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China Takes Aim At The Petrodollar

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In a potentially disrupting move…

EPA Air Regulations Could Decimate the US Coal Power Industry

A group of economists at the Brattle Group have just released a report that studies the impact of the Environmental Protection Agency’s (EPA) air regulations on coal fired power plants. The findings predict that between 59,000 and 77,000MW capacity of coal power plants will be forced to retire from operations over the next five years. This is 25,000MW more than predicted back in 2010.

The study found that in order to retrofit and replace the coal power plants that already exist in the US, an investment of $126 to $144 billion would be needed. This investment will be difficult for small companies to acquire, meaning that approximately 80 percent of the coal plants likely to retire will be owned by such small privately owned companies.

Frank Graves, the co-author of the study, said that “our analysis indicates that future coal retirements will be a bit more than double the level announced to date. The impacts will be modest over large areas, but more acute locally, especially for owners of smaller fleets that are predominantly coal-based. Everything else being equal, this amount of retirement will be enough to increase prices in both electric and gas markets for a few years, but we do not envision that impact to be large or persistent enough to alter retirement decisions.”

By July 2012 about 30,000MW of coal plants had decided to close operations by 2015 (nearly 10% of the total US coal power capacity).

By. Charles Kennedy of Oilprice.com



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  • Don Greenberg on October 09 2012 said:
    Mr Kennedy,

    You may want to get your facts straight before blaming the EPA regs for the retirement of coal plants. The report you cite actually say exactly the opposite. To quote the reports conclusion:

    "This 2012 reassessment indicates that
    somewhat more retirements are likely (about 25 GW) than we foresaw in late 2010. However, that change is
    primarily due to changing market conditions, NOT environmental rule revisions, which have trended towards MORE LENIENT requirements and schedules." (caps mine)

    Also in the FIRST PARAGRAPH on the FIRST PAGE the report states that regulation overall is more lenient than expected. To quote:

    "On the regulatory front, two of the major Environmental Protection Agency (EPA) rules (CSAPR
    and MATS) were finalized with less restrictive requirements on the compliance deadlines
    and equipment than previously predicted. More recently, a federal court order vacated the
    CSAPR, adding an increased level of uncertainty regarding the timing and requirements under
    a potential future proposal by the EPA. This recent ruling may increase the role of the EPA’s
    existing Regional Haze Rule for coal-fired plants in the Eastern Interconnect. In addition, the
    EPA’s proposed 316(b) rules on cooling water intake structures were less onerous than some
    predictions with no universal requirement to install cooling towers."

    The report summarizes that it is lower demand and lower natural gas prices aka MARKET CONDITIONS that are causing these retirements, NOT regulation.

    That all being said (and cited), I'm wondering if Mr. Kennedy you actually even read the report?

    You also may want to send a corrected version of you guest blog to the Christian Science Monitor where this appeared also.
  • Mel Tisdale on October 06 2012 said:
    The clue is in the name: 'Environment Protection'. Coal is a very bad polluter, not just because of its CO2 emissions.

    Those that don't care about their children and grandchildren will campaign for ditching the EPA regulations. Those that do care will campaign for their retention. The majority will metaphoricaly or in reality simply open another can of beer and see what else is on the television. Oh hum!

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