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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Forty months after the U.S. Supreme Court stayed the Obama administration's signature environmental rule, the Clean Power Plan, the Trump administration unveiled the final version of a replacement rule, the Affordable Clean Energy (ACE) plan, on June 19. Coal interests and coal-state lawmakers cheered the president for ending what they have termed the "war on coal," while environmental organizations and states led by Democratic governors vowed to sue to block implementation of the new rule. The new rule would go into effect 30 days after it is published in the Federal Register unless it is stayed by a federal judge.
Interestingly, executives at electric utilities that burn significant amounts of coal either said nothing about the new rule or they said the new rule would not alter their plans to continue decarbonizing their generation fleet by retiring coal-fired power plants.
In a document distributed by the U.S. Environmental Protection Agency (EPA) (Washington, D.C.) along with the new clean air rule, an unnamed source at the Edison Electric Institute (EEI) (Washington, D.C.), the group representing shareholder-owned electric utilities, said this: "EEI's member companies are united in their commitment to get as clean as they can, as fast as they can, while keeping reliability and affordability front and center as always. At this time, we are still reviewing the details of the Affordable Clean Energy rule, and we will be working with our members to determine what the rule means for individual companies, for our sector, and for our customers.
"EEI's member companies operate in very diverse markets, and many pathways can lead to the same collective result. Our industry already has made significant progress in reducing carbon dioxide (CO2) emissions, and this impressive trend is expected to continue. In fact, EEI's member companies collectively are on a path to reduce carbon emissions 50% by 2030, compared with 2005 levels. We remain committed to working with all stakeholders, especially states, and leading the clean energy transformation by continuing to reduce CO2 in our sector and by helping other sectors transition to clean, efficient electric energy."
Across the U.S., electric utilities have been closing their coal-fired power plants for years and replacing the shuttered generation with gas-fired power plants or a combination of renewable energy generation and energy efficiency programs. The closure decisions were driven by the declining cost of renewable generation, flat electric demand growth, changing customer expectations and state and federal environmental regulations. For more on this issue, see: May 21, 2019, article - Western Coal Power Round-Up: Close, Sell or Protect; April 2, 2019, article - Closure of Coal-Fired Generators Surged in 2018, Expected to Slow in 2019; December 26, 2018, article - Coal Use Continues Falling as Utilities Announce Generating Plant Closures; and April 10, 2018, article - Closures of Coal-Fired Power Plants Accelerate.
In announcing the new rule, the U.S. Environmental Protection Agency (EPA) (Washington, D.C.) said the rule will rely on heat rate improvements (HRI), also known as efficiency improvements, as the best system of emissions reduction (BSER) for reducing carbon dioxide (CO2) emissions from coal-fired electric generating units. The agency identified six candidate technologies to increase the efficiency of coal-fired generators:
Under the Clean Air Act, the EPA will allow states to consider "the remaining useful life of the source and other source-specific factors in establishing standards of performance," an EPA fact sheet said. It continued: "States will evaluate applicability to their existing sources of the six candidate technologies and improved operating and maintenance practices and take into consideration source-specific factors in establishing a standard of performance at the unit level."
In other words, if state officials decide a coal-fired power plant should remain open to preserve coal-mining jobs in that state, they will be able to do that. In its fact sheet, the EPA said an early notice of proposed rulemaking received 270,000 public comments. The preliminary ACE proposal, issued August 2018, received 500,000 public comments and over 200 people provided oral testimony at the agency's sole public hearing on the draft rule, held on October 1 in Chicago.
"Today, we are delivering on one of President Trump's core priorities: ensuring the American public has access to affordable, reliable energy in a manner that continues our nation's environmental progress," EPA Administrator Andrew Wheeler said June 19 in releasing the finalized rule. "Unlike the Clean Power Plan, (the) ACE (rule) adheres to the Clean Air Act and gives states the regulatory certainty they need to continue to reduce emissions and provide a dependable, diverse supply of electricity that all Americans can afford. When ACE is fully implemented, we expect to see U.S. power sector CO2 emissions fall by as much as 35% below 2005 levels."
The Power Industry's CO2 emissions already have fallen dramatically from 2005 levels, as coal plants have been retired and they have been replaced by gas-fired or non-emitting generation as well as energy-efficiency programs. Critics said the new rule would offer virtually no additional CO2 reductions to the plans already being implemented by electric utilities around the country.
The agency estimated the new rule would reduce emissions of CO2, mercury and precursors for pollutants, such as fine particulate matter and ground-level ozone. Specifically, by 2030, EPA projected the new rule would:
Hal Quinn, president and chief executive of the National Mining Association (Washington, D.C.), made this comment: "In this rule, the EPA has accomplished what eluded the prior administration: providing a clear, legal pathway to reduce emissions while preserving states' authority over their own grids. ACE replaces a proposal that was so extreme that the Supreme Court issued an unprecedented stay of the proposal, having recognized the economic havoc the mere suggestion of such overreach was causing in the nation's power grid."
