President’s Climate Plan Worries Industry, Consumers
by Michael Whatley
Consumer Energy Alliance 7/3/2013

Earlier last week at Georgetown University, President Obama laid out an aggressive plan to attack climate change, exclusively through executive action. In fact, according to National Journal, the word “Congress” isn’t used once in the 21-page report. It’s clear that the President is reacting to years of congressional inaction on climate-related issues since the failure of cap-and-trade legislation in 2009.

The document, entitled “The President’s Climate Change Action Plan,” lays out a series of wide-ranging domestic and international plans for reducing carbon pollution and preparing for the effects of climate change. For energy consumers and energy producers, the plan contains a mixed bag of incentive programs, new regulations and lofty goals – some of which will benefit consumers and the economy, and some of which could pose significant harm.

Most notably, the President issued a Presidential Memorandum directing the EPA to finalize carbon pollution standards for new and existing power plants. Last year, EPA had proposed new source performance standards for new power facilities that would have limited new facilities to a carbon pollution standard equivalent to a state-of-the-art combined-cycle natural gas facility. Initially, EPA stalled on the rule – likely due to the legal hurdles of trying to force new coal facilities to utilize a technology, carbon capture and sequestration, that doesn’t commercially exist. But, EPA is not stalling anymore. Less than one week after the President’s announcement, the EPA forwarded a revised carbon rule for new power plants to the White House for review. Although this rule isn’t yet public, it’s easy for one to assume that the rule will require new coal-fired plants to install carbon-capture technologies. If U.S. foreign aid for coal facilities will now be contingent on the use of carbon capture, it’s fairly likely the President expects a similar standard here at home.

While EPA’s rule for existing power plants is months, even years, away from finalization, existing coal facilities have reason to worry about the consequences of this standard. The EPA, with the President’s instruction, has clearly established that coal-fired facilities will need to meet very strict standards for carbon pollution: upgrade with carbon capture or face consequences.

What’s so troubling about these potential EPA regulations? For electricity consumers, the rules will undoubtedly lead to an uncertain future for coal, but clear ramifications for consumers: less fuel diversity and higher electricity costs. EPA’s actions have the potential to shutter hundreds of coal-fired power plants across the nation, forcing utilities to switch generation fuel and invest billions in upgrades and new facilities. All this means higher costs for ratepayers.

With coal producing over 40% of our nation’s electricity, limiting its potential will present a significant set of challenges that need to be carefully analyzed before we move forward with anything as ambitious as the President has outlined.

For transportation fuel consumers, the President’s action plan doesn’t include much new news. The President continues to highlight the anticipated carbon reductions from recently promulgated fuel economy standards for passenger vehicles, noting that new standards will be issued for heavy-duty vehicles in the future. The President also double downed on his support for the federal Renewable Fuel Standard, failing to acknowledge the program’s limitations. Given the program’s increasing volumetric requirements for renewable fuel, the nation’s fuel pool will soon exceed 10% ethanol. Fuel blends exceeding 10% ethanol have been shown to cause problems with engine wear and could result in the voiding of manufacturers’ warranties.

On a brighter note, some good news can be found in the plan’s goal to double renewable electricity generation by 2020. This goal will be achieved in a variety of ways, including a mandate for the Department of the Interior to permit an additional 10GW of renewable generation on public land, and encouraging electrification of existing dams. The plan also included a Presidential Memorandum directing federal agencies to streamline the permitting, siting and review process for electric transmission projects, which will help installed solar and wind power get to urban markets where it is needed.

The plan further underscores the President’s proposed budget for clean energy technologies, with a focus on funding research and development activities for small modular reactors, or small nuclear power generators. These small reactors cost much less than utility-scale installations and have the potential to revolutionize the nuclear power industry.

The President has laid out an aggressive plan – a plan that includes measures which will significantly and adversely affect electricity consumers across the United States for decades to come. Every homeowner, business, manufacturer and electricity consumer will undoubtedly feel the painful effects of higher energy costs under the President’s proposed plan. Congress must take an active oversight role in order to prevent these negative ramifications for our nation’s electricity consumers.

Michael Whatley is the executive vice president of Consumer Energy Alliance in Washington D.C.


Originally published at RigZone.