COLUMN-U.S. EPA must set realistic emissions limits for coal: Kemp
(John Kemp is a Reuters market analyst. The views expressed are his own)
By John Kemp
LONDON Dec 5 (Reuters) - President Barack Obama has directed the U.S. Environmental Protection Agency (EPA) to finalise regulations on the amount of carbon dioxide (CO2) emitted by existing coal-fired power plants by June 2015, as part of the White House Climate Action Plan.
The EPA has already published draft regulations that would limit greenhouse emissions from new coal plants to no more than 1,000 lbs of carbon dioxide per megawatt-hour of electricity generated (lbs/MWh).
The agency is now consulting with states, environmental groups and power producers on standards for existing and modified plants.
According to the EPA, standards for existing stations are "expected to be different from, and less stringent than, the standards proposed for future (power plants)" reflecting the differences between retrofitting existing plants and those not yet built.
Last year, the Natural Resources Defense Council (NRDC), one of the most influential environmental lobbying groups in Washington, published its own recommendations for emissions standards for existing coal plants, in a report provocatively titled "Closing the Power Plant Carbon Pollution Loophole".
The NRDC's proposals are significant because the council works closely with the White House and EPA on climate policy and they could have a significant influence on the EPA's own rulemaking.
The NRDC wants the EPA to limit emissions from coal plants to no more than 1,800 lbs/MWh from 2016, falling to 1,500 lbs/MWh from 2020 and just 1,200 lbs/MWh from 2025.
The limits would cut CO2 emissions by 22 percent in 2020 compared with a situation in which no action is taken, according to the NRDC.
Estimated social, medical and economic benefits could be worth up to $60 billion per year, while compliance costs would be as little as $4 billion, giving a cost-benefit ratio of as much as 15:1.
BEYOND THE PALE
The NRDC's report is largely silent on how coal plants could meet these targets except by running less often.
The report wants the government to set targets that will be impossible for coal-fired power plants to meet, then give them credits for funding demand-side management schemes intended to reduce electricity consumption.
The NRDC explains: "The (proposed) CO2 standard has the effect of ensuring that the energy efficiency savings displace higher-emitting coal generation rather than natural gas. The result of the CO2 policy is to reduce both total generation and the market share of coal, while increasing the market share of natural gas and renewables."
At first glance, the proposed limits for existing plants appear generous compared with the 1,000 lbs/MWh for newly built ones. But the standards would still be almost impossible for most coal-fired plants to meet.
Older subcritical coal plants emit over 2,000 lbs/MWh, according to the Coal Industry Advisory Board. Even the most modern supercritical and ultra-supercritical plants emit over 1,800 lbs/MWh ("21st Century Coal", IEA, 2013).
The NRDC makes much of the fact that the proposal would give power producers and state regulators flexibility over how they meet the emissions standard.
"NRDC's proposal is designed to give power plant operators freedom to choose how they would achieve the required emission reductions, giving credit for increases in energy efficiency and electricity generation using renewable sources and allowing emission-rate averaging among fossil fuel-fired power plants," the lobby group explains.
"States would also have freedom to design their own approach, as long as it achieved equivalent emission reductions," it added.
But nowhere does the report explain how existing power plants could be retrofitted to cut their emissions by more than 300 lbs/MWh in the case of modern supercritical systems, and over 500 lbs/MWh for older subcritical ones, by the end of the decade.
The flexibility promised by the report is therefore an illusion. There is no utility-scale coal plant anywhere in the world today meeting the 1,500 lbs/MWh standard that the NRDC wants to be compulsory seven years from now.
In theory, coal plants could meet the standard by fitting CO2 capture systems. In developing its regulations for new plants, the EPA cited the example of the new integrated gasification and combined cycle (IGCC) power plant with carbon capture and storage (CCS), which Southern Company is building in Kemper County, Mississippi.
But Kemper has faced lengthy construction delays, gone billions of dollars over budget, and is still not operational. Kemper does not really prove anything about the feasibility of IGCC-CCS systems. If anything, it suggests they are not yet technologically and commercially mature.
Building an IGCC power plant equipped with CCS on a greenfield site is very different from retrofitting an existing plant, as the EPA and the NRDC have acknowledged.
But without IGCC, CCS or oxycombustion technology, none of which has yet been proved commercially, there is no way any conventional coal plant can meet the targets which the NRDC suggests should be mandatory by 2020.
The NRDC makes no secret of the fact it wants targets to be met by reducing electricity consumption. "Demand-side management is the most cost-effective emission reduction option," the report explains.
In effect, coal plants will be made to pay for energy-efficiency measures and renewable generation that will put them out of business.
The NRDC describes its proposals as the "best system of emission reduction", echoing language contained in the Clean Air Act.
The act empowers the EPA to set performance standards "achievable through the application of the best system of emission reduction which ... has been adequately demonstrated" (42 USC 7411).
Anticipating challenges in the courts and Congress from the coal industry and some power producers, the NRDC believes its proposals will "establish a robust framework that is technically, legally and politically defensible".
But it is far from clear that fixing impossible targets for coal plants is feasible, reasonable or flexible, or that doing so can withstand political and judicial scrutiny.
Coal producers and power companies accuse the Obama administration and environmentalists of waging a "war on coal".
The administration counters that it is committed to an "all of the above" energy policy including a role for coal coupled with CCS.
But the unrealistic targets contained in the NRDC report suggest there is some truth in coal producers' and generators' complaints.
The NRDC's recommendations are really a demand-side management and renewables electricity policy dressed up as a proposal for limiting emissions from coal plants.
The underlying assumption is that the power industry can solve the problems of cutting CO2, increasing renewables and curbing electricity consumption if it is set ambitious targets and threatened with severe penalties for not meeting them.
In war, necessity is the mother of invention. The NRDC and other environmental groups want to adopt a similar "technology forcing" approach to climate change. It is an idea endorsed by the president and his senior advisers.
Obama has accused opponents of aggressive emissions standards of "a fundamental lack of faith in American business and American ingenuity".
Announcing his Climate Action Plan back in June, the president noted "in America we've always used new technologies - we've used science; we've used research and development and discovery to make the old rules obsolete".
But there is a fine line between setting ambitious targets and unrealistic ones.
The legal acceptability of the 1,000 lbs/MWh limit for new plants has still to be tested in the courts.
Coal accounts for 40 percent of U.S. power generation, compared with just 4 percent from renewables such as wind and solar, or a little over 11 percent if conventional hydroelectric plants are included.
However, many coal-fired plants are old, small and inefficient. Large parts of the coal fleet will need to be replaced in the coming decades.
The EPA should reject the NRDC's recommendations and set compliance targets around 1,800 lbs/MWh from 2020, which would encourage power companies to replace ageing, inefficient plants with modern supercritical units, boosting efficiency and cutting emissions at the same time.
Once IGCC, CCS and oxycombustion systems have been adequately demonstrated, that target could be gradually lowered over time, to encourage their uptake.
(Editing by Dale Hudson)
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