Note: A nearly identical version of this column appeared last week in Forbes Online. I am reposting it here with many additional hyperlinks so that readers may more easily access the evidence supporting my conclusions.

The November 2012 elections ensure that President Obama’s war on coal will continue for at least two more years. The administration’s preferred M.O. has been for the EPA to ‘enact’ anti-coal policies that Congress would reject if such measures were introduced as legislation and put to a vote. Had Gov. Romney won the presidential race and the GOP gained control of the Senate, affordable energy advocates could now go on offense and pursue a legislative strategy to roll back various EPA global warming regulations, air pollution regulations, and restrictions on mountaintop mining. But Romney lost and Democrats gained two Senate seats.

Consequently, defenders of free-market energy are stuck playing defense and their main weapon now is litigation. This is a hard slog because courts usually defer to agency interpretations of the statutes they administer. But sometimes petitioners win. In August, the U.S. Court of Appeals struck down the EPA’s Cross State Air Pollution Rule (CSAPR), a regulation chiefly targeting coal-fired power plants. The Court found that the CSAPR exceeded the agency’s statutory authority. Similarly, in March, the Court ruled that the EPA exceeded its authority when it revoked a Clean Water Act permit for Arch Coal’s Spruce Mine No. 1 in Logan County, West Virginia.

A key litigation target in 2013 is EPA’s proposal to establish greenhouse gas (GHG) “new source performance standards” (NSPS) for power plants. This so-called carbon pollution standard is not based on policy-neutral health or scientific criteria. Rather, the EPA contrived the standard so that commercially-viable coal plants cannot meet it. The rule effectively bans investment in new coal generation.

We Can Win This One

Prospects for overturning the rule are good for three main reasons.

(1) Banning new coal electric generation is a policy Congress has not authorized and would reject if proposed in legislation and put to a vote. Once again the EPA is acting beyond its authority.

The proposed “carbon pollution” standard requires new fossil-fuel electric generating units (EGUs) to emit no more than 1,000 lbs of carbon dioxide (CO2) per megawatt hour (MWh). About 95% of all natural gas combined cycle power plants already meet the standard, according to the EPA. No existing coal power plants come close; even the most efficient, on average, emit 1,800 lbs CO2/MWh.

A coal power plant equipped with carbon capture and storage (CCS) technology could meet the standard, but the levelized cost of new coal plants already exceeds that of new natural gas combined cycle plants, and “today’s CCS technologies would add around 80% to the cost of electricity for a new pulverized coal (PC) plant, and around 35% to the cost of electricity for a new advanced gasification-based (IGCC) plant,” the EPA acknowledges.

In short, the EPA has proposed a standard no economical coal plant can meet. Not surprising given President Obama’s longstanding ambition to “bankrupt” anyone who builds a new coal power plant and his vow to find other ways of “skinning the cat” after the 2010 election-day slaughter of 29 cap-and-trade Democrats. But the big picture is hard to miss: Congress never signed off on this policy.

The only time Congress even considered imposing GHG performance standards on power plants was during the debate on the Waxman-Markey cap-and-trade bill. Section 216 of Waxman-Markey would have established NSPS requiring new coal power plants to reduce CO2 emissions by 50% during 2009-2020 and by 65% after 2020 – roughly what the EPA is now proposing. Although Waxman-Markey narrowly passed in the House, it became so unpopular as “cap-and-tax” that Senate leaders pulled the plug on companion legislation.

Team Obama is attempting to accomplish through the regulatory backdoor what it could not achieve through the legislative front door. The “carbon pollution” rule is an affront to the separation of powers.

(2) The “carbon pollution” standard is regulation by misdirection – an underhanded ‘bait-and-fuel-switch.’

In Massachusetts v. EPA (April 2007), the Supreme Court held that GHGs are “air pollutants” for regulatory purposes. This spawned years of speculation about whether the EPA would define “best available control technology” (BACT) standards for “major” GHG emitters so stringently that utilities could not obtain pre-construction permits unless they built natural gas power plants instead of new coal power plants.

In March 2011, the EPA published a guidance document assuring stakeholders that BACT for CO2 would not require a permit applicant “to switch to a primary fuel type” different from the fuel type the applicant planned to use for its primary combustion process. The agency specifically disavowed plans to “redefine the source [category]” such that coal boilers are held to the same standard as gas turbines.

The EPA reiterated this assurance in a Q&A document accompanying the guidance. One question asks: “Does this guidance say that fuel switching (coal to natural gas) should be selected as BACT for a power plant?” The EPA gives a one-word response: “No.”

This bears directly on the legal propriety of the “carbon pollution” standard. In general, NSPS are less stringent than BACT. NSPS provide the “floor” or minimum emission control standard for determining an emitter’s BACT requirements. BACT is intended to push individual sources to make deeper emission cuts than the category-wide NSPS requires.

Yet despite the EPA’s assurance that BACT, although tougher than NSPS, would not require fuel switching or redefine coal power plants into the same source category as natural gas power plants, the “carbon pollution” rule does exactly that.

In April 2011, the House passed H.R. 910, the Energy Tax Prevention Act, sponsored by Rep. Fred Upton (R-Mich.), by a vote of 255-172. H.R. 910 would overturn all of the EPA’s GHG regulations except for those the auto and trucking industries had already made investments to comply with. Sen. James Inhofe’s companion bill (McConnell Amdt. 183) failed by one vote. In June 2010, Sen. Lisa Murkowski’s (R-Alaska) Congressional Review Act resolution to strip the agency of its Mass v. EPA-awarded power to regulate GHGs failed by four votes. One or both of those measures might have passed had the EPA come clean about its agenda and stated in 2009 that it would eventually propose GHG performance standards no affordable coal power plant can meet.

(3) The “carbon pollution” rule is weirdly contorted, flouting basic standards of reasonableness and candor.

Under the Clean Air Act, an emission performance standard is supposed to reflect “the degree of emission limitation achievable through the application of best system of emission reduction” that has been “adequately demonstrated.” The EPA picked 1,000 lbs CO2/MWh as the NSPS for new fossil-fuel EGUs because that is the “degree of emission limitation achievable through natural gas combined cycle generation.”

But natural gas combined cycle is not a system of emission reduction. It is a type of power plant. The EPA is saying with a straight face that natural gas combined cycle is an emission reduction system that has been adequately demonstrated for coal power plants. By that ‘logic,’ zero-carbon nuclear-, hydro-, wind-, or solar-electric generation is an emission reduction system that has been adequately demonstrated for natural gas combined cycle.

