White House Looks to Tighten Regulatory Grip on Coal Industry

March 28, 2012

The new Obama rules will have "a major impact on all coal production" says Colorado Mining Association president Stuart Sanderson

DENVER – The Environmental Protection Agency delivered a devastating blow to the coal industry Tuesday with the release of its first-ever proposal to impose strict limits on greenhouse-gas emissions from newly built power plants.

The proposed regulations would all but eliminate the construction of coal-fired power plants by holding them to a limit of 1,000 lbs. of carbon-dioxide emissions per megawatt hour. Analysts say the only way coal-fired plants could meet that standard would be with carbon-capture and storage technology, which is still in the early stages of development and has yet to prove cost-effective.

Republicans and industry officials blasted the proposal, accusing the Obama administration of trying to “pick winners” by forcing out inexpensive, coal-based electricity generation in favor of more costly natural-gas power plants.

“This rule will have a major impact on all coal production and power plants,” said Colorado Mining Association president Stuart Sanderson. “Ultimately you’ll see this translate into higher prices. Energy will become more of a luxury.”

The draft regulations are subject to a 60-day comment period, but the final rule may not be issued until after the November presidential election.

“The administration chose to impose this new regulatory mandate by executive fiat because it knows that it would be very unlikely that Congress, on behalf of the American people, would support such an egregious overstep of federal control,” said Rep. Rob Bishop, Utah Republican. “This policy is nothing more than President Obama’s latest effort to win favor with his anti-coal special interest group allies.”

Among those praising the proposal in a statement on the EPA website was former Democratic Gov. Bill Ritter, who said it was “welcome news, indeed, to see our nation moving forward with clean air standards to limit the harmful carbon pollution from new coal burning power plants as coal plants are the highest emitting source of air pollution in our country.”

The silver lining for industry is that proposed draft would not apply to existing power plants, even when they make renovations in order to comply with other agency rules, nor approved plants slated to begin construction in the next 12 months.

Even so, the much-anticipated proposal is expected to put a screeching halt on the construction of new coal-based power plants. While the natural-gas industry is the immediate beneficiary, industry officials noted that the EPA is expected to weigh in shortly with new regulations on hydraulic fracturing that could hinder natural-gas development.

The Obama administration says they support an “all-of-the-above” energy portfolio, but critics insist the strategy is to increase the viability of renewable energy by pricing fossil fuels out of the market.

“The whole purpose of these rules is to artificially boost the price of coal, which is the lowest-cost energy source,” said Sanderson. “We’ll see a conversion to natural gas, but as the EPA moves to regulate fracking, that will increase costs there, too. You’re basically looking at higher energy costs.”

According to the CMA, Colorado ranks eleventh in coal production, accounting for $1.2 billion per year in direct sales and an estimated $20 billion in indirect economic impact. The state also operates 13 coal-fired power plants, and more than 2,000 people work in the state’s coal industry.

Coal use for electricity has tripled in the last 30 years, and emissions have been reduced by 80% in response to demands for cleaner energy, said Sanderson.

The proposed standards came in reaction to a 2007 Supreme Court decision brought by environmental groups and local governments ordering the EPA to regulate greenhouse-gas emissions. Some details of the agency’s proposal leaked out in February, prompting a letter signed by 217 House members calling on the Obama administration to show restraint.

“Forcing a transition to commercially unproven technologies 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,” said the Feb. 23 letter.

Among the signers were Colorado Republican Reps. Mike Coffman, Cory Gardner, Doug Lamborn and Scot Tipton. Democratic Reps. Diana DeGette, Ed Perlmutter and Jared Polis did not sign the letter.

Colorado Democratic Sens. Michael Bennet and Mark Udall did not release comments on the proposal Tuesday, but Maggie L. Fox, president and CEO of The Climate Reality Project, said the draft meant “the coal industry must clean up its act, or make way for cheaper, cleaner ways to power our country.”

“As the record-breaking temperatures we’re experiencing this month all over the United States and Canada make clear, it’s past time for bold solutions,” said Fox, who’s married to Udall, in a statement.

The energy sector is already wrestling with increased EPA regulations on cross-state air pollution as well as mercury and air toxics issued in 2011. Tuesday’s proposal comes as  “the latest convoy in EPA’s regulatory train wreck that is rolling across America, crushing jobs and arresting our economic recovery at every stop,” said National Mining Association president Hal Quinn in a statement.

“Unfortunately, the EPA continues to ignore the real impact their rules will have on American families and businesses by driving up energy prices and destroying jobs,” said American Coalition for Clean Coal Electricity president and CEO Steve Miller.

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