EPA in Wonderland: Fantasy and Falseness in Newest Coal Ban

We’re given a rule that even its own sponsor says has “negligible” environmental or economic benefits or costs. Yet, not a week will pass after the final rule hits the Federal Register before green groups sue EPA to force regulation of modifications. EPA will surrender in its now normal dance with the greens of sue-and-settle.
 

By Richard Bornemann | October 1, 2013
 


EPA Administrator Gina McCarthy speaks at the National Press Club on September 20, 2013. Photo by Alex Wong

Green groups swooned over the National Press Club appearance by Environmental Protection Agency (EPA) Administrator Gina McCarthy, who unveiled her agency’s proposed 463-page second attempt to mandate carbon dioxide restrictions on “new” coal-fired power plants.

Two key coal state senators unwittingly indicated in their respective press statements following the September 20 release that they are united in their stand against the EPA rule for new coal plants. Republican Leader Mitch McConnell was critical of both the EPA and President Obama calling the proposed restrictions “an escalation of the war on coal” and “another attempt by the president to fulfill his long-term commitment to shut down our nation’s coal mines.” Democrat senator and former governor of West Virginia, Joe Manchin, criticized the administration for “trying to hold the coal industry to impossible standards.” The Mountain State senator called the facts plain and simple: “Coal provides the greatest share of electricity we use, generating around 40 percent of our power.”

Terminology

  • BSER: Best System of Emission Reduction
  • CAA: Clean Air Act
  • CCS: Carbon Capture and Storage
  • EOR: Enhanced Oil Recovery
  • IGCC: Integrated Gasification Combined Cycle
  • NSPS: New Source Performance Standard
  • NSR: New Source Review
  • RIA: Regulatory Impact Analysis

Analysis

The EPA’s first attempt, in April 2012, would have lumped together all “new” fossil-fueled generation (gas and coal) as “Electric Generating Units,” and imposed on them CO2 emissions limits under the Clean Air Act’s (CAA) Section 111 New Source Performance Standard (NSPS) requirements. The NSPS proposed in 2012 was 1,000 lbs. of CO2 per megawatt-hour (lbs./MWhr.) of electricity produced. Most coal-fired plants emit at least 1,800 lbs CO2/MWhr.

After a year and a half, and over 2 million public comments later, this recent EPA do-over is really just a legal cleanup of its 2012 proposal. Recognizing that the CAA is source category-specific, EPA came up with separate standards for big and small gas-fired plants, and for coal.

All coal-fired facilities, whether they burn pulverized coal, or coal that’s first gasified in a super clean process called Integrated Gasification Combined Cycle (IGCC), would be limited to 1,100 lbs. CO2/MWhr. That’s EPA’s notion of flexibility, an extra 100 lbs.

Section 111 says that the NSPS has to be based on the “best system of emission reduction” (BSER). BSER for natural gas, EPA says, is based on combined-cycle turbines. No problem there; this technology has a successful history everywhere.

But BSER for coal is to be based on Carbon Capture and Storage (CCS). CCS has not yet entered the commercial market anywhere.

That hasn’t stopped EPA from extolling the virtues of four favorite projects. The most advanced, at 75 percent complete, is Southern Company’s 582 MW IGCC Kemper County Energy Facility in Mississippi.

Kemper will gasify local low-grade lignite coal, and capture 65 percent of its CO2, which is to be piped and sold to area drillers, who’ll inject it underground for “enhanced oil recovery” (EOR). But Kemper is estimated to cost $5 billion, making its electricity perhaps the most expensive in the country. Naturally, any big first-of-a-kind project is going to be very high cost, but EPA doesn’t come close to justifying any notion that succeeding generations of CCS plants could ever compete with natural gas at any anticipated price point for gas.

Another EPA poster project is SaskPower’s $1.24 billion retrofit of one of its units at Boundary Dam in Saskatchewan. This plant, which is touted as the “world’s first commercial coal-fired CCS facility,” also uses local lignite, is supposed to capture 90 percent of its CO2 emissions to sell for EOR. A major concern for the Canadians is power loss. It takes a lot of electricity to run a CCS system, and the hope is to limit the loss to 25 percent.

EPA’s two other oft-cited projects, one in Texas and the other in California, exist only on paper, and they too will partly offset their very high power prices with CO2 sales for EOR. But what if electric power grid designs might require a plant location that’s nowhere near an oil field or cheap local coal? Well, then, that’s just too bad.

EPA’s fantasy is that BSER is a pure virtue; anything that’s the “best” imposed. That’s not true. A BSER has to be one that “the Administrator [of EPA] determines has been adequately demonstrated.” No one outside of EPA can seriously believe that commercial scale CCS has been “adequately demonstrated” anywhere. Southern Company itself has said that its project is not a model.

Even EPA has doubts. In a nod to reality, EPA refers to the “apparent ongoing viability” of the four CCS projects (emphasis added). Watch that word disappear from the final rule.

The falseness of the proposal is its claim to apply only to “new” coal-fired generation. The CAA defines “new source” as including “modification” of existing sources. While routine maintenance or repairs are supposedly exempt from “New Source Review” (NSR), EPA has a long history of suing utilities over NSR for almost every modification they make. EPA has even tried to impose it on repairs that don’t increase any emissions, but simply keep generating units operating longer.

Sure, the rule says, “At this time, EPA is not proposing standards of performance for modified or reconstructed sources.” EPA is silent “at this time,” but the CAA is nondiscretionary here. Besides, not a week will pass after the final rule hits the Federal Register before green groups sue EPA to force regulation of modifications. EPA will surrender in its now normal dance with the greens of sue-and-settle.

Finally, we’re left to wonder about the rule’s purpose. It’s not about climate change, though the EPA pleads it dramatically. Indeed, EPA’s own Regulatory Impact Analysis (RIA) acknowledges that the market has given the edge to natural gas, and that the rule “will result in negligible CO2 emission changes, energy impacts, quantified benefits, costs and economic impacts by 2022.”

We’re given a rule that even its own sponsor says has “negligible” environmental or economic benefits or costs. So, there is no purpose here, except to assert the power of an intense anti-coal ideology, and sell it with fantasy and falseness.


Richard Bornemann has provided strategic legislative and regulatory counsel to American energy and surface transportation companies of all sizes for more than 20 years. He is an energy and environment analyst for the Selous Foundation for Public Policy Research, and author of American Energy Independence: A Policy Review 1973-2012. Mr. Bornemann is also a contributor to SFPPR News & Analysis.