Trump's order a short-term fix to a long-term coal industry problem
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President Trump is acting on his promise to dismantle the Environmental Protection Agency’s Clean Power Plan (CPP), the ambitious policy, finalized in 2015 by the Obama administration, that aims to reduce carbon dioxide emissions from the power sector by 32 percent from 2005 levels by 2030.

The president is looking to overturn this landmark piece of legislation by using his executive powers, but the impact of any such move is likely to create modest winners, and far greater losers.

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It is worth noting that the CPP is not actually in force, as its implementation was stayed by the Supreme Court in February 2016 while legal challenges from various states and industry were heard by lower courts. As such, the policy change reverses what the CPP was expected to do, rather than what it has already done.

 

At least in the next decade, the CPP would have had an impact on coal (negative) and gas (positive). By requiring states to reduce carbon emissions from power, it would generally have encouraged states to start to move away from coal to both gas (far cleaner burning) and renewables.

 One of the quickest ways to make chunky reductions to power sector emissions is to replace an old coal-fired power station with a modern gas-fired plant (a Combined-Cycle Gas Turbine or CCGT plant), which delivers around a 50 percent reduction in carbon emissions for each unit of power produced.

As such, almost all of the CPP-mandated emission reduction targets out to 2030 could have been achieved by encouraging the building of CCGTs, at least in those states where coal-fired generation still dominates.

For states with power sectors less dominated by coal, completely replacing any existing coal plants with gas will still help get them most of the way to the 2030 targets. Of the few states with no coal plants (such as California), gas generation may need to be pushed out by renewables to meet the goals of the CPP.

On balance, by removing some of the incentives to further push gas in the power sector, scrapping the CPP will come at the expense of increased gas demand. One of the issues is that there are already many new gas-fired power plants online, with the lower 48 states having added 30 GW of capacity in the last four years alone.

That said, this came alongside the closure of 29 GW of coal-fired plants. The reasons for this switch were largely economic, although coal closures were also hastened by air pollution regulations (rather than climate rules). The only way to reverse this trend and get coal back into the power mix is to make coal cheaper than gas, but scrapping the CPP does little to support those aims.

Coal has also lost market share to renewable power, and reversing the CPP will take away some pressure from states not already promoting renewables to do anything on that front.

As such, it would be something of a blow to the U.S. renewable power industry and could mean that some of the renewables threat to coal will be lost. However, it is not a zero-sum win for U.S. jobs, and all of the progress made on renewables thus far came without being under the CPP policy framework.

It is clear that environmental groups will fight to prevent a full removal of power plant emissions rules, and at least 18 states and several large cities have moved to defend the CPP in the current hearings. Many states may choose to develop and implement local plans even without a strong requirement from the federal government.

Nevertheless, the removal of the CPP as it currently stands will eliminate some of the urgency to close coal plants and could slow the uptake of renewables, particularly in states that have so far not promoted this type of energy.

However, tearing up the plan does little to get higher levels of coal-fired generation back into the power market, which will be required for coal producers to see an increase in demand. 

 

Trevor Sikorski is the head of natural gas at  Energy Aspects, an independent research consultancy that provides analysis of energy markets to its clients. 


The views expressed by contributors are their own and not the views of The Hill.