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.

Advertisements

About azleader

Learning to see life more clearly... one image at a time!

Posted on Jul 26, 2014, in Climate, climate change, economics, Economy, Energy, energy policy, environment, EPA, Global Warming, Government, news, Opinion, Politics, science. Bookmark the permalink. 16 Comments.

  1. The current trend will work fine until the US starts running out of cheap shale gas. Prices will rise, and I suppose they´ll have to move on to some other source. Eventually, unless they do develop new technology for energy storage to make wind power more feasible, the general population will get extremely sore at the politicians who backed the EPA. I think it would have made more sense to encourage the construction of high efficiency coal plants, but have them use existing technology (carbon capture isn´t really economically feasible).

  2. The public will only get mad at politicians supporting the Clean Power Plan when it starts costing them money, just like the public turned against politicians in Australia.

    Earth will eventually run out of cheap shale gas, but not for a long time. EIA estimates only modest price increases between now and 2040 (around 9%). EPA’s IPM model forecasts shale gas prices will stay low until 2050.

    Affordable shale gas in going to be around for many decades to come.

    The Clean Power Plan will accelerate the transition to natural gas as the primary fuel for producing electricity in the United States. Perhaps renewables will be more affordable by the time we run out of natural gas.

  3. Hum?, so in affect, the EPA has artificially raised the cost of coal electrical generation beyond what the market will bear, based on regulation of CO2 production per MWh of electricity generated. (Good thing the shale boom happened, as the EPA was determined to do this anyway.)

    IMV the 1960s clean air act was necessary and good legislation. Classifying CO2 as a pollutant, is, in my view, not.

    China and India continue to build coal fired power plants like crazy, so our reduction is meaningless in terms of any reduction in GAT, even accepting the IPCC likely bloated climate sensitivity numbers.

    • Technically, the EPA isn’t purposely raising the cost of coal plants. (That is what cap and trade does). What the EPA proposes is to restrict coal-fired power plant CO2 emissions to about 1/2 their current level.

      The problem with that is there isn’t even a single utility scale coal electric plant in existence that can do that yet. (There are small demonstration plants that can) The DOE is funding utility-scale plants that may be able to do that, but they are not yet operational and are hugely over budget.

      Bottom line is that coal will not be cost competitive for a long time to come. The market-driven move away from coal started before the EPA came along with their new plan.

      The EPA Clean Power Plan also restricts CO2 emissions for natural gas plants. The difference is that NGCC already meets the proposed criteria and is the cheapest form of electric energy there is. Why use coal when you have a cheaper, cleaner energy source that already meets the proposed new EPA standard?

      Agreed the Clean Air Act has worked wonders for our environment. We can’t worry about what China and India do. When their environment becomes enough of a cesspool, they’ll clean it up just like we did. None of that has anything to do with CO2.

  4. What is the difference between NGCC costs and coal costs, excluding CO2 regulation? Would functional coal plants, their infrastructure all ready paid for, have shut down without government intervention? NGCC, saving grace that it is for our economy, is perhaps not always the best solution, or the most economical for every area, as India and China demonstrate.

    WRT CO2, my simple point is that even if the IPCC alarmist were correct, the China and India boom makes US and European reductions meaningless WRT GAT, even using what are likely bloated IPCC estimates of C.S.

    • I’m speaking about the United States only…

      The EIA’s newest levelized cost of electricity (LOCE) table is here:
      http://www.eia.gov/forecasts/aeo/electricity_generation.cfm

      It lists, the cost of various types of electric power plants built in the U.S. if they are to go into service in 2019. It’s a good baseline for evaluating options to meet the EPA Clean Power Plan. I used it as a primary cost calculation source for public EPA testimony that I gave in Atlanta.

      Advanced combined cycle (Advanced NGCC) is the cheapest, smartest plant choice at $64.4/MWh. It more than meets all EPA emission standards.

      No more conventional coal plants will ever be built so ignore that. Conventional coal was already dead before the EPA proposed the Clean Power Plan. It got done in by the EPA’s MATS standard.

      The only possible coal fired power plants that will be built are IGCC with CC (carbon capture). That meets the proposed EPA standard but costs $147.4/MWh, more than twice NGCC.

      I don’t buy the implied argument that we should do nothing because it won’t make a difference since China, India, Russia and the rest of the 3rd world will not. Reductions have to start somewhere. It might as well be here.

  5. I guess Obama kept his promise wrt coal.

  6. Well I guess we disagree, in that I see no reason to reduce CO2 whatsoever. There is abundant peer review literature, based on observations, not failing computer models, which supports this perspective. http://climatechangereconsidered.org/wp-content/uploads/2013/08/CCR2b-page-art.png

    I also fail to see how the EPA’s MATS standard is market driven.

    • Nothing EPA does is market-driven.

      MATS merely hastens (slightly) the market replacement of coal with natural gas. Natural gas in the United States is both cheaper and cleaner burning than coal. That is the main reason coal is going away. Government energy and environmental policy just ushers it along.

      CO2 levels as they are today likely aren’t problematic. Heck, historically, temperature changes have triggered CO2 changes, not the other way around. It’s the unlimited, unchecked growth of human-induced CO2 over time that eventually becomes a problem. And, of course, fossils will eventually run out and have to be replaced.

  7. My question was, “What is the difference between NGCC costs and coal costs, excluding CO2 regulation?”. I have no real idea?

