Greenwire (subscription required) reports that EPA has sent its proposed regulation establishing greenhouse gas (GHG) New Source Performance Standards (NSPS) for new and modified power plants to the Office of Management and Budget (OMB) for review.
The stringency of the regulation is unknown to outsiders at this time. Environmental lobbyists hope EPA will set the bar so high that only natural gas power plants, or coal-fired plants equipped with carbon capture and storage (CCS) technology, can comply. Industry representatives want EPA to propose separate standards for coal- and gas-fired electric generating units reflecting the different carbon intensities of coal and natural gas.
No previous NSPS has ever required new power plants to use natural gas rather than coal, and none has ever required modified plants to switch from coal to natural gas. Industry representatives contend that Congress never intended the NSPS program to block construction of coal power plants or mandate fuel switching. They’re right.
The alternative compliance option for new and modified coal power plants — installing CCS — may exist only on paper, because longstanding economic, technical, and regulatory challenges make CCS a costly and risky investment. No commercial-scale CCS-equipped power plant has ever been built without massive government subsidy.*
Noting that Midwest and Eastern coal-producing states are key swing states in presidential elections, former Bush EPA air office director Jeff Holmstead told Greenwire: “Does the White House want to run in Pennsylvania, and Ohio, West Virginia and Virginia if they’ve recently proposed something that will prevent the construction of new coal-fired power plants?”
Indeed, the war on coal was a political liability in the November 2010 congressional elections. Some two dozen Democrats who voted for the Waxman-Markey cap-and-trade bill got pink slips from their districts. Blocking construction of new coal-fired power plants has long been a top priority of the environmental movement. But does Team Obama want to kill coal badly enough to court political suicide?
Yes, opines my colleague, Chris Horner:
I’m starting to think that only Republicans can commit political suicide. Obama’s numerous efforts — the SF Chron ed board video [in which Obama advocated cap-and-trade even though (or because?) it would cause electricity rates to “necessarily skyrocket” and “bankrupt” coal power plants], for one — raising the interesting philosophical question: how many times can one commit suicide?
I conclude that if you have the right letter after your name political suicide is possible but must be assisted. It requires two other elements: (a) an opponent to help administer the knife/poison/radio in the bathtub, and (b) media to report a deathly act was committed. Really chaps me the Rs again have a guy (likely), who will be unable to credibly seize this stuff.
In other words, Republicans aren’t sharp enough to make political hay out of regulatory excess at EPA and the media wouldn’t much pay much attention anyway.
Even if Rs are vigilant and the media attentive, EPA might still go to extremes. What could be politically crazier in an election year, at a time of high gasoline prices, than to deny Americans the energy security benefits of Canada’s booming oil production? Rs have made the Keystone XL Pipeline a front-burner campaign issue, and media coverage is non-stop. Yet Obama may still decide to nix the pipeline, or somehow postpone deciding until 2013 despite a statutory requirement to grant or deny a permit by Feb 21 of this year. Similarly, Andrew Shaw, an analyst with McKenna Long & Aldridge, suggests that EPA may not issue a final NSPS rule until after the 2012 elections.
The only safe bet is that 2012 is going to be a contentious year in energy politics.
* The government of Saskatchewan has approved the $1.2 billion Boundary Dam Integrated Carbon Capture and Storage Demonstration Project, which aims to build and operate one of the world’s first “commercial-scale” CCS power plant by 2014. The Canadian government has subsidized the project to the tune of $240 million. It’s anybody’s guess when such projects will be able to stand on their own economic feet.