A coal power plant could meet the standard by installing CCS, but, as the EPA acknowledges, CCS is too costly to qualify as “adequately demonstrated.” The only practical way for utilities to comply is to build new gas turbines instead of new coal boilers. This is the first time the EPA has defined a performance standard such that one type of facility can comply only by being something other than what it is.

The EPA sets performance standards for specific categories of industrial sources. A coal boiler is different from a gas turbine, and up to now the agency reasonably regulated them as different source categories, under different parts of the Code of Federal Regulations – Subpart Da for coal boilers, Subpart KKKK for gas turbines. The EPA now proposes to regulate coal boilers and gas turbines as a single source category — “fossil-fuel EGUs” — under a new subpart numbered TTTT. But only for CO2! Coal boilers and gas turbines will continue to be regulated as separate source categories for criteria and toxic pollutants under Subparts Da and KKKK.

Why hold coal boilers and gas turbines to different standards for those pollutants? The EPA’s answer: “This is because although coal-fired EGUs have an array of control options for criteria and toxic air pollutants to choose from, those controls generally do not reduce their criteria and air toxic emissions to the level of conventional emissions from natural gas-fired EGUs.”

The same reasoning argues even more strongly against imposing a single GHG standard on coal boilers and natural gas turbines. Coal boilers do not have an “array of control options” for CO2 emissions, and have no “adequately demonstrated” option for reducing CO2 emissions to the level of gas-fired EGUs. Subpart TTTT is an administrative contortion concocted to kill the future of coal generation.

Why Care Even If You Don’t Mine or Combust Coal for a Living

At this point you may be wondering why anyone outside the coal industry should care about this cockamamie rule. There are several reasons.

First and most obviously, banning new coal generation could increase electric rates and make prices more volatile. For generations, coal has supplied half or more of U.S. electricity, and still provides the single largest share. The “carbon pollution” standard is risky because coal’s chief competitor, natural gas, has a history of price volatility and a future clouded by the environmental movement’s hostility to hydraulic fracturing, the technology transforming gas from a costly shrinking resource to an affordable expanding resource.

The “carbon pollution” standard itself could put the kibosh on new gas-fired generation if the EPA concludes, as Cornell researchers contend, that fugitive methane emissions from hydraulic fracturing make gas as carbon-intensive as coal.

The EPA is also developing GHG performance standards for refineries. “Unconventional” oil production from shale and oil sands is booming in North America, creating thousands of jobs, generating billions of dollars in tax revenues, and reducing U.S. dependence on OPEC oil. But unconventional oil production is energy-intensive and therefore carbon-intensive. It is unknown whether or how the forthcoming GHG standard for refineries will address the carbon intensity of unconventional oil. What we do know is that the environmental groups who litigated the EPA into proposing these standards are arch foes of unconventional oil.

In any event, the “carbon pollution” standard for power plants is just the start of a regulatory trajectory, not its end point. The EPA’s settlement agreement with environmental groups and state attorneys general obligates the agency to extend the standard to “modified” coal power plants and establish emission “guidelines” for non-modified units.

Moreover, the standard sets a precedent for promulgating NSPS for other GHG source categories, and for contriving new source categories (e.g. “electric generating units”) to hammer natural gas. As indicated above, if gas can set the standard for coal, then wind and solar can set the standard for gas. And at some point the refinery standard could undermine the profitability of unconventional oil. Although initially directed against new coal, the standard puts all fossil-energy production in an ever-tightening regulatory noose.

Pandora’s NAAQS

Taking a longer view, the “carbon pollution” rule moves the U.S. economy one step closer to the ultimate environmental policy disaster: national ambient air quality standards (NAAQS) for GHGs.

In December 2009, the EPA issued a rule under Section 202 of the Clean Air Act declaring that GHG emissions from new motor vehicles endanger public health and welfare. The endangerment rule was both prerequisite and trigger for the agency’s adoption, in January 2011, of first-ever GHG motor vehicle standards. The agency now claims that it need not issue a new and separate endangerment finding under Section 211 to adopt first-ever GHG performance standards for power plants, because subsequent science confirms and strengthens its Section 202 finding.

An implication of this argument is that the EPA need not make a new endangerment finding to promulgate NAAQS for GHGs under Section 108, because the Section 202 finding would suffice for that as well.

Section 108 of the Clean Air Act requires the EPA to initiate a NAAQS rulemaking for “air pollution” from “numerous or diverse mobile or stationary sources” if such pollution “may reasonably be anticipated to endanger public health and welfare.” Carbon dioxide obviously comes from numerous and diverse mobile and stationary sources, and the EPA has already determined that the associated “air pollution” – the “elevated concentrations” of GHGs in the atmosphere – endangers public health and welfare. Logically, the EPA must establish NAAQS for GHGs set below current atmospheric concentrations.

Eco-litigants have already put this ball in play. The Center for Biological Diversity and 350.Org petitioned the EPA more than two years ago to establish NAAQS for CO2 at 350 parts per million (roughly 40 parts per million below current concentrations) and for other GHGs at pre-industrial levels.

The potential for mischief is hard to exaggerate. Not even a worldwide depression that permanently lowers global economic output and emissions to, say, 1970 levels, would stop CO2 concentrations from rising over the remainder of the century. Yet the Clean Air Act requires States to adopt implementation plans adequate to attain primary (health-based) NAAQS within five or at most 10 years. A CO2 NAAQS set at 350 parts per million would require a level of economic sacrifice vastly exceeding anything contemplated by the Waxman-Markey cap-and-trade bill or the Copenhagen climate treaty, which aimed to stabilize CO2-equivalent emissions at 450 parts per million by 2050.

The EPA has yet to decide on the CBD-350.Org petition. Perhaps this is another case of punting unpopular regulatory decisions until Obama’s second term. The one instance where the administration addressed the issue is not reassuring. In a brief submitted to the Supreme Court in American Electric Power v. Connecticut, the Obama Justice Department described Section 108 as one of the provisions making the Clean Air Act a “comprehensive regulatory framework” for climate change policy.

Ultimately, only the people’s representatives can protect coal generation, hydraulic fracturing, and unconventional oil from hostile regulation. But nixing the “carbon pollution” standard would be a big setback to both the EPA and the eco-litigation fraternity, and would help safeguard America’s energy options until a future Congress reins in the agency.

The Governors of Georgia, Texas, Arkansas, Delaware, Maryland, New Mexico, and North Carolina have petitioned EPA Administrator Lisa Jackson to waive the mandatory ethanol blending requirements established by the Renewable Fuel Standard (RFS). The petitioners hope thereby to lower and stabilize corn prices, which recently hit record highs as the worst drought in 50 years destroyed one-sixth of the U.S. corn crop. Corn is the principal feedstock used in ethanol production.

Arkansas Gov. Mike Bebe’s letter to Administrator Jackson concisely makes the case for regulatory relief:

Virtually all of Arkansas is suffering from severe, extreme, or exceptional drought conditions. The declining outlook for this year’s corn crop and accelerating prices for corn and other grains are having a severe economic impact on the State, particularly on our poultry and cattle sectors. While the drought may have triggered the price spike in corn, an underlying cause is the federal policy mandating ever-increasing amounts corn for fuel. Because of this policy, ethanol production now consumes approximately 40 percent of the U.S. corn crop, and the cost of corn for use in food production has increased by 193 percent since 2005 [the year before the RFS took effect]. Put simply, ethanol policies have created significantly higher corn prices, tighter supplies, and increased volatility.

Agriculture is the backbone of Arkansas’s economy, accounting for nearly one-quarter of our economic activity. Broilers, turkeys, and cattle — sectors particularly vulnerable to this corn crisis — represent nearly half of Arkansas’s farm marketing receipts. Arkansas poultry operators are trying to cope with grain cost increases and cattle familes are struggling to feed their herds.

Section 211(o)(7) of the Clean Air Act (CAA) authorizes the EPA to waive all or part of the RFS blending targets for one year if the Administrator determines, after public notice and an opportunity for public comment, that implementation of those requirements would “severely harm” the economy of a State, a region, or the United States. Only once before has a governor requested an RFS waiver. When corn prices soared in 2008, Gov. Rick Perry of Texas requested that the EPA waive 50% of the mandate for the production of corn ethanol. Perry, writing in April 2008, noted that corn prices were up 138% globally since 2005. He estimated that rising corn prices had imposed a net loss on the State’s economy of $1.17 billion in 2007 and potentially could impose a net loss of $3.59 billion in 2008. At particular risk were the family ranches that made up two-thirds of State’s 149,000 cattle producers. Bush EPA Administrator Stephen Johnson rejected Perry’s petition in August 2008.

In the EPA’s Request for Comment on the 2012 waiver petitions, the agency indicates it will use the same “analytical approach” and “legal interpretation” on the basis of which Johnson denied Perry’s request in 2008. This means the regulatory decks are stacked against the petitioners. As the EPA reads the statute, CAA Section 211(o)(7) establishes a burden of proof that is nearly impossible for petitioners to meet. No matter how high corn prices get, or how serious the associated economic harm, the EPA will have ready-made excuses not to waive the corn-ethanol blending requirements.

According to the EPA, Petitioners must show that the “RFS itself” would cause severe economic harm, not merely “contribute” to it. Petitioners therefore must also show that the relief sought would achieve a substantial reduction in the prices of corn, feed, and food.

This reading of the statute effectively prejudges the issue. ”Severe” economic harm typically results from a combination of factors, not one single cause. An ethanol mandate that causes little economic harm when unemployment rates are low, corn production is high, and China’s demand for U.S. corn imports is low could inflict severe harm when the opposite conditions obtain — as they do today.

If Congress wanted the EPA to grant a waiver only when the RFS alone causes severe economic harm, it could have easily said so. The statute specifies no such limitation. CAA Section 211(o)(7) does not tell the EPA to ignore non-RFS factors that might also adversely affect food and feed prices, agricultural employment, and the competitiveness of U.S. livestock producers.

The EPA’s demand that the waiver be a ”remedy for the harm” is the flip side of this same trick coin. By law, the EPA may grant a waiver for only one year at a time. Although a series of waivers might provide a complete remedy, a one-year waiver may have little impact on markets shaped by the RFS’s 17-year (2006-2022) production quota schedule. So the EPA could reject the waiver petitions on the grounds that a piecemeal solution is no solution at all.

Note: The EPA argues the exact opposite when the issue is whether or not to pull a regulatory trigger. In such cases, even small contributions to an alleged harm are considered sufficient grounds for regulation, and even minute regulatory contributions to the hoped-for solution are deemed fully justified and legally required.

Take, for example, the EPA’s heavy-duty truck greenhouse gas (GHG) emission standards. The EPA estimates that the standards for model year (MY) 2014-2018 heavy-duty vehicles will reduce atmospheric carbon dioxide (CO2) concentrations by 0.732 parts per million, which in turn will avert an estimated 0.002-0.004°C of global warming and 0.012-0.048 centimeters of sea-level rise by the year 2100 (Proposed Heavy Truck Rule, p. 74289). Such changes would be too small for scientists to distinguish from the “noise” of inter-annual climate variability. The EPA acknowledges no obligation to demonstrate either that heavy-truck GHG emissions alone harm public health and welfare or that regulating MY 2014-2018 heavy-truck GHG emissions would have a major impact on global warming.

Consider also the EPA’s Utility MACT Rule for coal-fired power plants. The agency acknowledges that U.S. mercury (Hg) emissions constitute only 5% of global anthropogenic Hg emissions and only 2% of the total global Hg pool, and that U.S. power plant emissions account for only 0.6% of the global pool. More importantly, the EPA estimates  — based on dubious epidemiological evidence and questionable demographic modeling – that the MACT Rule’s Hg emission reductions will avert the loss of 0.00209 IQ points per child in a guesstimated population of 240,000 subsistence fishing households. IQ points cannot be measured out to five decimal places. The MACT Rule’s microscopic mercury-related health benefits are literally undetectable and unverifiable. The EPA is completely undaunted by such facts. In the agency’s words (Proposed Utility MACT Rule, p. 24978):

However, as the U.S. Supreme Court has noted in decisions as recently as Massachusetts v. EPA, regarding the problem of climate change, it is not necessary to show that a problem will be entirely solved by the action being taken, nor that it is necessary to cure all ills before addressing those judged to be significant. 549 U.S. 497, 525 (2007).

In stark contrast, when the issue before the EPA is whether to grant regulatory relief, then the regulation itself must be shown to cause severe harm, and even temporary relief must be shown to cure all ills (or most of them). This is not surprising. Being a regulatory agency, the EPA does not accord the harms of over-regulation the same weight as the harms of under-regulation.

So in all likelihood, the EPA will deny the Governors’ waiver requests, even though a waiver would undoubtedly lower and stabilize corn prices to some extent.