    • That cost is the very first one listed in the above referenced LOCE table. It’s labeled “Conventional Coal”. It’s LOCE cost is $95.6/MWh. That’s $31.2/MWh more than advanced NGCC’s $64.4/MWh.

  8. “It’s the unlimited, unchecked growth of human-induced CO2 over time that eventually becomes a problem”

    The NIPCC report, linked and based on hundreds of peer reviewed papers, does not agree with this. The quick summary is the benefits of CO2 are known and continue in a fairly linear fashion well beyond any human caused increase, and the projected harms are failing to materialize, and likely to fail in the future.

    • CO2 is a great benefit to plants, but you can have to much of a good thing. Just check out Venus, for example.

    • At one, or even two doublings our planet (560 to 1120 PPM) would be nothing like Venus. (Carl Sagan’s Venus analogy has been robustly debunked)

      Palatable water is a real issue, albeit one easily solvable if reasonable efforts our made. At 600 PPM plants would use 25 to 30 percent less water (compared to a 280 ppm world) to achieve equal growth. They would be far more drought tolerant. it has been found that the nitrogen efficiency of plants often increases in line with their water efficiency. The greening of the earth would become a greatly expanded carbon sink, and the buffering of the worlds oceans are likely easily capable of keeping the oceans alkaline, and the harms projected will not manifest in the real world. (It is demonstrated in many studies)

      Energy is the life blood of every economy. With inexpensive abundant energy, society is far more capable of dealing with real environmental issues. Many worry about population growth. If you wish to curtail population growth, modernize a society.

      Power is an a-prior human need. However when it becomes power OVER OTHERS, and centralizes in statist societal structure, then the “necessary evil” has outgrown its usefulness. California gasoline tax is set to take a 20 to 40 cent per gallon additional rise/tax. This is a penalty/tax on the poor. California is talking of outlawing the collection of rain water on personal property. (California water problem is a politically caused problem, and the same politicians are pushing a multi billion dollar bullet train, consuming resources more then adequate easily solve real issues.)

      A certain segment of the movement to tax the very air citizens breath is based on this human lust for power, and an irrational hate of humans…

      ”My three goals would be to reduce human population to about 100 million worldwide, destroy the industrial infrastructure and see wilderness, with its full complement of species, returning throughout the world.”
      David Foreman,
      co-founder of Earth First!

      ”The prospect of cheap fusion energy is the worst thing that could happen to the planet.”
      Jeremy Rifkin,
      Greenhouse Crisis Foundation

      ”Giving society cheap, abundant energy would be the equivalent of giving an idiot child a machine gun.”
      Paul Ehrlich,
      Professor of Population Studies,
      Author: “Population Bomb”, “Ecoscience”

      “The data doesn’t matter. We’re not basing our recommendations
      on the data. We’re basing them on the climate models.”
      – Prof. Chris Folland,
      Hadley Centre for Climate Prediction and Research

      “The models are convenient fictions
      that provide something very useful.”
      – Dr David Frame,
      climate modeler, Oxford University

      ”We need to get some broad based support, to capture the public’s imagination… So we have to offer up scary scenarios, make simplified, dramatic statements and make little mention of any doubts… Each of us has to decide what the right balance is between being effective and being honest.”
      Stephen Schneider,
      Stanford Professor of Climatology,
      Lead author of many IPCC reports

      ”Unless we announce disasters no one will listen.”
      Sir John Houghton,
      First chairman of the IPCC

      ”It doesn’t matter what is true, it only matters what people believe is true.”
      Paul Watson,
      Co-founder of Greenpeace

      ”Childbearing should be a punishable crime against society, unless the parents hold a government license. All potential parents should be required to use contraceptive chemicals, the government issuing antidotes to citizens chosen for childbearing.”
      David Brower,
      First Executive Director of the Sierra Club

      ”We’ve got to ride this global warming issue. Even if the theory of global warming is wrong, we will be doing the right thing in terms of economic and environmental policy.”
      Timothy Wirth,
      President of the UN Foundation

      ”No matter if the science of global warming is all phony… climate change provides the greatest opportunity to bring about justice and equality in the world.”
      Christine Stewart,
      former Canadian Minister of the Environment

      ”Global Sustainability requires the deliberate quest of poverty, reduced resource consumption and set levels of mortality control.”
      Professor Maurice King

      ”Current lifestyles and consumption patterns of the affluent middle class – involving high meat intake, use of fossil fuels, appliances, air-conditioning, and suburban housing – are not sustainable.”
      Maurice Strong,
      Rio Earth Summit

      ”Complex technology of any sort is an assault on the human dignity. It would be little short of disastrous for us to discover a source of clean, cheap, abundant energy, because of what we might do with it.”
      Amory Lovins,
      Rocky Mountain Institute

      ”I suspect that eradicating small pox was wrong. it played an important part in balancing ecosystems.”
      John Davis,
      Editor of Earth First! Journal

      Arrogant elitist, every one of them, and the list is far longer then quoted above. The only thing that exceeds their arrogance, is their ignorance, for this planet is easily capable of sustaining several billion more people.

      All the best
      David A

      • Satellite evidence has shown that higher CO2 levels have already benefited plant life, and therefore humans, here on Earth. I think it’ll take a lot more CO2 before it actually becomes harmful.

        The real solution to the CO2 “problem”, if there is one, is to make low or zero-emission energy cheaper than existing high emission sources, not artificially raise the price of fossils. That’s just plain dumb. Cheaper, cleaner fuels will grow economies and build wealth for everyone from the bottom up.

Comments and questions are welcomed!

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: