Stanford Enviro Experts Review Clean Power Plan Rollback

PALO ALTO, CA — Days ago the U.S. Environmental Protection Agency took national ecology policy back decades by rolling back landmark environmental policy.

The EPA’s newly-released Affordable Clean Energy rule replaces the Clean Power Plan, calling for efficiency improvements at generating stations and directs states to take the initiative on how they choose to regulate power plant emissions, Stanford News Service reported. The bold move opens the door to a widely deregulated period in which power plants will have much more flexibility in how they manufacture product without regard to human life's most basic essences like clean air.

The Clean Power Plan would also have made it difficult to build new coal-fired power plants. By contrast, the new rule aims to reduce power plant carbon emissions without actually setting limits on them. Instead, the rule calls for efficiency improvements at generating stations and directs states to take the initiative on how they choose to regulate power plant emissions, the news service echoed many national news reports.

Supporters applaud the rule’s flexibility, empowerment of states and legal defensibility. Critics say the change will lead to higher emissions, damage the health of people and the environment as well as slow the transition to a clean-energy economy.

Stanford News Service spoke with economist Charles Kolstad, legal scholar Deborah Sivas and energy and climate policy expert Michael Wara about the new rule and its potential impacts.

The following represents a portion of the results of that interview.

Is there anything surprising about the revised plan?
Sivas: I thought the Trump administration might just suspend the Clean Power Plan and delay doing anything else at all. But I’m sure lawyers for the administration have figured out that under the Clean Air Act and court precedents, EPA actually must take action to abate greenhouse gas emissions. So, rather than ignore the law entirely, the administration has promulgated a final, much weaker rule.
Kolstad: I am struck that EPA’s previous approach – replace the CPP with the ACE – has been scrapped, due to logical flaws in their arguments, I presume, in favor of a two-step approach. First, declare the CPP as having no effect on emissions as well as having other flaws and then repealing it. Secondly, show that the ACE is a cost-benefit improvement on the new status quo of no CPP – impressive. It’s a sleight of hand.
Wara: I think the most important aspects of this rule have to do with how the benefits of reduced air pollution are treated. The Trump EPA has – from the beginning – emphasized the uncertainty of benefits associated with reducing emissions of particulates and ozone. They continue this approach under the final ACE rule. This is likely to have knock-on effects for future air pollution regulations, and will be a precedent that is hard to undo even if a future administration wants to count these benefits. That will make further reductions in ozone and particulate matter harder to achieve.

What does this mean for coal power in the U.S.? What is the industry’s prognosis?
Kolstad: The main problems with coal power in the U.S. are cheap natural gas and risks associated with investing in it. Neither CPP nor the ACE are critical to the industry’s outlook. It is interesting to note that the Dow Jones index of coal stocks had dropped about 10 percent from when Donald Trump took over. The introduction of the ACE caused the index to rise about 7 percent – a modest sign of the extent to which markets think the ACE will help the U.S. coal industry. My sense is that the ACE will have very little impact on the continuing decline of coal-fired electricity production over the coming decade.
Wara: The ACE rule forthrightly acknowledges that coal power is struggling economically in the U.S. Indeed, the rule points out that the Obama Clean Power Plan targets are set to be achieved ahead of time and without any regulation. Unless there is a dramatic change in the price of natural gas, coal-fired electricity is likely to continue to decline in importance while natural gas and renewable energy will increase as sources of power.
Sivas: A flurry of lawsuits by states and conservation groups will probably start soon and continue well beyond the 2020 election. That likely means that for the next few years, today’s rule will have little on-the-ground impact. Given the legal uncertainty, there is a substantial question of how the power sector will respond in the short term to market risks. But if today’s rule is upheld by the courts and if Trump is reelected, the overall result of EPA’s action could be some extension of the life of coal-fired plants. It all depends on how markets respond to the legal and political uncertainty.

Is focusing solely on improving the efficiency of facilities sufficient to tackle the problem?
Wara: No. But the Trump administration has taken the position that efficiency improvements are all that the legal authority provided by the Clean Air Act will allow. Heat rate improvements at coal- and gas-fired power plants will only go so far. Ultimately, we need to replace coal and gas-fired power plants with zero-carbon resources if we are to have any hope of avoiding dangerous climate change.
Sivas: Increased efficiency is a good thing, of course, because it reduces the pollution generated for each unit of energy produced. It remains to be seen whether the power industry will conclude that it is cost-effective to retrofit existing coal or other natural gas plants for increased efficiency – as opposed to looking toward renewable energy or options that allow consumers to reduce or shift their electricity usage in response to financial incentives. The problem from a climate perspective is that EPA’s focus on retrofitting existing coal plants entirely ignores that switching to cleaner energy sources and demand-response policies is, in fact, the best way to reduce emissions. Energy efficiency improvement alone will never bend the greenhouse gas emissions curve the way we need to.

If there are no caps on emissions, what incentives are there for states to control emissions?
Kolstad: None from the feds, except for generating efficiency improvements. But states have many other reasons for wanting to reduce carbon emissions. Carbon emissions are clearly in the crosshairs. Maybe not for this federal administration but quite possibly the next. Financial markets consider carbon emissions a financial risk, and the populations of many states, such as California, Oregon and Washington, want to clean up their act.
Wara: Under ACE, states have to ensure that power plants within their borders meet efficiency requirements. These are essentially rate-based standards set at the power plant level. Under the Clean Power Plan, by contrast, states had to achieve a statewide standard. Given the evolution of the power system due to low natural gas prices, neither rule would create strong incentives for states to control emissions.