This cloud may have a silver lining. If the EPA once again refuses to balance the interests of corn farmers against those of other industries and consumers, it will furnish new evidence that the RFS is a policy disaster. Especially if the drought persists into 2013, an EPA that won’t heed the reasonable requests of domestic livestock producers, seven governors, 156 House members, 26 Senators, the head of the UN Food and Agriculture Organization, and other food security advocates will build support for RFS reform — or repeal.

Earlier this month, the House Oversight and Government Reform Committee issued a staff report on the Obama Administration’s fuel economy/greenhouse gas (GHG) regulatory program. The report, A Dismissal of Safety, Choice, and Cost, is the product of a “multi-year Committee investigation” that includes three hearings, a transcribed interview of EPA Assistant Administrator Gina McCarthy, and a review of more than 15,000 documents obtained by the Committee from the EPA, the National Highway Traffic Safety Administration (NHTSA), the California Air Resources Board (CARB), and 15 automobile manufacturers.

Some key findings:

• The Administration performed an end-run around the law and ran a White House-based political negotiation, led by “czars” who marginalized NHTSA, the federal agency charged in statute with setting fuel economy standards.
• Contrary to the statutory scheme Congress created, the EPA became the lead agency in fuel economy regulation and NHTSA was sidelined. Contrary to Congress’s preemption of State laws or regulations “related to” fuel economy, CARB became a “major player” and an “aggressive participant in the process,” allowing unelected state regulators in Sacramento to set national policy outside the federal rulemaking process.
• The Administration violated the spirit – and possibly the letter – of the Administrative Procedure Act, Presidential Records Act, and Federal Advisory Committee Act by negotiating agreements on both the Model Year (MY) 2012-2016 and MY 2017-2025 standards behind closed doors with only a select group of stakeholders.
• The new fuel-economy/GHG standards will add thousands of dollars to the cost of new vehicles. Consumers are likely to incur net financial losses unless annual gasoline prices reach $5-$6 per gallon.
• Compliance with the new standards will require mass reductions that will, in turn, compromise vehicle safety. EPA and CARB officials mocked and belittled safety concerns raised by NHTSA.

In a law journal article and regulatory comment letter, I also make the case that the administration’s fuel-economy agenda trashes the separation of powers and administrative procedures. But the Committee’s report provides the first, detailed behind-the-scenes chronology of Team Obama’s fuel economy machinations, confirming what other critics suspected but could not document.

Some secrets of the sausage factory, though, may never come to light: “Despite multiple requests, the Executive Office of the President refused to provide any information on its involvement in developing the fuel economy and GHG emissions standards.”

In related news, House Oversight and Government Reform Chairmain Darrell Issa (R-Calif.), Rep. Jim Jordan (R-Ohio), who chairs the regulatory affairs subcommittee, and Rep. Mike Kelly (R-Pa.), an auto dealer, yesterday requested the White House Office of Information and Regulatory Affairs (OIRA) ”to return the [MY 2017-2025 fuel-economy/GHG] rule to the agencies for further consideration of its adverse consequences to consumers and the economy” (Detroit News, Aug. 22, 2012).

It’s doubtful OIRA will grant the request, and not only because NHTSA administrator David Strickland said the rule would be published “in days, not weeks,” and Department of Transportation Secretary Ray LaHood said, “It is going to happen . . . there’s no backing away.”

Team Obama wants to lock in the fuel-economy/GHG rule before the November elections. As the Committee’s report notes, “The Administration rushed to set the second round of fuel economy standards before the 2012 presidential election because, according to one EPA official, the President ‘wants to secure his legacy.’”

Particularly revealing in this regard is the November 2011 joint press release that LaHood and EPA Administrator Lisa Jackson issued when they proposed the new fuel-economy/GHG rule. The two agency heads actually boasted they were bypassing Congress: ”Today‘s announcement is the latest in a series of executive actions the Obama Administration is taking to strengthen the economy and move the country forward because we can’t wait for Congressional Republicans to act” [emphasis added].

A legislative proposal boosting average fuel economy to 54.5 mpg would not pass in the 112th Congress. Note also that NHTSA need not propose fuel economy standards for MYs 2017 and later until 2014. “We can’t wait” really means: We won’t let the people’s representatives decide — not now, not after the 2012 elections.

So don’t hold your breath waiting for EPA and NHTSA to reconsider their handiwork. In the meantime, check out this informative YouTube video by the National Automobile Dealers Association (NADA).

The EPA and NHTSA estimate the fuel-economy/GHG rule will add $3,000 to the average cost of a new motor vehicle in 2025. According to NADA, the $3,000 higher price tag means that 7 million drivers who can now afford to buy a new vehicle, won’t in 2025. The rule will also regulate out of existence the most affordable new vehicles, i.e. those costing $15,000 or less.

Yesterday The Hill‘s Energy Blog reported on a brief filed by the EPA in the U.S. Court of Appeals for the District of Columbia:

The documents filed Monday with the U.S. Court of Appeals for the District of Columbia reveal the reasoning behind EPA’s move to shoot down the American Petroleum Institute’s (API) challenge of the renewable fuel standard (RFS). EPA determined that enough advanced biofuels — generally understood to be made from non-food products — existed to meet that portion of the RFS for 2012.

“EPA reasonably considered the production capacity likely to be developed throughout the year, while API would have EPA rely narrowly and solely on proven past cellulosic biofuel production,” EPA said in its brief. “EPA reasoned that lowering the advanced biofuel volume in these circumstances would be inconsistent with EISA’s [the Energy Independence and Security Act of 2007] energy security and greenhouse gas reduction goals, and decided to leave the statutory advanced biofuel volume unchanged.”

The (main) question here is what the 2012 cellulosic biofuel requirements should be set at. The EPA is arguing that they took a reasonable look at capacity production and put out what they thought could be developed, while the American Petroleum Institute is only looking at historic cellulosic biofuel production. So who is being reasonable?

Bob Greco over at the Energy Tomorrow blog produced this graph:

The large blue bars indicate the original blending requirements under the Energy Independence and Security Act. To the EPA’s credit, they had nothing to do with the original blending requirements. The lighter turquiose-ish are the finalized numbers requested by the EPA, as they are allowed to adjust requirements to fit reality. The red number represents actual commercial cellulosic ethanol production, according to the EPA’s own numbers.

Until this April there was zero commercial production of cellulosic ethanol, when 20,000 gallons were produced.