There were plenty of critical comments from environmental organizations and Democratic elected officials. New York State Attorney General Letitia James tweeted a pledge that her state would sue. Connecticut's attorney general made a similar proclamation. Legal challenges from other states, possibly California, are expected. California is part of the Ninth District Court of Appeals, a federal appellate court, and judges there have taken a dim view of many Trump administration initiatives.
House Speaker Nancy Pelosi (D-Calif.) blasted the new rule as a "dirty power scam" and "a stunning giveaway to big polluters." She called climate change "the existential threat of our time" and said the administration was ignoring scientific studies and yielding to special interests.
Joe Goffman, an environmental attorney who helped draft the Obama administration's Clean Power Plan, said: "I can't think of a single rule that would do more to set back the effort to do what we need to do to address the critical threat of climate change." Goffman currently is the executive director of Harvard University's Center Environmental & Energy Law Program.
Britt Burt, Industrial Info's vice president of research for the Global Power Industry, said: "The new rule will allow President Trump to say he is fulfilling his commitment to helping coal miners. But I expect this rule, like the Obama administration's Clean Power Plan, will encounter a significant amount of litigation. We may need a decision from the U.S. Supreme Court for the Power industry to get clarity on the environmental regulation of coal-fired power plants. The ACE rule may prolong the lives of coal-fired generators that are operating today. But it is not clear to me that this new rule will fundamentally alter the industry's desire to build a new coal-fired power plant."
In a webinar delivered one week before the EPA released its new clean air rule, Burt noted that only about $5.8 billion of coal power plant projects was scheduled to begin construction in North America between 2019 and 2021. He added that this scheduled project activity in North America only includes environmental compliance projects, decommissioning/dismantling, in-plant capital expenditures (such as equipment replacements, refurbishments and equipment modifications) as well as scheduled maintenance activity. In North America, there are no plans to add new coal-fired plants or units during this timeframe.
By contrast, in the U.S. alone over that same 2019-2021 timeframe, Burt said approximately $57.7 billion of gas-fired power project are scheduled to begin construction. About $143 billion of wind-power projects are scheduled to begin construction in the U.S. over the next three years, and $63.6 billion of solar power generation projects are scheduled to begin turning dirt in this country. Industrial Info does not expect all of these projects will begin construction as planned, or that all of them will be built at all. But the amount of capital investments that power developers plan to make in all fuels, except coal, is a clear indication of where the power generation industry is headed.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
Interestingly, executives at electric utilities that burn significant amounts of coal either said nothing about the new rule or they said the new rule would not alter their plans to continue decarbonizing their generation fleet by retiring coal-fired power plants.
In a document distributed by the U.S. Environmental Protection Agency (EPA) (Washington, D.C.) along with the new clean air rule, an unnamed source at the Edison Electric Institute (EEI) (Washington, D.C.), the group representing shareholder-owned electric utilities, said this: "EEI's member companies are united in their commitment to get as clean as they can, as fast as they can, while keeping reliability and affordability front and center as always. At this time, we are still reviewing the details of the Affordable Clean Energy rule, and we will be working with our members to determine what the rule means for individual companies, for our sector, and for our customers.
"EEI's member companies operate in very diverse markets, and many pathways can lead to the same collective result. Our industry already has made significant progress in reducing carbon dioxide (CO2) emissions, and this impressive trend is expected to continue. In fact, EEI's member companies collectively are on a path to reduce carbon emissions 50% by 2030, compared with 2005 levels. We remain committed to working with all stakeholders, especially states, and leading the clean energy transformation by continuing to reduce CO2 in our sector and by helping other sectors transition to clean, efficient electric energy."
Across the U.S., electric utilities have been closing their coal-fired power plants for years and replacing the shuttered generation with gas-fired power plants or a combination of renewable energy generation and energy efficiency programs. The closure decisions were driven by the declining cost of renewable generation, flat electric demand growth, changing customer expectations and state and federal environmental regulations. For more on this issue, see: May 21, 2019, article - Western Coal Power Round-Up: Close, Sell or Protect; April 2, 2019, article - Closure of Coal-Fired Generators Surged in 2018, Expected to Slow in 2019; December 26, 2018, article - Coal Use Continues Falling as Utilities Announce Generating Plant Closures; and April 10, 2018, article - Closures of Coal-Fired Power Plants Accelerate.
In announcing the new rule, the U.S. Environmental Protection Agency (EPA) (Washington, D.C.) said the rule will rely on heat rate improvements (HRI), also known as efficiency improvements, as the best system of emissions reduction (BSER) for reducing carbon dioxide (CO2) emissions from coal-fired electric generating units. The agency identified six candidate technologies to increase the efficiency of coal-fired generators:
- Neural Network/Intelligent Sootblowers
- Boiler Feed Pumps
- Air Heater and Duct Leakage Control
- Variable Frequency Drives
- Blade Path Upgrade (Steam Turbine)
- Redesign/Replace Economizer
Under the Clean Air Act, the EPA will allow states to consider "the remaining useful life of the source and other source-specific factors in establishing standards of performance," an EPA fact sheet said. It continued: "States will evaluate applicability to their existing sources of the six candidate technologies and improved operating and maintenance practices and take into consideration source-specific factors in establishing a standard of performance at the unit level."
