Archive for the ‘Electrical costs’ Tag

Real Costs of Coal Regulation – Electricity Generation   Leave a comment

The process of removing coal from our electrical generation capacity is already in motion. Energy companies are announcing premature closures of coal plants and are retracting permit applications because of regulations. For instance, Ohio’s FirstEnergy Corporation announced that it will close six coal facilities because of the new environmental regulations. A Georgia utility recently retracted funding for a permit application, citing the EPA’s air quality rules. Here in Alaska, to restart a mothballed clean-coal plant, our local electrical cooperative had to agree to upgrades of an already permitted and operating sister plant. Rate payers will layout more than $50 million in addition to the cost of starting up the new plant.

Some of the EPA’s newly proposed rules will make it prohibitively expensive to build new coal plants. Many of the new rules carry exorbitant costs, provide little to no benefit, or are based on weak scientific and empirical evidence.

Cross-State Air Pollution Rule (CSAPR). The Cross-State Air Pollution Rule targets pollution that crosses state boundaries, and it aims to reduce sulfur dioxide 73% below 2005 levels and nitrous oxide 54% below 2005 levels by 2014. CSAPR has separate compliance deadlines for 2012 and 2014 and has much more stringent reduction targets and a tighter time frame than the Clean Air Interstate Rule (CAIR), its predecessor rule. Even the Federal Energy Regulatory Commission (FERC) has warned that the CSAPR rule threatens grid reliability.

These costs come with little added environmental benefit. The EPA is ignoring the remarkable achievements in reducing nitrous oxide and sulfur dioxide emissions over the past four decades. These advances are largely the result of market-driven technologies, but existing regulations have contributed. Since 1970, coal power plants have reduced sulfur dioxide, nitrous oxide, and particulate matter (PM) emissions by 84% per kilowatt hour. However, the industry has reached a threshold where the additional emissions reductions are marginal and do not justify the costs. The EPA’s cost estimates are conservative, and its projected health benefits are wildly exaggerated. The EPA approximates annual compliance costs with CSPAR will be $7 billion annually and monetized health benefits will be from $111 to $294 billion annually.

The benefits of increased regulation are not empirically substantiated. The EPA uses outrageous worst-case scenarios, ignores state and local emissions controls, uses outdated data, and models air quality problems using emissions data that contradict actual monitored readings.

“EPA stresses the environmental urgency of this rule intended to help the downwind states attain the federal standards for PM and ozone. Oddly, however, the downwind states targeted in the rule violated the 24-hour fine PM standard less than one-half percent of the time from 2007-2009. In fact, more than 80 percent of the downwind areas CSAPR targets as either currently or at risk of violating the federal standards for ozone or PM already attain the air quality standards in question. EPA, however, still finds risks and calculates the monetized health benefits at emission levels below the federal standards set to protect public health.” (Kathleen Hartnett-White, senior fellow of the Texas Public Policy Foundation)

In other words, additional regulation is unnecessary because emissions are already at acceptable levels.

To make matters worse, the EPA will implement the rule through Federal Implementation Plans (FIPs) rather than the long-standing method of setting emission reduction standards and allowing states to effectively enforce the standards with State Implementation Plans (SIPs). If a state’s emissions cause another state to reach nonattainment, state regulators have the knowledge and flexibility to reduce emissions, but this change would usurp the state’s authority. The EPA’s new targets are unjustifiably onerous and unachievable to the point that many coal-fired plants have already announced layoffs, reduced operations, and permanent closures.

Other regulatory nightmares include:

  • Mercury and Air Toxics Standards
  • Coal Combustion Residues (Coal Ash)
  • National Ambient Air Quality Standards (NAAQS)
  • Cooling Water Intake Structures (CWIS)

Taken together, these five new and emerging standards will cost the economy billions of dollars and threaten to shut down vast areas of American manufacturing and energy production, but the most concerning of EPA’s new air-quality regulations have to do with greenhouse gas emissions. The EPA has long ignored the disagreement within the scientific community on classifying carbon dioxide as a pollutant and on the magnitude of anthropogenic (manmade) global warming. Even setting aside the scientific dissention on these two points, the EPA regulations will not reduce carbon dioxide enough to have any meaningful effect. Attempting to reduce carbon dioxide unilaterally will not significantly change overall global emissions. China and India’s carbon dioxide emissions are rapidly increasing as their economies continue to expand, and they have no intention of slowing economic growth to curb emissions. Even if the EPA were to reduce U.S. carbon emissions 83% below 2005 levels by 2050, as mandated by cap-and-trade bills, the reduction would constitute a negligible portion of worldwide emissions and do nothing to impact global temperatures.

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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