Will the Environmental Protection Agency resurrect the defunct Waxman-Markey cap-and-trade bill, a 1,428-page behemoth that threatened to slam the brakes on the U.S. economy before it died in the Senate in 2010?
That may seem unbelievable but it’s the likely end game if courts uphold EPA’s draconian carbon “pollution” rules for new and existing fossil-fuel power plants, which are almost fully upon us. And American democracy will also suffer if EPA goes ahead.
EPA’s carbon rule, proposed last September, would use the existing Clean Air Act to establish a new source performance standard (NSPS)—a limit, in plain English—for carbon dioxide (CO2) emissions that no commercial coal-fired power plant can possibly meet.
Cap-and-trade and the other market-rigging policies have a strong potential to make electricity rates “necessarily skyrocket,” as Obama once said in a moment of candor.
The proposed standard is 1,100 pounds of CO2 per megawatt hour of electricity produced. Today’s most advanced commercial coal power plants emit 1,800 pounds of CO2 per megawatt hour. New plants could comply only by installing carbon capture and storage (CCS) technology – a capability that can add 80% to the cost of building a new coal plant.
To make the proposal look reasonable, EPA has to bend reality a lot. Under section 111(b) of the Clean Air Act, NSPS are to reflect the “best system of emission reduction” that has been “adequately demonstrated.” EPA claims CCS is adequately demonstrated -- but there are no commercial-scale power plants operating anywhere with CCS, and none is being built without heavy taxpayer and/or consumer subsidies.
Take a CCS-equipped plant in Kemper County, Mississippi, for example. It got a $270 million grant from the Department of Energy to help—but its construction cost has increased from an initial estimate of $2.4 billion to $5.5 billion. That’s more than four times the cost of a new natural gas combined cycle (NGCC) power plant.
In short, a utility that builds a new coal plant with CCS, as required by EPA’s ruling, risks going bankrupt. The rule is thus an informal ban on investment in new coal power generation.
When did Congress approve that policy? Never!
In fact, Congress rejected it when Senate leaders pulled the plug on companion legislation to H.R. 2454, the Waxman-Markey bill. Section 116 of the bill would have established standards and mandates comparable to EPA’s September proposal.
EPA says don’t worry, utilities aren’t building new coal power plants anyway because new gas plants are cheaper. But if the rule simply ratifies where the market is going, it won’t reduce emissions. What then is the point?
The CCS rule is the first part of a 1-2 punch. The real targets of EPA and its allies are existing fossil fuel power plants, which produce 40% of U.S. CO2 emissions.
As a leaked Office of Management and Budget document reveals, the Clean Air Act requires EPA to establish performance standards for “new” sources under section 111(b) before it can establish performance standard guidelines for “existing” sources under another section, 111(d). The main purpose of the impossible new source rule is to empower EPA to issue that second rule.
EPA knows there are no “adequately demonstrated” technologies for drastically reducing CO2 emissions from power plants, new or existing. Efficiency upgrades can reduce power plant CO2 emissions but only by a few percentage points – nowhere near enough to satisfy Obama and aggressive environmental groups.
So, EPA’s 111(d) rule will reportedly define “best system of emission reduction” for existing power plants as the usual muddle of things designed to rig energy markets against fossil fuels: renewable electricity mandates, demand reduction programs, and--you guessed it--the cap-and-trade Congress shunned. All of those policies were also key components of the Waxman-Markey bill.
Why should Americans care? Cap-and-trade and the other market-rigging policies have a strong potential to make electricity rates “necessarily skyrocket,” as Obama once said in a moment of candor. High energy costs are a drag on the economy and deeply harm low-income households that already make painful sacrifices to pay utility bills.
Such bureaucratic lawmaking is also toxic to democracy. EPA is acting as if it were a Super Legislature, empowered by Mother Earth to steamroll through gridlock and dictate national energy policy.
EPA will rule unchecked like this until We, the People elect more representatives who honor the separation of powers -- or the ones we have elected draw the line where they should.
Marlo Lewis, Ph.D. is a Senior Fellow at the Competitive Enterprise Institute.