No New Coal: New Source Performance Standards Don't Clear the Air

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The current administration continues to push for cleaner air. That means reducing carbon emissions according to the 2009 EPA ruling that defines carbon dioxide as an air pollutant. It should be no surprise then, that the New Source Performance Standards (NSPS) on newly constructed power utilities reduces allowable carbon emissions.

The new emission levels, however, are below what is technologically feasible for coal burning plants. This effectively means that no new coal power plant can be constructed until new technology is developed and economically feasible. That is estimated to be ten or more years away. “[I]t is odd that they [the EPA] think it's a good idea to ban new coal-fired power plants,” says Jeff Holmstead, former EPA air chief.

There are multiple consequences from this ruling. Whether they are good, bad, or otherwise depends on your perspective.

1. Increased power demand will have to be satisfied from alternative fuels. Coal currently provides about half of all US electricity consumption.

2. Natural gas is presently the most cost effective substitute for coal. Gas powered plants already meet the new emission standard. An increase in demand for electricity will increase the demand for natural gas. (Natural gas providers have an interest in this ruling.

3. Renewable energies, such as wind and solar, are more than twice as expensive as gas and coal and we do not have the technological capability to store the power during down times. These renewable energies require backup power sources.

4. Natural gas, similar to coal, is a fossil fuel that must be ‘mined’ from underground. Each has their own environmental consequences.

5. Unless new supply meets increasing demand, electrical rates will rise. (At present the slow economy has kept demand relatively low and natural gas production has been booming.)

6. The rule impacts only new emission sources. Existing coal fired plants remain regulated under the old rules; they can continue to produce at current emission levels.

7. Because new plants cannot be built to meet the standards, existing plants with older technology, hence more emissions, will stay online longer.

8. The fastest growing countries continue to build new coal powered electric utilities to energize manufacturing at the lowest cost and compete at the global level.

The new emission standards are similar to previous regulations in a couple of ways. First, there are some "strange bedfellows" lobbying for the new air regulations. Alternative power providers benefit from reduced competition, regardless of environmental consequences. Second, by discouraging new coal burning facilities, the rule discourages investment in cleaner coal and keeps existing utilities online longer.

Originally posted at Environmental Trends.

Holly Fretwell is a Research Fellow at PERC and an adjunct instructor at Montana State University where she has taught  introductory economics, macroeconomics, natural resources and environmental economics. She works with the Foundation for Teaching Economics, giving workshops for  high school teachers to improve their skills in teaching and...
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