So, again, we ask: who is being unreasonable? The EPA who somehow still maintains that 8.65 million gallons will be produced in 2012? Or the American Petroleum Institute? Even if the API requested that the blending requirement be reduced to zero, their final guess will be much closer to reality than the estimate of the EPA.

Today, the D.C. Circuit Court of Appeals vacated the EPA’s Cross State Air Pollution Rule (CSAPR), also known as the Transport Rule. The Rule’s purpose is to implement the Clean Air Act’s ‘good neighbor policy,’ which prohibits upwind states from contributing significantly to downwind states’ non-attainment with National Ambient Air Quality Standards (NAAQS).

The Court vacated the CSAPR because . . . (drum roll, please) . . . the EPA regulated beyond its statutory authority. Dog bites man.

From the decision, filed for the Court by Judge Brett Kavanaugh:

Absent a claim of constitutional authority (and there is none here), executive agencies may exercise only the authority conferred by statute, and agencies may not transgress statutory limits on that authority.

Here, EPA’s Transport Rule exceeds the agency’s statutory authority in two independent respects. First, the statutory text grants EPA authority to require upwind States to reduce only their own significant contributions to a downwind State’s nonattainment. But under the Transport Rule, upwind States may be required to reduce emissions by more than their own significant contributions to a downwind State’s nonattainment. EPA has used the good neighbor provision to impose massive emissions reduction requirements on upwind States without regard to the limits imposed by the statutory text. Whatever its merits as a policy matter, EPA’s Transport Rule violates the statute. Second, the Clean Air Act affords States the initial opportunity to implement reductions required by EPA under the good neighbor provision. But here, when EPA quantified States’ good neighbor obligations, it did not allow the States the initial opportunity to implement the required reductions with respect to sources within their borders. Instead, EPA quantified States’ good neighbor obligations and simultaneously set forth EPA-designed Federal Implementation Plans, or FIPs, to implement those obligations at the State level. By doing so, EPA departed from its consistent prior approach to implementing the good neighbor provision and violated the Act.

For each of those two independent reasons, EPA’s Transport Rule violates federal law. Therefore, the Rule must be vacated.

Today (June 25th) is the deadline for submitting comments on the EPA’s proposed Carbon Pollution Standard Rule, which will establish first-ever New Source Performance Standards (NSPS) for carbon dioxide (CO2) emissions from fossil-fuel electric generating units.

The proposed standard is 1,000 lbs of CO2 per megawatt hour (MWh). The EPA claims that 95% of all new natural gas combined cycle power plants can meet the standard — maybe, maybe not. One thing is clear — no conventional coal power plant can meet the standard. Even today’s most efficient coal power plants emit 1,800 lbs CO2/MWh on average.

A coal power plant equipped with carbon capture and storage (CCS) technology could meet the standard, but the EPA acknowledges that  CCS is prohibitive, raising the cost of generating electricity by as much as 80%.

So what the proposal is really telling the electric utility industry is this: If you want to build a new coal-fired power plant, you’ll have to build a natural gas combined cycle plant instead. Not surprising given President Obama’s longstanding ambition to “bankrupt” anyone who builds a new coal power plant.

In a comment letter submitted today on behalf of the Competitive Enterprise Institute, I recommend that the EPA withdraw the proposed regulation for the following reasons:

1. The EPA’s proposal would effectively ban construction of new coal-fired power plants, a policy Congress has not approved and would reject if proposed in legislation and put to a vote.
2. The proposal is an underhanded ‘bait-and-fuel-switch.’ The EPA assured electric utilities in March 2011 that it would not require fuel-switching from coal to natural gas. Had the EPA come clean about its agenda in 2010 and 2011, Senators Murkowski and Inhofe would likely have garnered more support for their efforts to overturn the agency’s greenhouse gas regulations.
3. The proposal relies on weird contortions – a consequence of the EPA’s attempt to use the Clean Air Act as a framework for regulating greenhouse gases, a purpose for which the Act was neither designed nor intended. For example, the EPA pretends that natural gas combined cycle – a type of power plant – is a “control option” and “system of emission reduction” that has been “adequately demonstrated” for coal-fired power plants.
4. The proposal will provide another precedent for establishing National Ambient Air Quality Standards (NAAQS) for greenhouse gases, taking America one step closer to policy disaster.

A word of explanation about point #4. The EPA argues that it need not undertake a new endangerment finding to adopt the proposed standard, because the agency already determined in December 2009 that “air pollution” related to greenhouse gas emissions “may reasonably be anticipated to endanger public health and welfare.” But if that is so, then the EPA also need not make a new finding to initiate a NAAQ rulemaking for greenhouse gases.

Since the EPA defines the relevant “air pollution” as the “elevated concentrations” of greenhouse gases in the atmosphere (Endangerment Rule, p. 66516), the agency would have to set the NAAQS below current atmospheric levels. Picking up on this logic, the Center for Biological Diversity and 350.Org petitioned the EPA more than two years ago to establish NAAQS for CO2 at 350 parts per million (roughly 40 parts per million below current levels) and other greenhouse gases at pre-industrial levels.

Sooner or later, the EPA will have to address the NAAQS issue. Statutory logic (and precedent, if the Carbon Pollution Rule is not overturned) will favor the CBD/350.Org petition.

The potential for mischief is hard to exaggerate. The Clean Air Act requires States to adopt implementation plans adequate to attain a “primary” (health-based) NAAQS within five or at most 10 years. Implementing a CO2 NAAQS set at 350 parts per million would require a much higher degree of economic sacrifice than would be demanded by either the Waxman-Markey cap-and-trade bill or the Copenhagen climate treaty, which aimed to stabilize CO2-equivalent greenhouse gases at 450 parts per million by 2050. Even if the NAAQS for CO2 did not require much of the economy – all fossil-fuel-based power generation, manufacture, transport, and agriculture – to simply shut down, it would effectively prohibit growth in those sectors.

Nonetheless, some good may yet come from the EPA’s overreach. A policy crisis over NAAQS regulation of GHGs would finally make clear to the public and their elected representatives that Massachusetts v. EPA created a constitutional crisis by authorizing the EPA to enact policies that Congress has not approved and would reject if proposed in legislation and put to a vote.

