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EPA Plan To Cut Carbon Emissions Could Shift Energy Mix

The Obama administration’s historic plan to reduce carbon emissions from existing power plants, unveiled Monday, could hasten the nation’s shift from coal toward natural gas, energy efficiency and renewable sources such as wind and solar.


The controversial proposal by the Environmental Protection Agency calls for a 30% national cut in power-plant emissions of heat-trapping carbon dioxide — below 2005 levels — by 2030, but it gives states varying reduction goals, depending on their power mix.

The 645-page plan, a key pillar of President Obama’s climate initiative, requires states to develop and implement plans for meeting their targets. Recognizing that coal-fired facilities emit more carbon than other power plants, the administration plan sets lower 2030 targets for some states that rely heavily on coal, such as West Virginia, than those such as New York, with a more diversified energy mix.

“The U.S. energy sector is in transition, anyway,” and the plan’s rollout over the next 15 years will help to “shape” that shift in a low-carbon direction that addresses climate concerns, says Tim Profeta, director of Duke University’s Nicholas Institute for Environment Policy Solutions.

The nation’s energy industry has dramatically shifted toward natural gas in recent years as new drilling techniques have lowered its production costs. Power plants fueled by natural gas produced 30% of U.S. electricity in 2012 — up from 16% in 2000. Plunging prices for solar panels and wind turbines have also prompted a surge in renewable energy.

In contrast, the coal industry has hit hard times. Its power plants still provide the nation’s largest share of electricity, 37%, but that’s down from 52% in 2000 and is expected — even without the latest EPA proposal — to hit 32% by 2040, according to the Energy Information Administration.

The EIA, which says the number of U.S. coal power plants has fallen from 633 in 2002 to 557 in 2012, expects 60 gigawatts of coal-fired power — one-fifth of total U.S. coal capacity in 2012 — will retire by 2020, and that’s excluding the impact of the new EPA rule. The EPA says the average age of U.S. coal plants is now 42 years.

Critics say the EPA plan, expected to trigger legal challenges, amounts to a “war on coal.” Rep. Nick J. Rahall, D- W.V., said Monday that he and his state’s GOP colleague, Rep. David McKinley, will introduce legislation to stop the new proposal, along with another one last year aimed at future power plants.

“This new regulation threatens our economy and does so with an apparent disregard for the livelihoods of our coal miners and thousands of families throughout West Virginia,” Rahall said.

The new EPA rule, along with federal limits on mercury emissions taking effect next year, could force the retirement of at least one-third of the nation’s coal-fired power plants by 2030, says Mike Duncan, president and CEO of the American Coalition for Clean Coal Electricity, an industry group. “It creates a reliability and affordability problem,” he says, adding it will raise electricity prices for U.S. consumers and manufacturers that will push jobs overseas.

Advocates say the plan has health, climate and economic benefits. “This is not just about disappearing polar bears or melting ice caps. … This is about protecting local economies and jobs,” said EPA Administrator Gina McCarthy, adding it will spur innovation and create jobs.

The EPA projects annual compliance costs of $7.3 billion to $8.8 billion by 2030, but since the proposal is expected to reduce air pollution, it says annual public health benefits will total $55 billion to $93 billion by avoiding up to 100,000 asthma attacks and 2,100 heart attacks each year.

The proposal, which won’t take effect for at least two more years, allows states to meet their targets in a variety of ways that include greater use of pollution-control technology, energy efficiency, natural gas or renewable energy. States could also follow California and nine northeastern states, which have created cap-and-trade programs that cap overall emissions but allow polluters to buy government-issued credits from clean-energy producers.

The ultimate impact will “come down to costs,” says Richard J. Campbell, a specialist in energy policy at the non-partisan Congressional Research Service. He says states will look for the most cost-effective ways to comply, including the potential retirement of more coal-fired power plants.

The EPA rule could accelerate the U.S. shift away from coal, but it gives states plenty of options, says Kyle Aarons, a senior fellow at the Center for Climate and Energy Solutions, a non-profit group.

Even coal-reliant states should be able to meet the goals, says Dan Bakal, director of electric power for Ceres, a non-profit group that promotes corporate sustainabilty. He says they’ve yet to take steps, including the trading of pollution credits, that states with low carbon-emission rates have already deployed.

Duke University’s Profeta agrees, saying the proposal is “not unsympathetic to coal-heavy states.” The EPA, for example, sets a 20% emission-reduction target for West Virginia and 19% for Wyoming by 2030, and an 18% cut for Kentucky. It sets a 44% goal for New York, although the state can get credit for prior emission-cutting efforts.

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