Coal plant shutdowns predicted to double under EPA climate rule

Source: By Timothy Cama, The Hill • Posted: Tuesday, May 26, 2015

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The rule is also projected to increase electricity prices 4.9 percent above what they would be without it.

The Environmental Protection Agency’s (EPA) carbon limits for power plants are projected to cause 90 gigawatts of coal plant capacity to retire by 2040 so that states can comply, the Energy Information Administration (EIA) projected Friday.

That is more than double the 40 gigawatts that the EIA, the independent data arm of the Energy Department, predicted would be shut down in that time period if it weren’t for the climate rule. The United States currently has 1,212 coal-fired power plants with a total capacity of 329.8 gigawatts.

The report could provide new evidence for opponents of the rule such as Republicans and fossil fuel interests. They have argued that the Obama administration would significantly raise electricity costs, close numerous power plants and kill the jobs of the people working there and in related fields.

Nearly all of the plant shutdowns would happen by 2020, the year of the first set of standards in the EPA’s rule. Another standard takes effect in 2030.

“Switching from coal-fired generation to natural gas-fired generation is the predominant compliance strategy as implementation begins, with renewables playing a growing role in the mid-2020s and beyond,” the EIA said in its analysis.

Complying with the rule would require a “significant investment in electric transmission system infrastructure to integrate renewables from remote areas,” the agency said.

Those investments, among other costs, would increase electricity prices 4.9 percent in 2020, 4 percent in 2030 and 2.6 percent in 2040, all in comparison to a situation without the rule.

The EIA also warned of potential reliability problems from moving more toward renewable energy sources, which are mostly intermittent in nature.

It’s the first comprehensive report on the EPA rule from a government entity other than the EPA.

An industry-commissioned report from Nera Economic Consulting found last year that the rule could cost at least $366 billion over 15 years, and could cost businesses and consumers $41 billion annually.

The Nera study said the rule would shutter at least 45 gigawatts of coal-fired generating capacity.

The North American Electric Reliability Corp. concluded that the rule could harm grid reliability.

The Friday report, however, also found a number of positive benefits from the regulation.
It predicted that carbon emissions from the power sector in 2030 would be 29 percent to 36 percent below 2005 levels, in line with the EPA’s coal of a 30 percent cut.
Although electric prices would be higher, the bills that consumers and businesses pay in 2040 will be “slightly below” what they would be without the plan, due to factors like energy efficiency and reducing demand.
The plan would also spur a great deal of renewable energy installation. Renewable energy capacity under the rule would grow 160 percent above what it would otherwise be by 2040, at 174 gigawatts.
“Wind power plays an important role in Clean Power Plan compliance, with wind electricity generation capacity more than tripling over 2013 levels by 2040 in the Base Policy case,” it said. Solar power is projected to have 136 gigawatts, versus 76 without the plan.
The EIA’s report does not analyze potential health and climate benefits of the rule.
EPA spokeswoman Liz Purchia said her agency “appreciates EIA’s work to develop this assessment based on the agency’s proposed Clean Power Plan, and the agency will be reviewing the assessment as we work to develop the final rule.”
She pointed to numerous limits in the EIA’s analysis, including that it was based only on the proposed rule and that, since it does not examine benefits, it paints an incomplete picture.
The EPA is planning to release a final version of the regulation in August.
The National Mining Association said the report confirms the concerns industry and other businesses interests have long had.
“It contradicts claims by the Environmental Protection Agency (EPA) that its Clean Power Plan will help their economy,” Hal Quinn, the mining group’s president, said in a statement. “And it confirms that this costly power plan will ‘lock-in’ a more expensive and risky energy future for their citizens.