President's Climate Plan Worries Industry, Consumers

This opinion piece presents the opinions of the author.
It does not necessarily reflect the views of Rigzone.

Earlier last week at Georgetown University, President Obama laid out an aggressive plan to attack climate change, exclusively through executive action. In fact, according to National Journal, the word “Congress” isn’t used once in the 21-page report. It’s clear that the President is reacting to years of congressional inaction on climate-related issues since the failure of cap-and-trade legislation in 2009.  

The document, entitled “The President’s Climate Change Action Plan,” lays out a series of wide-ranging domestic and international plans for reducing carbon pollution and preparing for the effects of climate change. For energy consumers and energy producers, the plan contains a mixed bag of incentive programs, new regulations and lofty goals – some of which will benefit consumers and the economy, and some of which could pose significant harm.

Most notably, the President issued a Presidential Memorandum directing the EPA to finalize carbon pollution standards for new and existing power plants. Last year, EPA had proposed new source performance standards for new power facilities that would have limited new facilities to a carbon pollution standard equivalent to a state-of-the-art combined-cycle natural gas facility. Initially, EPA stalled on the rule – likely due to the legal hurdles of trying to force new coal facilities to utilize a technology, carbon capture and sequestration, that doesn’t commercially exist. But, EPA is not stalling anymore. Less than one week after the President’s announcement, the EPA forwarded a revised carbon rule for new power plants to the White House for review. Although this rule isn’t yet public, it’s easy for one to assume that the rule will require new coal-fired plants to install carbon-capture technologies. If U.S. foreign aid for coal facilities will now be contingent on the use of carbon capture, it’s fairly likely the President expects a similar standard here at home.

While EPA’s rule for existing power plants is months, even years, away from finalization, existing coal facilities have reason to worry about the consequences of this standard. The EPA, with the President’s instruction, has clearly established that coal-fired facilities will need to meet very strict standards for carbon pollution: upgrade with carbon capture or face consequences.

What’s so troubling about these potential EPA regulations? For electricity consumers, the rules will undoubtedly lead to an uncertain future for coal, but clear ramifications for consumers: less fuel diversity and higher electricity costs. EPA’s actions have the potential to shutter hundreds of coal-fired power plants across the nation, forcing utilities to switch generation fuel and invest billions in upgrades and new facilities. All this means higher costs for ratepayers.

With coal producing over 40% of our nation’s electricity, limiting its potential will present a significant set of challenges that need to be carefully analyzed before we move forward with anything as ambitious as the President has outlined.