Yesterday, the EPA held an all-day “listening session” at its Washington, D.C. headquarters, ostensibly to gather ideas and information from the public about how best to reduce carbon dioxide (CO2) from existing power plants. The event was one of eleven listening sessions the agency hosted over the past three weeks. I was one of many people who “testified” at EPA HQ. We each had three minutes to speak.
I was there about an hour, and during that time none of the other witnesses presented ideas or information about how to reduce CO2 emissions from existing power plants. Rather, they deplored the climate “crisis” and implored the EPA to do everything in its power to replace “dirty coal” with “clean, renewable energy.”
In September, the EPA proposed its “carbon pollution” rule for new power plants. The listening sessions are on the agency’s planned follow-up measure in 2014 — guidelines instructing States how to reduce CO2 emissions from existing power plants. About 40% of U.S. electric generation comes from existing coal-fired power plants.
Here is more or less what I said when my turn came to speak:
I am Marlo Lewis, a senior fellow at the Competitive Enterprise Institute. I have come to offer you a word of caution: Don’t try to get cute with your guidelines. Don’t use the guidelines either to shut down existing coal plants, or to enact a national clean energy standard through the regulatory back door.
This caution is in order because of something I call the “bait-and-fuel-switch.”
Back in March 2011, the EPA published PSD and Title V permitting guidelines for greenhouse gases. The document stated that best available control technology (BACT) standards for CO2 would not require utilities planning to build new coal-fired power plants to “fuel switch” and build natural gas combined cycle (NGCC) power plants instead.
But only one year later, in March 2012, the EPA proposed a “carbon pollution” rule establishing new source performance standards (NSPS) for CO2 that nearly all NGCC plants already meet but exactly zero commercial coal power plants can meet. The proposal was transparently a fuel-switching mandate. And it was that even though NSPS is less stringent than BACT, and the agency had assured stakeholders that BACT for CO2 would not require fuel switching.
Faced with the threat of litigation and the likelihood of defeat in court, the EPA proposed a revised version of the “carbon pollution” rule a few months ago. It is still a fuel-switching mandate, even if not as blatantly so.
Here’s the key point. The cost and reliability implications of a regulation affecting future power plants — many of which may never be built — are far less obvious than the cost and reliability implications of a regulation affecting existing power plants.
If the EPA’s guidelines threaten to shut down existing coal power plants, there will be a backlash in 2014 — an election year.
So it will be better for all concerned — the agency, power producers, and ratepayers — if the EPA’s guidelines for reducing CO2 emissions from existing power plants do not adversely affect the economic viability of existing coal power plants, electric supply reliability, or consumer electricity rates.
Thank you for the opportunity to testify.