fired plant located in Rogers City, Michigan in 2011 and led to only a 4.7 percent CO2 emissions reduction, mainly based on efficiency measures. Another case-by-case standard for CO2 was set in 2011 for the existing coal-fired George Neal South Power Plant in Salix, Iowa, and it resulted in only about a 1.2 percent reduction in emissions.
Obama’s planned uniform regulations will need to be even more benign, or EPA risks violating the Act.
Low natural gas prices and EPA’s regulation of other pollutants such as mercury and sulfur dioxide have significantly lowered CO2 emissions from power plants in the last few years, causing many older coal-fired plants to either be operated less or retired. Don’t expect Obama’s climate plan to have the same effect.
Potts is a partner at the law firm of Foley & Lardner LLP and has authored articles on the Clean Air Act in law journals published by Yale, Harvard, N.Y.U, and Berkeley.