CEI’s Myron Ebell appeared on E&E-TV this morning to discuss the upcoming vote on Senator Inhofe’s (R-OK) CRA vote to end the EPA’s mercury and air toxic’s rule. You can watch the video here. Here is a snippet of the conversation:

Monica Trauzzi: Myron, the Senate is expected to take up a measure this month that would change the future of EPA’s mercury and air toxics rule. There are two proposals that are actually being discussed on the Hill right now and the first is by Senator Inhofe and that would scrap the rule entirely. The second is by Senators Alexander and Pryor, and that would give utilities a little extra time to comply with the rule. What’s your take on the proposals and the overall impact on industry?

Myron Ebell: Well, first, the House has already passed legislation with a quite significant majority to block the utility MACT rule. Senator Inhofe’s resolution is brought under the Congressional Review Act and, therefore, it only requires a majority of those voting and it cannot be blocked by the Majority Leader or require a 60 vote, procedural vote. So, his is actually doable in the Senate. The Alexander Pryor legislation, I think Senator Alexander, who we might think of as the next Dick Lugar, is trying to provide cover for Democrats in tough election races to say that they’re voting for something that has absolutely no chance of passage, because their bill would take 60 votes, whereas Senator Inhofe’s much better resolution, which would block the rule entirely, only takes 50. The Alexander-Pryor legislation would only delay the implementation by a couple of years. So, instead of giving utilities four years, they would have six years in order to shut down their coal-fired power plants essentially.

Monica Trauzzi: But isn’t that a good thing? I mean couldn’t that help industry if they had a little extra time to comply and apply some of these technologies?

Myron Ebell: Sure, it could, but the fact is that there is no technology that will help these coal-fired power plants comply. So, we’re just essentially extending the killing off of coal-fired power plants. This bill has no chance of passage. That’s the key thing. It’s only being introduced to try to peel votes off of the Inhofe resolution.

Monica Trauzzi: So, you’re talking about the Alexander-Pryor bill?

Myron Ebell: Yes, it has, it would require 60 votes and there aren’t, if there aren’t 50 votes for the Inhofe resolution, there certainly aren’t going to be 60 for the Alexander bill.

Watch the rest here, or read the entire transcript here.

Bait-and-switch is one of the oldest tricks of deceptive advertising. The used-car dealer “baits” you onto the lot with an ad promising low interest payments on the car of your dreams. When you get there, the dealer regretfully informs you the car has already been sold. But, no, you haven’t wasted your time, because he’s got this other great car – the “switch” — which has so many superior features and it will only cost you a little more per month.

An even less ethical variant of this tactic is employed in politics. Party A in a negotiation gives an assurance or promise to obtain Party B’s support for a law or regulation. Party A then reneges on the deal once the policy is on the books. EPA’s recently proposed “Carbon Pollution Standard” Rule is a posterchild for this tactic.

EPA is proposing a carbon dioxide (CO2) “new source performance standard” (NSPS) for fossil-fuel power plants under section 111 of the Clean Air Act (CAA). EPA has developed NSPS for numerous industrial source categories such as municipal waste combustors, solid waste landfills, medical waste incinerators, cement plants, nitric oxide plants, copper smelters, steel plants, pulp mills, coal utility boilers, auto and truck surface coating operations, and natural gas turbines.

For each source category, the NSPS ”reflects the degree of emission limitation achievable through the application of the best system of emission reduction which (taking into account the cost of achieving such reduction and any nonair quality health and environmental impact and energy requirements) the Administrator determines has been adequately demonstrated.”

Okay, what does this have to do with bait and switch?

In general, NSPS are less stringent than “best available control technology” (BACT) standards — the individually-tailored emission control requirements owners or operators must meet to obtain a CAA permit to build or modify a major emitting facility. NSPS establishes the minimum emission control standard or “floor” for determining a facility’s BACT requirements. Under CAA sec. 169(3), application of BACT may not result in emissions that exceed those allowed by the applicable NSPS. The point of BACT is to push individual sources to make deeper emission reductions than the category-wide performance standard requires. In EPA’s words:

The NSPS are established after long and careful consideration of a standard that can be reasonably achieved by new source anywhere in the nation. This means that even a very recent NSPS does not represent the best technology available; it instead represents the best technology available nationwide, regardless of climate, water availability, and many other highly variable case-specific factors. The NSPS is the least common denominator and must be met; there are no variances. The BACT requirement, on the other hand, is the greatest degree of emissions control that can be achieved at a specific source and accounts for site-specific variables on a case-by-case basis.

Since an applicable NSPS must always be met, it provides a legal “floor” for the BACT, which cannot be less stringent. A BACT determination should nearly always be more stringent than the NSPS because the NSPS establishes what every source can achieve, not the best that a source could do.

As EPA interprets the CAA, new and modified major emitting facilities became subject to BACT for CO2 on Jan. 2, 2011 — the day EPA’s motor vehicle greenhouse gas emission standards took effect, making CO2 a “regulated air pollutant.” A big concern of the electric power industry was whether EPA might define BACT so stringently that a coal-fired power plant seeking to build a new unit or modify an existing unit would have to switch from coal to natural gas. (Natural gas power plants emit only about half as much CO2 per megawatt hour as coal power plants do.)

There was much angst and speculation about this in 2009 and 2010 but no definitive statement from EPA until March 2011, when the agency published a guidance document for ‘stakeholders.’ The document states that BACT for CO2 will not require fuel switching, nor will EPA ”redefine the source” such that coal boilers are held to the same standard as gas turbines:

The CAA includes “clean fuels” in the definition of BACT. Thus, clean fuels which would reduce GHG emissions should be considered, but EPA has recognized that the initial list of control options for a BACT analysis does not need to include “clean fuel” options that would fundamentally redefine the source. Such options include those that would require a permit applicant to switch to a primary fuel type (i.e., coal, natural gas, or biomass) other than the type of fuel that an applicant proposes to use for its primary combustion process. For example, when an applicant proposes to construct a coal-fired steam electric generating unit, EPA continues to believe that permitting authorities can show in most cases that the option of using natural gas as a primary fuel would fundamentally redefine a coal-fired electric generating unit.

EPA reiterates this assurance in a Q&A document accompanying the guidance:

12. Does this guidance say that fuel switching (coal to natural gas) should be selected as BACT for a power plant?

• No.
• BACT should consider the most energy efficient design and control options for a proposed source.
• BACT should also include consideration of “clean fuels” that may produce fewer emissions but does not necessarily require a different type of fuel from the one proposed, particularly when it can be shown that using another type of fuel would be inconsistent with the fundamental purpose of the facility.

Yet despite EPA’s assurance that BACT, which usually is more stringent than NSPS, will not require fuel switching or redefine coal power plants into the same source category as natural gas power plants, EPA’s “carbon pollution standard” does exactly that.

