Don’t Freak Out About the Clean Power Plan Repeal

Okay, maybe freak out a little. But here’s why it’s not quite as dire as it sounds.

(Scott Webb)

Amid the recent hubbub over the Clean Power Plan, it’s important to remember the law never actually went into effect. When the Obama Administration proposed it in 2014, the goal was to cut greenhouse-gas emissions from existing power plants by 30 percent. But 28 states immediately sued the federal government in response, preventing the plan’s implementation. (One attorney general who lead that initial charge? Oklahoma’s Scott Pruitt, now administrator of the Environmental Protection Agency, who on Tuesday gleefully kicked off the process to repeal the CPP.)

The other point to remember about Obama’s signature climate-change regulation is that it was written in tandem with another protection that remains in effect today: the New Source Rule, which limits emissions from new or modified power plants. Despite the current administration’s best efforts to achieve otherwise, that regulation is working with broader economic forces to brush coal-fired energy aside.

The New Source Rule caps emissions for natural gas plants at 1,000 pounds of carbon dioxide per megawatt-hour of electricity produced. The limit for coal plants is 1,400 pounds. “That regulation essentially set a limit that allowed modern-technology natural gas plants to be permissible,” says Ashley Lawson, a senior fellow at the Center for Climate and Energy Solutions. “But new coal-fired power plants were going to need to use some very new technology to meet the regulations.”

That new technology is carbon capture and storage—the process of taking carbon dioxide from emissions, liquefying it, then pumping it underground. The most efficient coal-fired plants emit about 1,700 tons of carbon dioxide per megawatt hour, meaning any new or updated plants would have to employ carbon capture to meet the benchmark. It’s an expensive process no American utility-scale plant has yet deployed.

Pruitt announced a review of the New Source Rule back in April, but no repeal has yet been announced. There’s reason to believe it might fare better than the Clean Power Plan, though, because of the current state of energy economics. As Lawson says, “nobody’s building coal plants anymore.” Hydraulic fracturing caused the price of natural gas to plummet, and the U.S. now produces more energy via gas than coal. The Energy Information Administration projects the electricity capacity from coal to decline by 57 percent by 2050. Electricity from natural gas, on the other hand, is projected to grow 73 percent.

“When you look at the new capacity by fuel type, it’s all wind and gas,” Lawson says. “The economics of power generation are such that regulation on new plants isn’t dramatically changing investment decisions.”

In other words, since the industry is already adhering to the New Source Rule by not building any new coal plants, there likely won’t be major pushback against it.

That said, coal still stands to benefit, even if just in the short term and even if it has to defy market logic. Pruitt previously announced an intent to end tax credits for wind and solar projects, while Energy Secretary Rick Perry proposed changing the way utilities compensate energy producers in a way that rewards coal and nuclear plants. All this for an industry that, as the Washington Post noted, employs fewer people than Arby’s or Hobby Lobby.

The natural gas industry might prove an important player. Embraced as an important “bridge fuel” between coal and renewables by the Obama administration, natural gas stands to lose as much as renewables if coal- and nuclear-centered policies are adopted.

Natural gas prices, improving battery technology, the price of solar panels—these economic factors will determine coal’s fate. But Lawson says the Trump Administration’s actions muddy the waters for an industry that looks decades into the future. “It is helpful for the power sector to have some long-term certainty about the regulatory environment,” she says.

Indeed, while the CPP was never enforced, utilities and energy firms adjusted their plans with the expectation it would become law. It remains to be seen whether Trump’s actions are taken as seriously.

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