Obama to Decide Greenhouse-Gas Cap Seen Blocking New Coal Plants

By Mark Drajem

March 9 (Bloomberg) — President Barack Obama is close to issuing the first U.S. greenhouse-gas limits, rules that may preclude the construction of new coal-fired power plants.

Analysts and lawmakers are bracing for rules from the Environmental Protection Agency that would set the emission limits for power plants at the level of a natural-gas plant, which is about half that of a coal-fueled facility. Any new coal plants would need expensive carbon-capture equipment.

A “hard-core stance on new plants is expected,” Christine Tezak, senior policy analyst at Robert W. Baird & Co. in McLean, Virginia, said in an interview. “It would make it extra difficult for new coal.”

The proposed nationwide standards would be the first issued by the EPA for carbon-dioxide from power plants, the largest source of those emissions in the U.S. Environmental groups such as the National Wildlife Federation are pressing the Obama administration to issue tight standards in order to head off an increase in global warming that they warn could be catastrophic.

The White House must decide if it will side with its environmental allies on the EPA proposal, or bow to election-year pressure from companies that say the measure would outlaw new coal plants, raising electricity prices. The decision has taken on real and symbolic importance for both sides after Congress failed to pass climate legislation.

“It creates a direction, saying that the best bet is to create a plant that has the least amount of carbon pollution,” Joe Mendelson, director of policy at the National Wildlife Federation’s climate and energy program, said in an interview. “A mild standard for any new plants just would not cut it.”

Battleground States

While the initial impact would be minimal, as utilities are closing coal plants because natural gas prices at ten-year lows, adopting the EPA proposal would add to industry and Republican complaints in coal-dependent states such as Ohio, Colorado and Pennsylvania, where voter loyalty has swung between parties in recent elections.

The EPA’s greenhouse-gas plan “could send thousands of U.S. jobs overseas and raise electricity rates on families and seniors at a time when the nation can least afford it,” Kentucky Republican Ed Whitfield and 220 other lawmakers wrote in a letter to the Office of Management and Budget on Feb. 23.

They said EPA intended to impose a standard that would force new coal plants to have carbon capture, and asked the White House to scrap the rule. By law, the OMB reviews regulations to make sure their benefits are worth the cost.

Ozone Rules

Obama dismissed in September an EPA proposal to tighten ozone rules after the U.S. Chamber of Commerce and other groups warned of political fallout from a regulation they said would shut down factories nationwide. Last month, the administration delayed safety standards requiring rearview cameras in cars and light trucks, saying it needed to further study the issue.

Betsaida Alcantara, an EPA spokeswoman, didn’t return telephone and e-mail messages seeking comment. The EPA is past a court deadline for issuing the proposal, which would then be open for comment and finalized late this year.

Environmental groups such as the Sierra Club met with White House officials in recent weeks. The environmentalists argue that decade-low natural gas prices make the EPA proposal both affordable and achievable.

“With gas prices where they are, nobody is building new coal plants,” John Thompson, director of the coal transition project at the Clean Air Task Force in Carbondale, Illinois, said in an interview. “The cost of this rule right now will be zero.”

The Clean Air Task Force, founded in 1996, is a foundation-funded non-profit that aims to cut pollutants from coal-fired power plants.

Shutting Coal Plants

The EPA issued two sets of rules last year designed to force coal plants to clean up other pollutants or shut down.

GenOn Energy Inc. and FirstEnergy Corp. announced this year that they will shutter coal-fired plants because they can’t afford to upgrade to meet EPA rules. GenOn, the third-largest U.S. independent power producer by market value, said Feb. 29 that it will shut about 13 percent of its generating capacity by May 2015, with all but one of the eight sites slated close a coal plant.

The average U.S. coal plant emits 2,249 pounds of carbon dioxide for each megawatt hour of power produced, compared to 1,135 pounds for a natural gas plant, according to the EPA.Newer combined-cycle natural gas plants, in which the heat exhaust of a first gas-fueled turbine drives a second generator, are more efficient.


Thompson and other environmental advocates have visited the White House to make the case that new coal plants could also be built if the facilities capture the carbon dioxide emitted and stash it underground. Southern Co. and representatives of other utilities presented officials with materials saying the technology is not ready for sale on a commercial level.

That process “is not considered commercially available technology yet,” Stephanie Kirijan, a spokeswoman for Southern, said in an e-mail. Southern owns three of the ten largest carbon-dioxide emitting power plants in the country. It’s building a carbon-capture coal plant in Mississippi.

Carbon-dioxide emissions since the industrial revolution have led to a warming of the earth’s temperature over the past 50 years, threatening to cause extreme weather, drought and coastal flooding, according to the U.S. Global Change Research Program.

Because of falling natural gas prices, the share of coal in electricity generation fell to 42 percent in 2011, compared with 45 percent in 2010 and 50 percent in 2005, according to the U.S. Energy Information Agency in Washington.

The administration proposal has risks for utilities, as natural gas prices may spike in the future.

“Power companies are very wary about assuming that natural gas prices will remain this low, and certainly want to retain the option of building coal,” Jeff Holmstead, a lawyer at Bracewell & Giuliani LLP in Washington with energy industry clients, said in an interview.