Under the proposed standard, new fossil-fuel power plants may emit no more than 1,000 lbs of carbon dioxide (CO2) per megawatt hour. About 95% of all natural gas combined cycle power plants already meet the standard (p. 115). No existing coal power plants come close; even the most efficient, on average, emit 1,800 lbs CO2/MWh (p. 134). Because carbon capture and storage (CCS) is prohibitively expensive, raising the cost of a conventional coal plant by 80% (p. 124), the only feasible way for a new coal power plant to comply is to be something other than what it is — a natural gas power plant.

As noted previously, EPA is pretending that natural gas combined cycle — a type of power plant — is a “system of emission reduction” that has been “adequately demonstrated” for coal power plants. That is absurd.

To make the “carbon pollution standard” seem reasonable, EPA proposes to redefine source categories so that coal boilers and gas turbines are both equally “fossil-fuel electric generating units.” But redefining coal power plants is exactly what EPA said it would not do in the BACT guidance document.

As should go without saying, Congress never voted to ban new coal generation. Indeed, Congress declined to adopt similar CO2 performance standards for coal power plants when Senate leaders pulled the plug on cap-and-trade. Section 116 of the Waxman-Markey bill (the American Clean Energy and Security Act) would have established NSPS requiring new coal power plants to reduce CO2 emissions by 50% during 2009-2020 and 65% after 2020. Congress did not adopt this agenda because the public rejected it. Waxman-Markey became politically radioactive soon after it narrowly passed in the House. In the November 2010 elections, 29 Democrats who voted for Waxman-Markey got the boot.

Congressional efforts to rein in EPA — particularly Sen. Lisa Murkowski’s Congressional Review Act resolution of disapproval to overturn EPA’s Greenhouse Gas Endangerment Rule and Sen. James Inhofe’s Energy Tax Prevention Act – would have gained more traction had EPA fessed up in 2009, 2010, or even 2011 that, come 2012, it would promulgate CO2 performance standards that no commercially viable coal plant could meet.

It’s an old story, but one that can’t be told too often. EPA is legislating climate policy – implementing an agenda the people’s representatives have not approved and would reject if put to a vote.

Sen. James Inhofe (R-Okla.) has vowed to kill the “carbon pollution standard” via a Congressional Review Act resolution of disapproval (Greenwire, subscription required). For those of us who still respect the separation of powers, ’tis a consummation devoutly to be wished.

Yesterday, EPA proposed its first-ever “carbon pollution standard rule” for power plants. The rule would establish a new source performance standard (NSPS) for carbon dioxide (CO2) emissions from fossil-fuel electric generating units (EGUs). The proposed standard is an emission rate of 1,000 lbs CO2 per megawatt hour. About 95% of all natural gas combined cycle (NGCC) power plants already meet the standard (p. 115). No existing coal power plants do. Even today’s most efficient coal plants emit, on average, 1,800 lbs CO2/MWh (p. 134). EPA is effectively banning investment in new coal electric generation.

Like the rest of EPA’s greenhouse agenda, the proposed rule is an affront to the Constitution’s separation of powers. Congress never voted to prohibit the construction of new coal power plants. Indeed, Congress declined to pass less restrictive limits on coal electric generation when Senate leaders pulled the plug on cap-and-trade. Congress should reassert its constitutional authority, overturn the rule, and rein in this rogue agency.

EPA of course denies its proposal would “interfere with construction of new coal-fired capacity” (p. 38). How so? Because “a new coal-fired power plant may be able to meet the 1,000 lb CO2/MHh standard by installing CCS [carbon capture and storage] at the time of construction.”

That doesn’t pass the laugh test. As EPA acknowledges, “at present,” installing CCS would “add considerably to the costs of a new coal-fired power plant,” which are already higher than the costs of new natural gas combined cycle plants. The CCS option is phony — there is no market demand for it.

EPA says financing is “available to support the deployment of CCS,” but private funding would not exist absent lavish federal grants and tax breaks that our deficit-ridden government can ill-afford to renew or expand.

EPA lists six coal-fired EGU projects that plan to install CCS (pp. 159-160), and acknowledges that “most if not all” get grants or loan guarantees from the Department of Energy. Consider one of the largest, Southern Company/Mississippi Power’s Kemper County project. Here’s what the company’s Web site says about federal financial support:

To offset the costs to construct the facility, Mississippi Power has received a $270 million grant from the Department of Energy, $133 million in investment tax credits approved by the IRS provided under the National Energy Policy Act of 2005, and loan guarantees from the federal government. . . .Mississippi Power also recently received an additional $279 million in IRS tax credits.

Why should Congress pony up billions more for exotic CCS coal plants when virtually all natural gas power plants already meet the proposed standard at much lower cost and no risk to taxpayers?

EPA’s proposed rule is weird in four ways.

(1) The proposal tries to palm off natural gas combined cycle — a type of power plant — as a ”control option” or ”system of emission reduction” for coal-fired power plants.

EPA picked 1,000 lb CO2/MWh as the “standard of performance” for new fossil-fuel EGUs because that is the “degree of emission limitation achievable through natural gas combined cycle generation” (pp. 35-36). But consider how the Clean Air Act (CAA) defines “standard of performance” [Sec. 111(a)(1)]:

The term “standard of performance” means a standard for emissions of air pollutants which reflects the degree of emission limitation achievable through the application of the best system of emission reduction which (taking into account the cost of achieving such reduction and any nonair quality health and environmental impact and energy requirements) the Administrator determines has been adequately demonstrated.

Performance standards are supposed to reflect the best “system of emission reduction.” But natural gas combined cycle is not a system of emission reduction. It is a type of power plant. EPA is not proposing that new coal power plants install emission reduction systems that have been “adequately demonstrated.” Rather, EPA is proposing that new coal power plants be new natural gas plants. EPA is saying with a straight face that natural gas combined cycle is an emission reduction system that has been adequately demonstrated for coal power plants.

To my knowledge, this is the first time EPA has ever defined a performance standard such that one type of power plant or facility can comply only by being something other than what it is.

(2) The proposed rule lumps coal boilers and natural gas turbines into a newly-minted industrial source category (fossil-fuel EGUs) — but only for CO2 emissions, not for conventional air pollutants.

