EPA’s climate rule bad news for Western coal — EIA

Source: Elizabeth Harball, E&E reporter • Posted: Wednesday, July 13, 2016

The Obama administration’s climate rule for power plants could result in markedly less coal production in top-producing regions compared to business as usual, a recent analysis by the U.S. Energy Information Administration has found.

U.S. EPA’s Clean Power Plan aims to reduce carbon emissions from the power sector 32 percent from 2005 levels by 2030. If the rule takes effect in 2022, EIA projects coal’s continued decline will be felt most acutely in the U.S. West.

“Because it’s sort of the giant, it’s got further to fall,” said EIA analyst Diane Kearney.

Under one potential Clean Power Plan implementation scenario, EIA found the West’s coal production could fall by 155 million tons between 2015 and 2040, compared to a decline of 31 million tons if the rule is not enacted.

Big coal economies like Wyoming’s Powder River Basin fared better than Appalachia and other major U.S. coal regions until a recent spate of coal industry bankruptcies and layoffs. Another recent EIA report found the amount of coal burned to generate electricity fell in nearly every state over the last decade (ClimateWire, April 29).

However, Kearney and others cautioned against pinning the coal industry’s recent troubles on the Clean Power Plan. The regulation won’t be implemented until at least 2022 if it is deemed legal following the Supreme Court’s decision to stay the rule in February.

“Coal has been struggling in recent years for a variety of reasons,” Kearney said, including low natural gas prices, federal tax credits for renewable energy sources and other environmental regulations like EPA’s Mercury and Air Toxics Standards.

But coal advocates argued that EIA’s analysis provides more evidence that the Clean Power Plan puts undue pressure on the industry.

“EIA underscores the conspicuous burden that EPA’s regulations on power plants have placed on the coal industry and therefore the role these regulations have played in the decline it forecasts,” Luke Popovich, spokesman for the National Mining Association, said in an email.

West loses advantage as pollution controls are added

Compared to business as usual, Appalachia and regions in the central United States also would produce less coal under the climate rule, EIA found.

However, the agency predicts the decline due to the climate rule would be less severe in those regions than in the West. Appalachia, which has borne the brunt of the industry’s troubles since 2000, would see a continued decline of 50 million tons by 2040 without the Clean Power Plan, and 79 million tons with the Clean Power Plan.

Coal production in the interior United States is actually projected to increase in either case, EIA found. With the Clean Power Plan, production is estimated to increase by 5 million tons by 2040, compared to an estimated 86 million tons by 2040 if the rule is not implemented.

Kearney said the West’s coal is becoming less of a good deal for buyers because many power plants are installing pollution controls that make it more attractive to burn the high-sulfur coal mined farther East.

“The coal plants that remain are going to have emissions control equipment,” Kearney said. “That gives the interior region and other high sulfur-producing [coal] regions a little bit of an increased competitive advantage than they’ve had in the past.”

Steve Clemmer, director of energy research for the Union of Concerned Scientists’ Climate and Energy Program, described EIA’s projected decline in coal production due to the Clean Power Plan as “relatively modest,” agreeing with Kearney in that it “follows the trend that we’ve seen.”

Clemmer added that without EPA’s climate regulation, the United States may struggle to reduce its overall emissions in line with what it agreed to accomplish under the international climate agreement forged last year.

“Under the case without the Clean Power Plan, emissions actually flatten out and increase slightly through 2040,” Clemmer said, citing another recent EIA analysis. “If that happens, that’s going to make it really difficult for the U.S. to meet its commitments under the Paris Agreement.”

“The Clean Power Plan is a really important component of the administration’s targets,” Clemmer added.

Asked to comment on EIA’s findings, EPA said the developments that have spurred the U.S. grid’s transition away from heavily carbon-emitting sources are “well-documented and speak for themselves.”

“Shaped by years of unprecedented outreach and public engagement, the final Clean Power Plan is fair, flexible and designed to strengthen the fast-growing trend toward cleaner and lower-polluting American energy,” EPA spokeswoman Enesta Jones said in an emailed statement. “With strong but achievable standards for power plants, and customized goals for states to cut the carbon pollution that is driving climate change, the Clean Power Plan provides national consistency, accountability and a level playing field while reflecting each state’s energy mix.”