New EPA rules: Clean coal or end of coal?

The smoke stacks at American Electric Power's (AEP) Mountaineer coal power plant in New Haven, W.V.

It was a historic day at the Environmental Protection Agency today. For the first time, the U.S. government set down limits on greenhouse gas emissions from new power plants, both coal and natural gas. Coal-fired plants took the biggest hit. Regulators proposed limits on carbon dioxide emissions that effectively force the industry to build a whole new kind of power plant.

That plant would capture the CO2 emissions and bury them underground. “The coal industry has been touting for years that is has clean coal technology,” says Dan Lashof, director of the Climate and Clean Air Program at the Natural Resources Defense Council. “This rule says, well if you got it, you gotta use it.”

The industry, however, says “carbon capture and storage” technology is unproven on a commercial scale and prohibitively expensive. Coal executives say the E.P.A. is “waging war on coal” and that the rules effectively kill new coal plants.

But Richard Morse, managing director at energy consultancy SuperCritical Capital, says whether the E.P.A. intends that or not, it doesn’t matter. The marketplace has spoken. “The U.S. coal market over the last few years has really been transformed by developments in the natural gas market,” says Morse.

Morse says for years coal accounted for 50 percent or more of electric power in the U.S.  Last year, it was down to 37 percent. Coal’s upstart rival, cheap and abundant natural gas, is the reason. The U.S. Energy Information Administration predicts that by 2035, 80 percent of new power generation will come from natural gas, a comparatively cleaner fossil fuel.

So why are the coal industry and some utilities upset over the E.P.A.’s proposed rules?

“This is a prelude to a much more important rule which will deal with existing coal-fired power plants,” says David Victor, climate change policy scholar and professor at the University of California, San Diego. Victor says if the E.P.A. cracks down hard on existing plants, we can expect a wave of coal plant closings. And it’s those plants, as well as any future ones, that utilities see as their hedge against historically volatile natural gas prices. In other words, the industry wants to keep that option open.

The E.P.A. will announce proposed rules for existing coal-fired power plants in June 2014.

About the author

Sarah Gardner is a reporter on the Marketplace sustainability desk.

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