EPA’s Clean Power Plan: New plants and the Iron Law

The 1,534 Mw Sandow Station coal-fired electric power plant in Rockdale, Texas: Azleader

Austin, July 26, 2014 — The Clean Power Plan is a first-ever set of regulations put together by the U.S. Environmental Protection Agency (EPA) that specifically targets controlling greenhouse gases to reduce global warming. Electric power plants produce one third of U.S. CO2 emissions.

In the January 8, 2014 proposal for new electric power plants EPA said the new plant rule would have these two very remarkable outcomes:

  1. No implementation cost
  2. No change in CO2 emissions

The surprising reason given by EPA is that all new fossil fuel power plants being constructed or being considered for construction already meet the new regulation requirements.

Why create a regulation to curb CO2 emissions that will cost nothing and is projected to have no effect at all? That seems illogical. Unbeknownst to the EPA, the reason the new power plant regulation is toothless is because of the “Iron Law of Climate Policy”.

Unstated in the EPA’s proposed regulation is that there will be very real CO2 emissions reductions realized as a result of new power plants construction to replace retiring plants. The reductions will be because of the Iron Law, not because of any EPA regulation.

The new power plant regulation

The new regulation stipulates that all coal-fired electric plants built from now on cannot emit more than 1,100 lbs CO2/MWh of electricity generated. It also says all natural gas-fired plants cannot emit more than 1,000 lbs CO2/MWh.

There is lot of other detailed minutia within the 464-page bulk of this one regulation, but given it will have no impact on CO2, describing nitty-gritty details seems pointless.

Two hidden facts within the wordy regulation do have crucial Iron Law importance:

  1. The coal-fired plant restriction cannot be met
  2. The natural gas-fired restriction is already being met

It isn’t that coal-fired power plants can’t be built to meet the new standard, they can. The problem is they can’t be built cost effectively. On the other hand, the newest natural gas-fired technology, called advanced combined cycle, already meets the proposed new plant standard.

Natural gas, using new proven technology, produces half the greenhouse gas emissions of coal-fired power plants at a lower levelized cost.

The Iron Law of Climate Policy

The Iron Law is an idea proposed by Dr. Roger Pielke, Jr., a controversial political scientist and mathematician at the University of Colorado at Boulder.

Its premise is simple: If climate policy butts heads with economic policy, climate policy will lose every time. The Iron Law states that citizen support for climate change initiatives is inversely proportional to their cost. The more they cost, the less support they get.

A corollary to the Iron Law states the best way to make climate policy work is to create, through technology, low-carbon energy solutions that are cheaper than high-carbon ones, like coal.

An illustrative example of the Iron Law in action comes from recent events in Australia. Late in 2011 the climate-conscious Labor Party government delivered on a campaign promise to curb Australian CO2 emissions by enacting the most expensive cap-and-trade legislation in history. It went into effect in January 2012.

In less than two years, the opposition Liberal Party got voted into office in September 2013 by promising to repeal the Labor Party’s economically oppressive cap and trade law. It won because of citizen backlash against rising electric rates, in violation of the Iron Law.

Australia’s cap and trade law was officially abolished less than two weeks ago. Economic policy won out over climate policy.

The Iron Law and new U.S. electric power plants

Oil and natural gas boom in the Eagle Ford shale deposit south of San Antonio, Texas: Azleader

The Iron Law was already at work in the United States before the EPA’s new plant regulation was written. Low emission natural gas has been steadily replacing dirty coal since 2007. The process will continue unchanged under the EPA’s proposed new plant regulation.

Low-emission natural gas is replacing coal because it follows the Iron Law. It both reduces undesirable carbon emissions AND it costs less. Natural gas advanced combined cycle technology is the least expensive electric power option there is. It’s projected to remain the cheapest at least through 2019.

Outside a couple very expensive, highly subsidized coal-fired CCS electric power plants under construction, no new coal plants are scheduled to be built in the United States.

Thus, an ongoing process going strong since 2007 is expected to continue, especially since it already meets the proposed EPA emission standard. That’s why EPA concludes its new regulation has no cost and will not affect CO2 emissions.

Conclusions

The Clean Power Plan is a set of three related regulations designed for one primary purpose, reducing CO2 emissions from fossil-fuel electric power plants to reduce the effects of global warming.

Replacing coal with natural gas is one of the primary reasons U.S. CO2 emissions have went down by 12 percent since 2007. Those reductions have been driven by economics and the Iron Law. New natural gas advanced combined cycle technology offers a lower-emissions, lower-cost alternative to coal.

The U.S. Energy Information Administration estimates that 40-60 Gw of coal-fired electric capacity will be retired between now and 2020. According to the EIA, most of it will be replaced with natural gas whether there is a Clean Power Plan or not. CO2 emission reductions will continue.

Another newly proposed regulation requires states to reduce CO2 emissions by 30 percent by 2030. States would be wise to keep in mind lessons learned from new power plant construction when designing their individual state plans to meet reduction goals.

State politicians that follow the Iron Law when designing individualized CO2 reduction plans will be successful. Those that don’t will suffer the same fate as Australia’s Labor Party government.

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