The controversy over the Environmental Protection Agency’s Clean Power Plan has become the latest chapter in the chronicle of President Obama’s so-called ‘war on coal’. The plan promises many things, chief among them the health and climate benefits accrued by switching to cleaner burning fuels. But a case before the DC Circuit Court has the potential to derail the plan before it even comes into effect, with implications for US coal producers and the national clean energy debate.
The new regulations have their critics, led by coal companies and Senate Majority Leader Mitch McConnell (R- KY), who has personally urged the nation’s 50 governors to ignore the rules. While this may seem like just another example of partisan politics, the latest case, if successful, could seriously curtail the Environmental Protection Agency’s (EPA) powers. A victory for coal would be a blow for the environmental lobby and the federal government.
The dispute over the Clean Power Plan centers on its proposal to cut pollution from power plants by assigning tough emissions reductions targets on a state-by-state basis. The goal is to reduce carbon pollution from the power sector by 30 percent by 2030 from 2005 levels. Existing coal-fired plants, as the biggest polluters, will be the most affected. Opponents argue that the federal government is overreaching its regulatory authority prescribed under Section 111(d) of the Clean Air Act. The EPA is expected to release the final rules midsummer this year. Related: How Much Longer Can The Oil Age Last?
In the meantime, the first battle took place in the courts. The DC Circuit Court agreed to hear a case brought by Murray Energy against the EPA, which has the support of coal producers and 14 coal-reliant states, led by West Virginia and Michigan. Arguments against the plan include loss of jobs, rising household power bills, and a failure to consider the costs of compliance and unfairness of placing this financial burden on a few entities. 13 states and the District of Columbia responded by filing a petition in support of the EPA’s plan. The judges did not appear keen to weigh in on a rule that hasn’t yet been finalized.
Proponents of the Clean Power Plan have released findings that underscore the benefits of the rules. An independent study found that the proposals could prevent thousands of deaths per year from respiratory illness and heart attack as a direct result of improved air quality. Related: Which Nation Just Became The World's Top Crude Importer?
For all the bombast, the latest regulations are only one factor contributing to the decline of the once ubiquitous coal plants in the United States. The dramatic rise in shale gas production has seen cheap natural gas catch up to coal in power generation. The declining cost of solar panels and state-led incentives to increase renewable energy sources in the power mix are also having an effect.
The US Energy Information Administration (EIA) predicts that without major policy changes, coal-fired generation will remain fairly flat between now and 2040, dropping from 39 percent to 34 percent. However, this scenario does not include the consequences of the Clean Power Plan coming into effect, which the EIA anticipates will have a significant impact on coal use.
BP’s 2035 energy outlook may get a little closer to this case. The company expects coal’s contribution to North America’s electricity mix to decline by 2.9 percent per year in the coming two decades, falling to 18 percent by 2035, the lowest level on record. Related: California’s Climate Goals: Realistic Or Just Wishful Thinking?
If the case against the EPA’s Clean Power Plan is successful and coal somehow makes a comeback, the US would be bucking global trends. Coal, which was the fastest growing fuel between 2000 and 2013, is now expected to be the slowest growing fuel over the next two decades. Much of this is due to negative growth in OECD countries.
The threat against coal in the United States is far greater than President Obama’s pen. Coal has already lost its main advantage – cost effectiveness – and the national sentiment is clear. A short term win for coal companies and coal states may extend the life of some plants in the United States. The win could still have serious implications in terms of limiting the EPA’s authority and would certainly be a slap in the face for the Clean Power Plan’s proponents.
But ultimately it would be unable to reverse the national and global movement towards cleaner-burning and increasingly affordable energy alternatives over the coming decade.
By Alexis Arthur of Oilprice.com
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