In other words, if state officials decide a coal-fired power plant should remain open to preserve coal-mining jobs in that state, they will be able to do that. In its fact sheet, the EPA said an early notice of proposed rulemaking received 270,000 public comments. The preliminary ACE proposal, issued August 2018, received 500,000 public comments and over 200 people provided oral testimony at the agency's sole public hearing on the draft rule, held on October 1 in Chicago.
"Today, we are delivering on one of President Trump's core priorities: ensuring the American public has access to affordable, reliable energy in a manner that continues our nation's environmental progress," EPA Administrator Andrew Wheeler said June 19 in releasing the finalized rule. "Unlike the Clean Power Plan, (the) ACE (rule) adheres to the Clean Air Act and gives states the regulatory certainty they need to continue to reduce emissions and provide a dependable, diverse supply of electricity that all Americans can afford. When ACE is fully implemented, we expect to see U.S. power sector CO2 emissions fall by as much as 35% below 2005 levels."
The Power Industry's CO2 emissions already have fallen dramatically from 2005 levels, as coal plants have been retired and they have been replaced by gas-fired or non-emitting generation as well as energy-efficiency programs. Critics said the new rule would offer virtually no additional CO2 reductions to the plans already being implemented by electric utilities around the country.
The agency estimated the new rule would reduce emissions of CO2, mercury and precursors for pollutants, such as fine particulate matter and ground-level ozone. Specifically, by 2030, EPA projected the new rule would:
- Reduce CO2 emissions by 11 million short tons
- Reduce SO2 emissions by 5,700 tons
- Reduce NOx emissions by 7,100 tons
- Reduce PM2.5 emissions by 400 tons
- Reduce mercury emissions by 59 pounds
Hal Quinn, president and chief executive of the National Mining Association (Washington, D.C.), made this comment: "In this rule, the EPA has accomplished what eluded the prior administration: providing a clear, legal pathway to reduce emissions while preserving states' authority over their own grids. ACE replaces a proposal that was so extreme that the Supreme Court issued an unprecedented stay of the proposal, having recognized the economic havoc the mere suggestion of such overreach was causing in the nation's power grid."
There were plenty of critical comments from environmental organizations and Democratic elected officials. New York State Attorney General Letitia James tweeted a pledge that her state would sue. Connecticut's attorney general made a similar proclamation. Legal challenges from other states, possibly California, are expected. California is part of the Ninth District Court of Appeals, a federal appellate court, and judges there have taken a dim view of many Trump administration initiatives.
House Speaker Nancy Pelosi (D-Calif.) blasted the new rule as a "dirty power scam" and "a stunning giveaway to big polluters." She called climate change "the existential threat of our time" and said the administration was ignoring scientific studies and yielding to special interests.
Joe Goffman, an environmental attorney who helped draft the Obama administration's Clean Power Plan, said: "I can't think of a single rule that would do more to set back the effort to do what we need to do to address the critical threat of climate change." Goffman currently is the executive director of Harvard University's Center Environmental & Energy Law Program.
Britt Burt, Industrial Info's vice president of research for the Global Power Industry, said: "The new rule will allow President Trump to say he is fulfilling his commitment to helping coal miners. But I expect this rule, like the Obama administration's Clean Power Plan, will encounter a significant amount of litigation. We may need a decision from the U.S. Supreme Court for the Power industry to get clarity on the environmental regulation of coal-fired power plants. The ACE rule may prolong the lives of coal-fired generators that are operating today. But it is not clear to me that this new rule will fundamentally alter the industry's desire to build a new coal-fired power plant."
In a webinar delivered one week before the EPA released its new clean air rule, Burt noted that only about $5.8 billion of coal power plant projects was scheduled to begin construction in North America between 2019 and 2021. He added that this scheduled project activity in North America only includes environmental compliance projects, decommissioning/dismantling, in-plant capital expenditures (such as equipment replacements, refurbishments and equipment modifications) as well as scheduled maintenance activity. In North America, there are no plans to add new coal-fired plants or units during this timeframe.
By contrast, in the U.S. alone over that same 2019-2021 timeframe, Burt said approximately $57.7 billion of gas-fired power project are scheduled to begin construction. About $143 billion of wind-power projects are scheduled to begin construction in the U.S. over the next three years, and $63.6 billion of solar power generation projects are scheduled to begin turning dirt in this country. Industrial Info does not expect all of these projects will begin construction as planned, or that all of them will be built at all. But the amount of capital investments that power developers plan to make in all fuels, except coal, is a clear indication of where the power generation industry is headed.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
