Aug 22, 2011

Getting ready for a wave of coal-plant shutdowns

Washington Post - Over the next 18 months, the Environmental Protection Agency will finalize a flurry of new rules to curb pollution from coal-fired power plants. Mercury, smog, ozone, greenhouse gases, water intake, coal ash—it’s all getting regulated. And, not surprisingly, some lawmakers are grumbling.

Industry groups such the Edison Electric Institute, which represents investor-owned utilities, and the American Legislative Exchange Council have dubbed the coming rules “EPA’s Regulatory Train Wreck.” The regulations, they say, will cost utilities up to $129 billion and force them to retire one-fifth of coal capacity. Given that coal provides 45 percent of the country’s power, that means higher electric bills, more blackouts and fewer jobs. The doomsday scenario has alarmed Republicans in the House, who have been scrambling to block the measures. Environmental groups retort that the rules will bring sizeable public health benefits, and that industry groups have been exaggerating the costs of environmental regulations since they were first created.

"The CRS report also agrees with green groups that the benefits of these new rules shouldn’t be downplayed...EPA estimates that an air-transport rule to clamp down on smog-causing sulfur dioxide and nitrogen dioxide would help prevent 21,000 cases of bronchitis and 23,000 heart attacks, and save 36,000 lives. That’s, at the high end, $290 billion in health benefits, compared with $2.8 billion per year in costs (according to the EPA) by 2014. “In most cases,” CRS concludes, “the benefits are larger.”

So, who’s right? This month, the nonpartisan Congressional Research Service, which conducts policy research for members of Congress, has been circulating a paper that tries to calmly sort through the shouting match. Thanks to The Hill’s Andrew Restuccia, it’s now available (PDF) for all to read. And the upshot is that CRS is awfully skeptical of the “train wreck” predictions.

CRS notes that many of the plants most affected by the new EPA rules were facing extinction anyway: “Many of these plants are inefficient and are being replaced by more efficient combined cycle natural gas plants, a development likely to be encouraged if the price of competing fuel—natural gas—continues to be low, almost regardless of EPA rules.”... Granted, those upgrades and changes won’t be free. The CRS report doesn’t try to independently evaluate the costs of the new rules, noting that they will depend on site-specific factors and will vary by utility and state. (Matthew Wald recently wrote a helpful piece in The New York Times looking at how utilities might cope.) But, the report says, industry group estimates are almost certainly overstated. For one, they were analyzing early EPA draft proposals, and in many cases, the agency has tweaked its rules to allay industry concerns. And many of the EPA’s rules are almost certain to get bogged down in court or delayed for years, which means that utilities will have more time to adapt than they fear.

...Granted, few would expect this report to change many minds in Congress. Just 10 days ago, Michele Bachmann was on the campaign trail promising that if she becomes president, “I guarantee you the EPA will have doors locked and lights turned off, and they will only be about conservation.” That doesn’t sound like someone who’s waiting for a little more data before assessing the impact of the new regulations.

Read full at Washington Post