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Affordable?… Clean?… Energy Rule

June 19, 2019 Work Area: Power Plants

This week, the Trump EPA finalized its latest gambit to revive dying, coal-fired power plants by issuing the so-called “Affordable Clean Energy” (ACE) rule. The final rule repeals the Obama Administration’s signature climate achievement, the Clean Power Plan (CPP), and replaces it with a rule that allows coal plants to invest in minor heat rate improvements which will cause the plants to run more and for a longer period of time. The result will be increased carbon dioxide (CO2) emissions as well as the pollutants that contribute to unhealthful smog, deadly soot, and toxic mercury and other contaminants.

This “repeal and replacement” of the CPP is the fulfillment of a Trump campaign pledge to end Obama’s supposed “War on Coal” as directed by Trump’s earliest executive order on energy (E.O. 13783). Since then, first EPA Administrator Scott Pruitt, and now Andrew Wheeler and Assistant Administrator William Wehrum, have been attempting to fashion a rationale to support this predetermined outcome. But the ACE rule is nothing more than a transparent ploy to prop up the dying U.S. coal industry without regard to the Clean Air Act’s edict to employ the “best system of emission reduction” in the power system. ACE fails both the legal and commonsense tests of how to address climate change under the Clean Air Act and, therefore, cannot stand.

Here are some quick takeaways on the release of the final ACE rule:

  • The electric sector has reduced its emissions by nearly one-third since 2005. This was due to reduced demand and generation of more electricity from renewables and natural gas and less than coal. The CPP built on this trend and since its finalization it’s become clear that it could have been much more aggressive. ACE takes the opposite approach, – increasing reliance on coal plants – and in fact, precludes power plant owners from complying with the rule through the measures it has been employing since 2005 to great effect.
  • ACE’s “best system of emission reduction” increases overall emissions. The chosen system – heat rate improvements – would increase emissions in 18 states plus Washington, DC and 28 percent of all coal plants would have higher total CO2 emissions in 2030.
  • The final ACE rule is even weaker than the proposal, where EPA’s own analysis found that it would result in over 1,600 premature deaths as compared to the CPP. EPA’s final rule assumes these deaths away by changing its modeling for the CPP to make it appear as if it would do nothing. Therefore, when the Agency finalizes a rule that does next to nothing, it looks like an improvement.

So, let’s take a deeper dive into why the final ACE rule is a joker, not an ACE:

ACE ignores and attempts to reverse the trend in the power sector and the states to displace coal generation with cleaner sources of electricity.

Last fall the U.S. Energy Information Administration (EIA) found that the U.S. power sector’s CO2 emissions had declined 28 percent since 2005. The sector accomplished this by lowered demand and production of more electricity from renewables and natural gas and less from coal. It was this very success that the CPP recognized and built upon. The CPP, finalized in 2015, set emission targets for CO2 emissions from existing coal- and gas-fired power plants based on the ongoing industry trend of shifting generation from high-emitting sources to lower-emitting sources.

Note that the CPP was stayed by the Supreme Court in 2016 and never went into effect, yet the power sector has steadily been moving away from coal generation to cleaner sources of electricity, giving the lie to Trump’s campaign claim that the CPP was killing coal plants. This trend towards clean energy in the intervening years demonstrates that the CPP could have been even more aggressive in pressing this shift to achieve greater emission reductions. ACE, however, adopts the exact opposite approach – increasing reliance on coal-fired power plants – and in fact, precludes power plant owners from complying with the rule by using the very measures it has been using to such great effect.

In reality, many states and power companies are rapidly and increasingly committing to deep decarbonization (i.e., 80-100% clean energy by midcentury) by shifting generation to cleaner sources through adoption of clean energy standards, renewable portfolio standards, emission caps, increased reliance on low- and zero-carbon energy sources such as nuclear energy and carbon capture and storage on remaining fossil plants, and increased investment in energy efficiency. CATF has documented that in just the last twelve months, the combination of state action and utility commitments to deep decarbonization has covered nearly a third of U.S. generation and power sector CO2 emissions. The one strategy that no one is using is minor heat rate improvements on coal plants because companies and states know that this is throwing good money after bad. Yet, that is exactly the strategy EPA now adopts as the “best” system of emission control.

ACE will increase, not decrease, emissions from the power sector.

Despite all this evidence to the contrary, ACE determines that the best system of emission reduction is power plant heat rate improvement projects. A study of the Trump proposal found that heat rate improvements would increase emissions in 18 states plus Washington, DC and that 28 percent of all coal plants would have higher total CO2 emissions in 2030. ACE does not include any binding emission reduction target, but merely encourages states to analyze a truncated selection of efficiency measures that old, dirty power plants could install to generate more electricity per unit of coal input. The modified coal plant will need to buy less coal per megawatt generated and therefore can sell its electricity at a lower price. With marginally cheaper electricity, utilities may buy coal-fired electricity more often, which results in the plants running more, staving off retirement longer and polluting more. That’s right! EPA has determined that the best system of emission reduction is actually a system that increases overall emissions.

Perhaps the most persuasive evidence that ACE will result in increased emissions is EPA’s concurrent move to gut the New Source Review program, a rollback that has been on the wish list of the power industry for decades. Before a power plant can undertake the kind of refurbishment projects contemplated by the ACE rule, it must get a permit and put on air pollution controls if the project will increase any air pollutant above ‘major source’ levels. This program (which also applies to large modifications), was also proposed to be gutted by the Trump EPA, which seeks to exempt many such plant refurbishment projects from the requirements to put on additional pollution controls. While that was proposed with ACE, it is now supposedly to be finalized “later” – causing additional increases associated with ACE, and additional pollution increases beyond that, which EPA does not publicly disclose with this final rule. By separating ACE from the NSR exemption, something recent scholarship coins “deregulatory splintering,” the Agency is illegally trying to obscure the true impacts of the rule. This past winter, EPA’s air chief explained that ACE does not work without an exemption from NSR for plants that improve their emission rate but run more often and pollute more. So, no one should be fooled by this attempted sleight of hand.

EPA “cooks the books” to avoid being tagged with the responsibility for 1,600 premature deaths.

When EPA proposed the ACE rule, the New York Times revealed in a front-page news story that EPA’s own analysis showed that the new rule could lead to over 1,400 premature deaths from fine particulate matter by 2030. When the premature deaths from ozone smog are added, EPA estimated a total of 1,630 premature deaths from repealing the CPP and replacing it with the ACE rule. Those numbers were alarming and did not play well with the public. What to do? The logical answer, particularly days after scientists recorded the highest greenhouse gas levels in human history, would be to take climate change and its deadly impacts more seriously and strengthen the rule. But no, that would not comport with this Administration’s polluters-first approach to regulation. EPA found in its proposal that ACE would result in a pathetic two percent increase in efficiency at coal-fired power plants. Astonishingly, the final ACE is even weaker, resulting in a 1.5 percent efficiency increase at the coal plants that are predicted to make any improvements (41 EGUs do nothing). And what about those 1,600 additional premature deaths, from ACE, you ask? The Agency assumes them away – by now claiming that the CPP offers no benefits.

At every turn then, EPA bucks the law and common sense in its futile attempt to reverse the decline of coal. Clean Air Task Force and its allies will be challenging this patently illegal coal subsidy masquerading as a climate rule in the D.C. Circuit Court of Appeals this summer.

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