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Category — War on Coal

Peltier Corrects: EPA’s CO2 Rule of ‘Great Strategic Benefit’ to Obama Administration

[Editor Note: In "Speaking of Power" (October 2012), POWER editor-in-chief Robert Peltier takes issue with a recent analysis concluding that the EPA's new CO2 rule for powerplants was inconsequential. Since his editorial was published, it was reported that a second wave of CO2 powerplant regulations are in the works.]

Cato Institute senior fellows Jerry Taylor and Peter Van Doren suggest in a recent Forbes blog that the U.S. Environmental Protection Agency’s (EPA’s) carbon pollution standard for new coal-fired power plants (Standard) is a meaningless skirmish in President Obama’s “war on coal.” But while the Standard may have no tangible impact on the industry in the future, it has great strategic benefit to the administration.

Going from Facts …

The blog posting, “President Obama’s Alleged ‘War on Coal’—Climate Change Edition,” correctly assesses the situation: First, the EPA’s recently proposed Standard covers only new coal-fired power plants built 12 months after the Standard goes into effect, perhaps in 2014, probably in 2015. The Standard limits carbon emissions from new plants to those of a typical gas-fired combined cycle plant. Because any additional emissions must be captured and sequestered, building a new coal plant under the proposed Standard isn’t practical or economic. The result: There are no new coal-fired plants on the drawing board in the U.S. The EPA, as the authors correctly point out, counts perhaps 15 “transitional sources” (other sources list 22) that may still be constructed as “grandfathered” plants. Ironically, if no new coal plants are constructed, the Standard produces no CO2 reductions.

Second, the authors correctly note that the long-term price of natural gas is expected to remain low. As they say, the “futures price for natural gas in August 2012 (the farthest out that one can buy gas on the New York Mercantile Exchange) is $3.01 per million BTU.” Industry new construction has focused on gas-fired plants and wind turbines for the past few years. [Read more →]

November 6, 2012   3 Comments