The Obama administration uncorked its carbon rule yesterday. Now one major question is whether Congress will try to put it back in the bottle. Lawmakers worked yesterday to put a fingerprint on the historic regulations with their own measures, prompting potentially a flurry of climate-related legislation not seen since the marathon sessions on cap and trade in 2010.
“Every state is going to have to take a look at its own power grid and its own emissions and make a decision as to how it wants to go about complying with these rules,” said Mary Nichols, chairwoman of the California Air Resources Board (ARB), which runs California’s cap-and-trade program. “We are convinced that when they do that, they will look at California’s approach and that it has a lot to offer.”
CONVENTIONAL wisdom, strongly promoted by the natural gas industry, is that natural gas drives down American emissions of carbon dioxide, by substituting for carbon-rich coal. The climate stabilization plan announced by the Obama administration on Monday relies on that. But in other ways, cheap natural gas drives emissions up. “It’s a seesaw,” said Michael W. Yackira, chairman of the Edison Electric Institute, the trade association of the investor-owned electric companies. Some of the factors are hard to quantify, making it uncertain whether, in the long term, natural gas’s net effect is positive for climate control.
Even before yesterday’s announcement, the most contentious issue in this rule has been whether EPA has the authority to regulate beyond an individual power plant and allow states to switch fuel sources, increase renewable energy capacity and push for demand-side efficiency — options two through four. The first building block, in which power plant operators invest in technology to lower the amount of heat lost during operation, is the choice that most resembles traditional standards to improve air quality. But the potential savings are relatively minimal, says EPA’s rule — about 6 percent by 2020. But by using all four blocks, the country could lower emissions by 4 ½ times more.
“A new Washington Post-ABC News poll … shows that a significant majority of Americans from both parties support limits on greenhouse gases from power plants, even if it means higher utility bills. That includes people in coal-producing states including Kentucky, which gets almost all of its electricity from coal.
Depending on who’s predicting, yesterday’s Clean Air Act draft rule targeting carbon pollution from existing power plants will either revive the U.S. economy by tapping America’s spirit of energy innovation, or it will sink the economy as the government attempts to remove coal and other carbon-intensive fuels from the country’s energy mix. Groups representing a broad cross-section of the U.S. economy wasted little time picking apart the Obama administration’s highly anticipated Section 111(d) rule for existing power plants. Yet the only firm consensus to emerge from early analysis is that the next two years — roughly 12 months of agency review and revision followed by another 12 months of state implementation — will be critical to evaluating the rule’s real effects.
“Extra renewables in one state could be used to offset emissions in another state,” said Kate Zyla, deputy director of the Georgetown Climate Center. The approach could be a lucrative opportunity for states that already have aggressive renewable energy targets to effectively export the emissions reductions associated with that activity. Some of this already occurs — for example when Midwestern wind farms sell renewable energy credits (REC) to utilities in states like Maryland or Delaware, which have their own renewable portfolio standards but less land on which to generate wind power within their borders.
Senate Majority Leader Harry Reid ruled out action yesterday before November on a package to renew dozens of expired tax breaks, including key incentives for renewable energy, biofuels and efficiency. The Nevada Democrat laid the blame for the impasse at the feet of Republicans, who filibustered the so-called tax extenders bill last month to object to Reid’s management of the floor. Minority Leader Mitch McConnell (R-Ky.) reiterated that criticism today and said Republicans would continue to push for amendment votes if Reid brings the bill back up. Asked whether he had decided the extenders bill would not return to the floor before the elections, Reid said the continued impasse meant that was the case, despite the fact that the bill has broad support from the business community.
Enormous amounts of capital investment — up to $2.5 trillion a year — will be needed to supply the world’s energy needs through 2035, according to a report released Monday by the International Energy Agency, the intergovernmental organization based in Paris. A total of $40 trillion would go to developing and maintaining energy supplies, with $8 trillion more being spent on energy efficiency, the organization said in the report.
Coal production and mine employment would decline under the Obama administration’s rule proposal for controlling greenhouse gases from existing power plants, according to U.S. EPA’s analysis. The regulatory impact analysis that accompanies the landmark proposal released today outlines scenarios where coal would take a hit at the expense of natural gas and other energy sources. “The EPA projects coal production for use by the power sector, a large component of total coal production, will decline by roughly 25 to 27 percent in 2020 from base case levels,” said the analysis. “The use of coal by the power sector will decrease by roughly 30 to 32 percent in 2030.