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GUEST COLUMN: EPA Greenhouse Gas Rules Would Stifle Energy Innovation

When it comes to energy regulatory oversight, businesses are looking for a few general themes:

  • Predictability – what can and should they plan for?
  • A sweet spot where interests – including environmental interests –  are protected and commerce can flourish
  • Benchmarks that are based on science and engineering, not wishful thinking
  • Diversity – allowing everyone a shot at success so we don’t rely too much on one form of energy

The new rulemaking on greenhouse gas regulations for new energy sources proposed by the Environmental Protection Agency falls short of these goals. Here are some reasons why:

The proposed rulemaking sets a limit that most natural gas generators can accommodate with today’s technology — but that coal generation cannot. It seems a bit strange that this magic limit saves the planet and just so happens to allow natural gas generation but not coal generation.

I know everyone, including the Chamber, is excited about the new natural gas finds across the country, but it was a few short years ago that we were talking about importing natural gas. Things change in ways we cannot predict – so why propose rules that preclude new coal generation?

We understand there is a provision in the EPA regulations for coal companies to average their GHG emissions over 30 years, theoretically allowing them to build a new plant and retrofit it with sequestration technology when (and if) it becomes available and economical. The Administration claims that there is a ‘path forward’ for coal in this rule. However, the path seems to run through installation of carbon capture and storage – a technology that is still under development and too expensive for use today.

Given that, what company will be able to get financing for a new plant that is built on the hope that new technology will be available and affordable at some point in the future? We don’t believe investors would or could take that risk.

EPA’s greenhouse gas regulations are advocating for natural gas generation and creating a regulatory wet blanket on future coal production — in essence, picking winners and losers when we need nothing but winners.

Consider how much cleaner coal production has gotten in the past three or four decades. The Prairie State generation plant that’s just about to become fully operational in southwestern Illinois produces 50% less regulated emissions and 15% less GHG emissions using best available control technology – a great step forward.

However, if these proposed regulations come into place, the leap coal producers are asked to make in GHG emissions will be a roadblock to new innovation, not an incentive. The leap being asked for could result in companies abandoning coal research and moving to other forms of energy – leaving us more vulnerable with fewer supply choices.

We agree with the Administration when it talks about the importance of inventing new alternative energy technologies in America. But we believe if these regulations are enacted, the cleaner coal technologies will be invented somewhere else, or they won’t be invented at all because other countries that rely on coal are making little to no efforts to minimize GHG emissions. We are a leader in cleaner coal technologies and could be going forward. But asking for this leap of faith could squash our ability to lead the world.

I hesitate to try and quantify the exact costs and benefits if this proposed rulemaking is adopted as is. The future is really hard to predict. Who could have predicted the natural gas finds that might turn us into a natural gas exporting country instead of an importing one? Who could have predicted that crude oil production in North Dakota would jump from 7,500 barrels per day in 2006 to more than 500,000 barrels a day today? Who could have predicted that wind turbines would be up to 30% more efficient than four years ago, or that solar equipment costs would plummet.

However, unless there is a leap in coal generation technology that is unforeseen at this time, these rules will effectively shut down the future of new coal generation and the jobs, economic development, and opportunity that would come with it.

We have the chance to rely on a three-legged stool when it comes to baseload generation, nuclear, natural gas, and coal – supplemented by the growth of wind, solar, hydro, waste to energy and others. Why should we knock off one of the legs of that stool?

We are better off with a diversified portfolio of generation options. “All of the above” should mean all of the above. It seems these regulations push coal aside instead of forward.

Because the rest of the world will continue using coal, shouldn’t rulemaking provide a reasonable, incremental road map that drives innovation and new technologies that can be exported globally AND that make a dent in the CO2 emissions the rules are trying to achieve?

EPA should take a long, deep breath, and take a hard look at these new regulations and change them to allow new coal plants to be built, incentivized in a way that creates a market for the technological advances that will make coal cleaner and cleaner – and a viable option for U.S. and global electricity users.

Tom Wolf testified on the economic impact of EPA regulations before the House Subcommittee on Energy and the Environment on June 6, 2012.

http://www.freeenterprise.com/energy-environment/guest-column-epa-greenhouse-gas-rules-would-stifle-energy-innovation

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