US Chamber of Commerce Blog
Sen. Joe Manchin (D-W.Va.) is no fan of the Obama administration’s campaign to drive coal out of America’s energy mix. When he ran for Senate in 2010, Manchin shot a hole through carbon cap-and-trade legislation in Congress.
Since being elected, Manchin has continued defending coal as an abundant and affordable energy source and fighting against EPA’s regulatory overreach. Last week, he co-sponsored a Congressional Review Act resolution of disapproval for EPA’s carbon regulations on new power plants.
“Never before has the Federal Government forced an industry to do something that is technologically impossible--until now,” he told Senators on November 17, 2015.
Manchin was referring to carbon capture and sequestration (CCS) technology that pulls out carbon dioxide before it can go into the atmosphere.
Canada’s CBC News reports that the first commercial coal-fired power plant to use CCS technology, the Boundary Dam plant in Saskatchewan, has only been running at 40% of its capacity and has “serious design issues.” Just a few months earlier, EPA cited the Boundary Dam project (page 64513) as evidence that CCS was commercially proven in support of its requirement that CCS be installed on any new coal plant built in the United States.
“These recent revelations prove that CCS is still technically unproven and still potentially damaging in a power plant application. Therefore, it is foolish for this administration to require it now for new U.S. coal plants,” Manchin said. He went on to detail the project’s troubles:
The reports also identify the CCS system of the demonstration plant as being a key issue in the delays for getting the plant up and running. After 1 year of operation, the project was forced to replace certain important features at a cost of $60 million. There have always been nearly $23 million in nonperformance penalties and lost revenues.
The plant's management company, which is SaskPower, has acknowledged these recent reports and are now pushing back the project's operational date to the end of 2016, but there are no guarantees this will prove true either.
SaskPower is also claiming that the project will need at least a year of stable operation to prove the technical operation and the economics of the project, which would aid in determining commercial viability.
SaskPower has announced it will not be able to make an informed decision about carbon capture sequestration until 2018. Yet the EPA here in the United States of America is demanding that all U.S. coal-fired generation industry implement this technology now.
Skepticism about the current commercial viability of CCS technology is also found inside President Obama’s White House. Its 2014 National Climate Assessment states, "It is difficult to forecast success in this regard for technologies such as CCS that are still in early phases of development."
It goes on to note [emphasis mine]:
CCS facilities for electric power plants are currently operating at pilot scale, and a commercial scale demonstration project is under construction. Although the potential opportunities are large, many uncertainties remain, including cost, demonstration at scale, environmental impacts, and what constitutes a safe, long-term geologic repository for sequestering carbon dioxide.
This doesn’t sound like a feasible technology to me—at least not yet.
Sen. Manchin’s criticism is important for two reasons. First, as Sen. Machin points out, the U.S. economy will depend on coal for decades to come, and the aging fleet of coal-fired power plants (average age, 45 years) will need to be replaced.
“[R]egulations that prohibit building new coal-fired power plants can soon become a serious issue for the Nation's electricity grid and the reliability we all depend upon,” Sen. Manchin warned.
Under EPA’s tough carbon regulations for new power plants, we won’t be able to use technology we know works. Facilities like the Southwestern Electric Power Company’s ultra supercritical coal-fired power plant in Arkansas that produces 320,000 fewer tons of carbon dioxide annually wouldn’t pass muster. As a result, EPA has effectively made the cleanest coal plant design in the country illegal to build and operate.
The second reason involves how the Clean Air Act is structured, and the fact the Obama administration is bypassing Congress and regulating carbon emissions purely through the Regulatory State.
Under the Clean Air Act, before EPA can regulate carbon emissions from existing power plants—the “Carbon Pollution Standards” rule--it must regulate those same emissions from new power plants.
CCS is the foundation for a “greenhouse of cards,” as the Competitive Enterprise Institute’s Marlow Lewis explains:
Under §111 of Clean Air Act, EPA may not promulgate emission performance standards for existing sources unless it first (or concurrently) promulgates performance standards for new sources.
So if Congress or courts overturn the “Carbon Pollution Standards” rule, that would also upend the CPP, which in turn would gut the U.S. INDC, scuttling COP21.
If CCS isn’t commercially viable—and judging from the Boundary Dam experience it isn’t yet—the Clean Power Plan goes down too.
Now, in all likelihood, because Paris talks will start soon on November 30 and the cautious pace of federal court proceedings, the Obama administration shouldn’t expect to be embarrassed by having a federal judge bring down its intricate climate agreement structure.
Nevertheless, should the carbon rule for new power plants go down in the future. The administration’s house of cards will collapse. The Clean Power Plan will fall and take the administration’s international promises with it.
Three months after EPA made its move to regulate carbon emissions from power plants, Congress started to make its countermove.
The Senate stood up for affordable, reliable electricity by rejecting EPA’s rules on a 52-46 vote. And later this month, the House of Representatives is expected to send the same message as negotiators meet in Paris for the COP21 climate change talks.
As for the Paris talks, Stephen Eule, vice president for climate and technology at the U.S. Chamber’s Institute for 21st Century Energy, told a Senate panel to be skeptical about any real breakthroughs.
For developing countries like China and India, “the inescapable fact is developing countries have a much greater interest in pursuing economic growth and poverty eradication than they do in reducing GHG emissions,” Eule said.
It is a simple fact that much of the energy needed to power economic growth will likely be supplied by fossil fuels. Many developing countries have large resources of coal, natural gas, and oil, and it would be unrealistic to expect them not to use it.
What’s more, even with EPA’s scheme to reconfigure America’s power system, the United States’ carbon emissions commitments don’t add up:
We estimate that in 2025 total net GHG emissions would still be about 800 million TCO2 eq., or 45%, short of the needed 1.8 billion TCO2 in reductions needed to meet the President’s 28% emissions target.
The blog post from Eule goes into detail about EPA’s carbon emissions gap.
Under EPA’s plan, Americans will pay higher electricity rates for a reduced amount of generating capacity—we’ll pay more for less.
Given all the pain EPA’s carbon regulations will impose on the U.S. economy--with little gain--it’s no surprise Congress is rejecting them.
Expect to pay higher electricity rates because of EPA’s carbon regulations. NERA Economic Consulting modeled the final version of EPA’s Clean Power Plan for the American Coalition for Clean Coal Electricity. NERA economists expect an 11% to 14% increase nationwide in electricity rates between 2022 and 2033.
The rate shock will be felt across the country:40 states could have average retail electricity price increases of 10% or more 17 states could have average retail electricity price increases of 20% or more 10 states could have average retail electricity price increases of 30% or more clean-power-plan-will-mean-higher-electricity-bills-average-electricity-rate-increase-2022-2033-_chartbuilder.png Facebook TweetChart: These states will see average electricity rate increases of at least 30% because of EPA's Clean Power Plan
Even EPA acknowledges its carbon regulations will mean higher electricity rates.
What do higher rates mean for consumers? According to NERA, American households will have $64 billion to $79 billion less to spend. It’s simple. More money for energy means less money available for food, health care, and other necessities.
At the same time we will be paying more for electricity, there will be less power generating capacity. NERA finds that EPA’s carbon regulations will force the retirement of as much as 19% of coal-fired power generation by 2033, pulling down the total electrical generating capacity of the U.S. by as much as 10%.
Higher electricity rates and a lowered supply of generation capacity. How is this any good for an economy dependent on affordable, reliable energy?