WASHINGTON, September 17, 2014 — The EPA giving the public an additional 45 days to comment on its “Clean Power Plan” Proposal. This proposal, however, contains the same critical faults in the original proposal.
The proposal seeks to reduce carbon emissions from power plants by an average of 30 percent by 2030 with specific targets for each state. Although the amount each state must reduce their carbon footprint varies under the new proposal, the overall outcome remains the same, including the harm to the economy.
In the fall of 2013, the EPA originally announced the new rules that would limit the allowable amount of carbon dioxide emissions for new power plants to 1,000 pounds per megawatt of electricity for natural gas power plants and 1,100 pounds per megawatt of electricity for coal power plants. In order to achieve reductions in emissions, proponents of these caps want power producers to turn to carbon capture technology. Unfortunately, these technologies have yet to be commercialized on a large scale. Consequently, these new standards are premature.
The most advanced, lowest carbon emitting power plants in service, or soon to be in service, produce around 1,800 pounds per megawatt of power. Carbon capture technology prevents carbon from entering the atmosphere. Additionally, the captured carbon can be used to produce byproducts like ethanol. Carbon capture technology also adds costs to electricity production unless the value of any potential byproducts can equal or exceed the cost of using the technology.
All emerging technologies need time to reach a point of equilibrium where the costs and manufacturing capacity of such products are able to approximate their intrinsic value. Premature regulatory pushes for technologies create artificial demand that leads to unable prices. In other words, a push to rapidly force these technologies into the marketplace can create unnecessary price spikes for consumers and electricity producers while offering little return benefit for the increased costs.
The consequences are increased costs and an unwillingness to adopt newer technologies which prevents further decreases in pollution while further increasing costs through an ongoing lack of efficiency. These efforts to reduce emissions for new power plants will have negligible benefits to the environment, because they only apply to future power plants. Should these regulations be extended to already existing power plants, the environmental benefits over the next few months or years would also be minimal. As such, the most prudent action is to roll these regulations out in a smarter fashion.
If a limit of 1,800 pounds per megawatt is achievable now, all new power plants should be limited to or slightly below this amount. Adding a carrot to this stick, power plants should receive tax credits for reducing their emissions to at or below the 1,100 pound limit. A progressive tightening of tax credits and standards would incentivize further progress. This approach would help foster the construction of newer, more efficient power plants that can replace old power plants, which is important as the US is light-years from shedding our reliance on coal power.
As part of a second phase, old power plants can then be required to adopt increasing limits that encourage electricity producers to either install carbon capture technologies or replace their old plants. The EPA should also tighten all standards that govern the development of new technologies, i.e. lower caps and drop the threshold for tax credits.
This approach would force change without creating damaging economic instability in the form of price spikes while incentivizing our power industry to progress as it must.