Power Plan Replacement Rule Restores Federal and State Balance Mandated by Law

WASHINGTON, D.C. – Hal Quinn, President and Chief Executive Officer of the National Mining Association (NMA), issued the following statement in response to the Environmental Protection Agency’s (EPA’s) proposed replacement rule.

“Through the replacement rule, the EPA has returned to a lawful framework for regulation of power plant emissions. The Clean Air Act created a system of shared authority by EPA and the states, and this proposal appropriately reflects that construct.

“The policy put forward by the previous administration was an illegal attempt to impose a political agenda on the country’s power system, to create what it called ‘a new energy economy.’ That ‘new energy economy’ would have had dire consequences for everyday Americans who depend on affordable, reliable coal-powered electricity, forcing the premature retirement of many existing coal plants, and increasing the vulnerability of our grid to supply outages and price spikes — an unacceptable proposal given the negligible environmental benefits.

“The replacement rule respects the infrastructure and economic realities that are unique to each state, allowing for state-driven solutions, as intended by the Clean Air Act, rather than top down mandates. It also embraces American innovation, by encouraging plant upgrades.

“Advancing the nation’s environmental protections does not have to come at the expense of American families, risking the reliability of our grid and sidestepping the law. The EPA and the Trump administration should be applauded for articulating a clear, legal proposal that considers the interests of all Americans.”

Background

The Obama administration’s Clean Power Plan (CPP) was formally unveiled by President Obama on Aug. 3, 2015, and officially published on Oct. 23, 2016.

Economic Impacts

The diverse fuel mix in the U.S. allows price increases in any one fuel to be offset by another. IHS Markit recently found that the current diversified U.S. electric supply portfolio, which is anchored by coal, reduces the cost of electricity by about $114 billion/year and lowers the average retail price of electricity by 27 percent.[i] Under the CPP, however, that valuable fuel diversity and its cost savings would have eroded.

An analysis of the CPP by Energy Ventures Analysis (EVA) forecast that the plan would have forced the closure of 41,000 MW of coal-based generating capacity – an amount capable of serving 24 million homes – costing consumers an estimated additional $214 billion for electricity between 2022 and 2030, and an additional $64 billion for the construction of replacement generating capacity.[ii] And projections in the Energy Information Administration’s Annual Energy Outlook 2017 estimated that the original plan would have reduced coal demand by 242 million tons, which would decrease coal-related direct and indirect employment by 127,000 high-wage jobs by 2040.[iii]

A recent case study from EVA found the cost to consumers of premature coal plant retirements is 15 times more than the cost of supporting continued plant operations. Specifically analyzing three at-risk coal plants in the PJM region, the case study found the loss of those plants would result in $2.0 billion in increased annual energy and capacity market prices, while the cost of continued operations of those plants would be $130 million.[iv]

Climate Impacts

Climate change benefits of the Obama CPP would be virtually unmeasurable—with global temperatures reduced by 0.018°C[v] by the year 2100, atmospheric concentrations of CO2 reduced by less than one percent[vi].

Path to Replacement Rule

Due to concerns about immediate negative economic consequences and wide-ranging legal defects, including the rule’s constitutionality, regulatory overreach, and its contradiction of established interpretation of the CAA, it was immediately challenged in court (West Virginia v. Environmental Protection Agency) by a broad coalition of concerned parties.  Due to the extraordinary nature of the case, and the threat of immediate economic harm posed by the rule, the Supreme Court issued a stay on Feb. 9, 2016, suspending any obligation by the states to implement the rule before litigation is completed.

On March 28, 2017, the Trump Administration issued Executive Order 13783, which directed the administrator of EPA to review the CPP and, if appropriate, to “as soon as practicable, suspend, revise, or rescind… or publish for notice and comment proposed rules suspending, revising, or rescinding those rules.”

On October 16, 2017, the EPA published a proposed rule to repeal the CPP.

Progress on Emissions Reductions

Independent of either rule, the industry significantly reduced emissions in recent years and continues to do so. Emissions per kilowatt-hour (kWh) of sulfur dioxide (SO2), nitrogen oxides (NOx) and particulate matter (PM) from the coal fleet have been reduced by more than 93 percent over the period 1970-2017. The industry has invested almost $122 billion into emissions controls through 2017, and is expected to spend an additional $5 billion through 2020.[vii]

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[i] IHS Markit, “Ensuring Resilient and Efficient Electricity Generation: The Value of the Current Diverse U.S. Power Supply Portfolio,” https://ihsmarkit.com/Info/0917/electricity-generation-special-report.html, 2017.

[ii] Energy Ventures Analysis, “EPA’s Clean Power Plan: An Economic Impact Analysis,” https://nma.org/wp-content/uploads/2017/02/11.13.15-NMA_EPAs-Clean-Power-Plan-An-Economic-Impact-Analysis.pdf, 2015.

[iii] Direct coal mining jobs derived from Mine Safety and Health Administration’s miner productivity data. Indirect employment effects derived from the coal mining sector job multiplier (3.6) in the IMPLAN economic impact model.

[iv] Energy Ventures Analysis, “Impact of Coal Plant Retirements on the U.S. Power Markets – PJM Interconnection Case Study,” https://nma.org/wp-content/uploads/2018/07/EVA-Report-on-Coal-Plant-Retirements-Final-7.19.2018.pdf, July 2018.

[v] “0.02°C Temperature Rise Averted: The Vital Number Missing from the EPA’s ‘By the Numbers’ Fact Sheet,” CATO Institute, https://www.cato.org/blog/002degc-temperature-rise-averted-vital-number-missing-epas-numbers-fact-sheet, June 2014.

[vi]“Climate Effects” Of EPA’s Final Clean Power Plan,” American Coalition for Clean Coal Electricity, http://www.americaspower.org/wp-content/uploads/2015/09/Climate-Effects-Paper-August-6-2015.pdf, August 2015.

[vii] ACCCE “Coal Facts,” http://www.americaspower.org/wp-content/uploads/2018/03/Coal-Facts-March-2018.pdf, March 2018.

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