23 January 2014 17:13 [Source: ICIS news]
By Joe Kamalick
WASHINGTON (ICIS)--A federal effort to extinguish coal-fired power plants ultimately may be thrown out by the courts, but a leading coal state senator says a pending rule should be consigned to the dustbin now before it short-circuits the nation’s energy grid.
Senator Mitch McConnell of Kentucky, Republican minority leader in the Senate, is pressing for a resolution of disapproval by Congress that would bar the Environmental Protection Agency (EPA) from issuing in final form a rule that critics charge would shut down coal-fired electric generation in the US.
A resolution of disapproval is a recent legislative manoeuvre, created in 1996, allowing Congress to overturn an administrative rule or regulation that legislators consider too onerous. It is seldom sought and more rarely achieved.
The procedure requires only a simple majority vote in both the House and Senate for congressional approval.
But a disapproval measure then must be signed by the president or, lacking White House approval, must be passed anew by both chambers with two-thirds majority votes to override the president’s veto.
McConnell’s effort to forestall what he terms the latest salvo in “the EPA war on coal” is a long shot, to say the least.
Then again, this is an election year and capricious political winds can fill the sails of some legislative vessels and leave others becalmed.
The fight is over a revised proposed rule that EPA issued earlier this month.
That proposed regulation would set a limit of 1,000lb (454kg) of carbon dioxide (CO2) emissions per gigawatt hour (GWh) for planned electric utilities powered by natural gas, and a cap of 1,100lb/GWh for any power plant using coal.
McConnell and numerous other critics of the pending rule argue that EPA’s standards would be impossible to meet, noting that even the most efficient coal-fired power plant in operation has emissions of around 1,900lb/GWh, and that most existing coal-burning utilities have CO2 outputs that are nearly twice EPA’s target cap.
Consequently, EPA’s critics contend that the agency simply is seeking to force coal out of the US power generation fuel mix, once and for all.
While the proposed rule imposes the 1,100 lb/GWh limit only on coal-fired utilities yet to be built, EPA also is developing a similar proposed regulation governing existing power plants.
It is widely expected that the agency will seek to impose a similarly restrictive cap on those utilities now using coal, to the extent that they will be forced to shift to natural gas in the near future.
US petrochemicals manufacturers and downstream chemical producers are heavily dependent on natural gas as both a feedstock and an energy fuel, and they are high-volume consumers of electric power.
Consequently, the EPA move against coal-fired power poses a double threat to chemicals producers in potentially creating price spikes for both natgas and electric power.
The proposed EPA rule already has been hit with lawsuits, chiefly by a coalition of 17 states, led by Nebraska, contending that the agency’s bid to shutter coal-fired power plants is beyond EPA’s authority under existing law.
EPA contends that any new coal-fired plant could meet the proposed emissions cap if it incorporates carbon capture and sequestration (CCS) technologies that it claims “have been adequately demonstrated”.
But in the Nebraska lawsuit, state attorney general Jon Bruning argues that CCS technologies in fact have not been adequately demonstrated and have not been shown to be commercially and economically viable.
In claiming that CCS technology has been adequately demonstrated, EPA has cited three federally funded coal power plants employing CCS that are in various stages of construction in Mississippi, Texas and California.
However, notes Bruning, under the Energy Policy Act of 2005, no power-generating facility or technology that is federally funded “shall be considered to be adequately demonstrated for purposes … of the Clean Air Act”.
Bruning’s challenge is said to have merit, but it could take years for that case to work its way from district court to the appellate level and perhaps ultimately to the US Supreme Court.
In the meantime, says Senator McConnell, EPA will have worked its will upon the electric power industry and for all practical purposes coal-fired generation will have been shut out of the market.
In a letter to the comptroller general of the US Government and Accountability Office (GAO), McConnell argues that EPA’s proposed rule “will effectively ban new coal-fired power plants in the US for the foreseeable future - which is apparently the intent of EPA”.
Like managers in other major, capital-intensive industries, chief executives and project developers among utility companies must plan five or ten years in advance. So even though the EPA bid to hobble future coal-fired power plants is only a proposal, no prudent planner today would risk allocating capital funds toward coal-burning capacity going forward.
Even if carbon capture and storage technology was proven and well-established on a commercial level, McConnell notes that EPA’s own analysis shows that installation of CCS as part of a new coal-fired power plant would increase the cost of that facility by 80% - again serving as a roadblock to future coal-based energy generation.
McConnell, whose home state of Kentucky ranks third among the nation’s 16 coal-producing states, pointed out that 80% of coal mined in the US is used for power generation. Obviously, if coal were shut out of the utility market, Kentucky and 15 other coal-producing states would experience a sharp decline in corporate income, profits, jobs and state tax revenues.
McConnell’s solution, in which he is joined so far by 40 other senators, is to get a congressional resolution of disapproval to stop EPA in its tracks and keep the proposed emissions cap rule from ever coming into force.
“Given that our nation has the world’s largest estimated recoverable reserves of coal, I believe that the federal government should not be blocking the procurement and development of this important resource,” McConnell told the GOA comptroller.
McConnell is seeking the comptroller’s opinion on whether Congress can proceed with a resolution of disapproval for an administrative rule that is only proposed and not yet final.
The Kentucky senator contends that while the EPA limit on coal-fired emissions is not yet set in stone, the proposed rule has de facto immediate effect and consequently is open to a disapproval resolution.
The GAO response may be weeks, perhaps months in coming. Assuming a positive response from GAO, McConnell’s disapproval resolution likely will require further weeks or months of wrangling on Capitol Hill before it comes to a vote in both the Senate and House.
As it would require only a simple majority vote in each chamber, passage in the Republican majority House is certain and approval in the Democrat-controlled Senate is very likely.
A Senate vote on McConnell's resolution of disapproval likely will come shortly before the mid-term US elections on 4 November.
Several Democrat senators are up for re-election in November this year, and some of them are seen as vulnerable, including several representing coal-producing or coal-dependent states.
Assuming congressional approval of such a resolution, smart money would bet on a veto by President Barack Obama, who has made global warming issues a renewed priority for his second term.
That said, Obama is facing the lowest approval ratings of his presidency, and he is keen to do whatever necessary to ensure that his fellow Democrats retain their narrow majority in the Senate.
To save some Democrat senators from defeat, Obama may feel obliged to support them in backing coal-state interests.
Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
Asian Chemical Connections