EPA sets performance standards for specific categories of industrial sources. A coal boiler is different from a gas turbine, and up to now EPA reasonably regulated them as different source categories, under different parts of the Code of Federal Regulations (Subpart Da for coal boilers, Subpart KKKK  for gas turbines). EPA now proposes to regulate them together as a single source category — fossil fuel EGUs — under a new subpart numbered TTTT. But only for CO2! Coal boilers and natural gas turbines will continue to be regulated separately for “criteria air pollutants” (pollutants contributing to soot and smog) under Subparts Da and KKKK (p. 71).

Why hold coal boilers and gas turbines to different standards for criteria pollutants? EPA’s answer:

This is because although coal-fired EGUs have an array of control options for criteria and air toxic air pollutants to choose from, those controls generally do not reduce their criteria and air toxic emissions to the level of conventional emissions from natural gas-fired EGUs. [p. 102]

Wouldn’t the same logic argue even more strongly against imposing a single CO2 standard on coal boilers and natural gas turbines? Coal-fired EGUs have only one real option for reducing CO2 emissions to the level of emissions from natural gas power plants — install CCS, which nobody can afford to do without subsidy. As EPA notes, ”using today’s commercially available CCS technologies would add around 80 percent to the cost of electricity for a new pulverized coal (PC) plant, and around 35 percent to the cost of electricity for a new advanced gasification-based (IGCC) plant” (p. 124).

So we’re back to EPA’s contortion of classifying natural gas combined cycle as a ”control option” for CO2 emissions from coal-fired power plants.

(3) The proposed rule exempts modified coal-fired power plants from the CO2 performance standard even though CAA Sec. 111 requires modified sources to be regulated as “new” sources.

CAA Sec. 111(a) defines “new source” as “any stationary source, the construction or modification of which is commenced after the publication of regulations (or, if earlier, proposed regulations) prescribing a standard of performance under this section which will be applicable to such source [emphasis added].” The provision defines “modification” as “any physical change in, or change in the method of operation of, a stationary source which increases the amount of any air pollutant emitted by such source or which results in the emission of any air pollutant not previously emitted.” These definitions clearly imply that, once EPA promulgates CO2 performance standards for power plants, a coal-fired EGU that increases its CO2 emissions due to a physical change or change in operation is a “new” source and should be regulated as such. Yet under EPA’s proposal, modified coal-fired EGUs will not be treated as new sources.

Why? EPA claims it does “not have adequate information as to the types of physical or operational changes sources may undertake or the amount of increase in CO2 emissions from those changes.” That’s odd. Hasn’t EPA been collecting data on power plant CO2 emissions since the 1990 Clean Air Act Amendments (Sec. 821) and on power plant modifications for even longer? EPA also says it does not have ”adequate information as to the types of control actions sources could take to reduce emissions, including the types of controls that may be available or the cost or effectiveness of those controls” (p. 151).

A more plausible answer is that EPA knows full well what types of controls would be available, how costly such controls would be, and how damaging the political backlash to EPA and the Obama administration. There are no economical options to reduce CO2 emissions from modified coal-fired EGUs to 1,000 lb CO2/MWh. The owner of a modified coal-fired EGU would either have to install CCS or convert the facility from a coal-fired to a natural gas-fired power plant. Is EPA once again “tailoring” (amending) the CAA to avoid a regulatory debacle of its own making?

(4) The proposed rule has no monetized costs or benefits.

EPA says the rule will not ”add costs” to the electric power sector, ratepayers, or the economy (p. 36). That’s because EPA “does not project construction of any new coal-fired EGUs” between now and 2030. Rather, EPA expects electric power companies “to build new EGUs that comply with the regulatory requirements of this proposal even in the absense of the proposal, due to existing and expected market conditions” (p. 200), namely, the superior economics of natural gas:

. . . new natural gas-fired EGUs are less costly than new coal-fired EGUs, and as a result, our Integrated Planning Model (IPM) projects that for economic reasons, natural gas-fired EGUs will be the facilities of choice until at least 2020, which is the analysis period for this rulemaking. Indeed, our IPM model does not project construction of any new coal-fired EGUs during that period. This state of affairs has come about primarily because technological developments and discoveries of abundant natural gas reserves have caused natural gas prices to decline precipitously in recent years and have secured those relatively low prices for the future [p. 36].

The rule won’t “add costs” because it simply ratifies where the market is already going. Conversely, the rule will have no quantifiable benefits:

As previously stated, the EPA does not anticipate that the power industry will incur compliance costs as a result of this proposal and we do not anticipate any notable CO2 emissions changes resulting from the rule. Therefore, there are no monetized climate benefits in terms of CO2 emission reductions associated with this rulemaking [p. 202].

Creeping Kyotoism

So what’s the point? Why propose a “carbon pollution standard” that won’t reduce CO2 emissions and has no estimated climate benefits?

Because the rule expands EPA’s control over the power sector and advances its greenhouse regulatory agenda. It puts fossil-fuel EGUs squarely under EPA’s regulatory thumb with respect to CO2 emissions. It sets the precedent for EPA to promulgate CO2 performance standards for other industrial source categories. Most importantly, it tees up EPA to extend CO2 emission controls to modified and existing (i.e. non-modified) coal power plants. In EPA’s words:

Although modified sources would not be subject to the 1,000 lb CO2/MWh standard for new sources, the EPA anticipates that modified sources would become subject to the requirements the EPA would promulgate at the appropriate time, for existing sources under 111(d). [p. 153]

The proposed rule will also serve as a necessary predicate for the regulation of existing sources within this source category under CAA Section 111(d). [p. 201]

The proposed rule is EPA’s first — not last — action to fulfill the agency’s December 2010 settlement agreement with state attorneys general and environmental groups. The agreement requires EPA to establish CO2 performance standards for new and modified EGUs and emission guidelines for non-modified EGUs (p. 64).

So yes, the proposed rule will add no cost (other than paperwork) to modified and existing coal power plants. But once the framework is in place, EPA will be able to impose costs down the line. Coal is already losing market share to natural gas even without having to meet CO2 performance standards. The proposed rule positions EPA to put coal power plants in an ever-tightening regulatory noose.

It is hard to imagine EPA not targeting modified and existing coal plants in a second Obama administration. Consider how fast Team Obama has moved on the mobile source side of the greenhouse agenda. Only two weeks after EPA and the National Highway Traffic Safety Administration (NHTSA) published model year (MY) 2012-2016 greenhouse gas/fuel economy standards for new motor vehicles in the Federal Register — standards costing the auto industry an estimated $51.7 billion (Tailpipe Rule, p. 25642) – the White House announced plans to establish even tougher standards for MYs 2017-2025.

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.