Skyrocketing Energy Costs   Leave a comment

Used to power nearly half of all electricity generation for years, coal is the single largest electricity source in America. The United States has 497 billion tons of recoverable coal, which is enough to provide electricity for 500 years at current consumption rates. Clearly, coal has the potential to be an important resource long into the future.

Naturally, the Obama Administration has taken actions that significantly reduce coal’s share of America’s energy portfolio now and in the future. The proposed and newly implemented regulations affecting coal will drive up energy costs for Americans and business owners and destroy jobs, but do little to protect the environment. These regulations drive up the costs of goods and services that promote public health, such as affordable heating and air conditioning, but also divert resources away from activities that could truly improve America’s public health. They are based on a weak scientific foundation and would significantly increase compliance costs for existing coal plants and effectively bar construction of new ones, which will increase the cost of electricity for consumers and business.

The attempt to drive coal out of America’s energy portfolio goes even further. A host of Environmental Protection Agency (EPA) permit requirements have delayed construction of new coal plants, led to fuel-switching, or resulted in withdrawn permit applications. Further, despite remarkable improvements in coal mining operations and mining safety, the permitting process for mining and regulations for worker safety have been costly and failed to produce the desired effects. Congress should overhaul the regulatory approach to coal to create a framework that restricts overregulation, empowers the states, balances economic growth and environmental well-being, and creates a timely permitting process for all aspects of coal production. Congress should also eliminate all subsidies for coal technologies.

During his first presidential campaign, Barack Obama warned Americans that electricity prices would “necessarily skyrocket” under his proposal to reduce carbon dioxide emissions with a cap-and-trade system. Legislative attempts to cap carbon with stringent cap-and-trade provisions would force power companies to take coal power plants offline or make costly upgrades. Both choices would increase the cost of generating electricity.

Although cap-and-trade never became law, unelected bureaucrats are implementing regulations that have the same effect. The Environmental Protection Agency, the Office of Surface Mining Reclamation and Enforcement (OSMRE) in the Department of the Interior, and the Mine Safety and Health Administration (MSHA) in the Department of Labor have promulgated a host of new rules that will increase the costs of mining coal, building new plants, and operating existing plants. These regulations include:

  • Cross-State Air Pollution Rule,
  • Mercury and Air Toxics Standards (Utility MACT),
  • Coal Combustion Residues (coal ash),
  • Ozone National Ambient Air Quality Standards,
  • Cooling Water Intake Structures,
  • Greenhouse Gas New Source Performance Standard,
  • New Source Review,
  • Section 404 Clean Water Permits,
  • Stream Buffer Zone Rule,
  • Proximity Detection Systems,
  • Examinations of Work Areas in Underground Coal Mines for Violations of Mandatory Health or Safety Standards,
  • Lowering Miners’ Exposure to Respirable Coal Mine Dust, and
  • Patterns of Violations.

The consulting group ICF International estimates 20% of America’s coal power plants could be retired as soon as 2020 because of the EPA’s air, waste, and water regulations. The Institute for Energy Research projects that the Cross State Air Pollution “transport rule” and the Utility MACT “toxics rule” will remove more than 33 gigawatts (GW) of electricity generation (almost 10% of the electricity generated by coal plants) from production. Several other economic analyses project EPA regulations could take an additional 75 GWs of coal generation offline, which would significantly raise electricity bills for American consumers and threaten reliability of the electricity grid.

These higher energy prices will also have rippling effects throughout the economy. As energy prices increase, the cost of making products rises. Higher operating costs for businesses will be reflected in higher prices for consumers. Everything Americans use and produce requires energy, so consumers will take hit after hit. As prices rise, consumer demand falls, and companies will shed employees, close entirely, or move to other countries where the cost of doing business is lower. This results in fewer opportunities for American workers, lower incomes, less economic growth, and higher unemployment

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