EPA announces ‘Clean Power Plan’ to cut coal use, reduce emissions

The federal Environmental Protection Agency announced a far-reaching and controversial plan Monday (June 2) that it says will cut carbon dioxide emissions 30% by 2030 from 2005 levels, a move that would effectively limit Arkansas’ and the nation’s reliance on coal-fired electricity generation.

President Barack Obama’s new  “Clean Power Plan,” however, will include an option that allows Arkansas regulators and stakeholders more time to develop and submit a workable plan beyond the earlier announced June 2016 deadline – a move that Entergy Arkansas and the Arkansas Electric Cooperative Corp had requested.

In announcing the new plan on Monday morning, the EPA said the new guidelines would move the U.S. toward a cleaner environment and fight climate change while supplying Americans with reliable and affordable power.

"Climate change, fueled by carbon pollution, supercharges risks to our health, our economy, and our way of life.  EPA is delivering on a vital piece of President Obama's Climate Action Plan by proposing a Clean Power Plan that will cut harmful carbon pollution from our largest source – power plants," EPA Administrator Gina McCarthy said in a news release.

Coal-fired plants now supply nearly 53% of Arkansas’ electricity demand – relying entirely on coal deliveries via railcar from Wyoming, according to U.S. Energy Information Administration.

ARKANSAS REACTION
Duane Highley, president of the Arkansas Electric Cooperative Corp., said Monday that the EPA plan will result in higher utility rates in Arkansas.

“We are disappointed that this EPA rule will reduce our use of coal, which is our most economical and reliable fuel to generate electricity,” said Duane Highley, president and CEO of AECC. “Although the proposed rule leaves the precise implementation details to the states to develop, the inevitable result will be the use of more expensive fuels, such as natural gas.”

The AECC is the wholesale supplier to 17 regional electric distribution cooperatives in Arkansas that have more than 500,000 customers.

Highley also said the EPA plan could impact utility reliability.

“This past winter's experience highlighted many reasons why power generation should not put all of our reliability eggs in the natural gas basket,” Highley said in a statement. “There were gas plant failures, pipeline freezes and wholesale natural gas supply disruptions. Our nation needs and deserves a diverse energy supply portfolio to keep the lights on. By reducing the amount of coal in our generation mix, prices will go up and reliability could go down.”

U.S. Sen. Mark Pryor, D-Ark., who is locked in a close re-election battle with U.S. Rep. Tom Cotton, R-Dardanelle, criticized the EPA plan.

“I have serious concerns that the EPA’s proposal will undermine the affordable and reliable electricity Arkansans currently enjoy. I will continue to speak with Arkansas stakeholders to gauge how this rule could impact our state’s economy and jobs,” Pryor said in a statement. “Last week, I asked the EPA to extend the comment period once this proposal was released. I’m pleased this request was granted, and I would urge consumers, businesses and utilities to make their concerns heard.”

Not surprising, the EPA plan also was criticized by U.S. Sen. John Boozman, R-Ark.

“President Obama’s proposed regulations for power plants will hurt Arkansas families, farmers and businesses, without providing any significant benefits. Congress rejected the President’s cap-and-trade policy, so now he is bypassing the will of the legislative branch and imposing a similar plan bit by bit. President Obama says it won’t cost much and that if you like affordable energy, you can keep affordable energy, but like his other promises, we know that actions speak louder than words,” Boozman said in a statement. “The U.S. Chamber of Commerce predicts that the President’s plan will shrink the economy by at least $51 billion and destroy more than 200,000 jobs each year between now and 2030. This is another example of bureaucrats trying to control climate from their desks in Washington, with no concern for the pain it will cause.”

COAL USE HISTORY
In 2013, U.S. coal mines produced just fewer than one billion short tons of coal, the lowest output level since 1993. More than 90% of this coal was used by U.S. power plants to generate electricity, EIA statistics show. Yet, while coal has been the largest source of electricity generation in the United States for more than 60 years, its annual share of total net generation declined from nearly 50% in 2007 to 39% in 2013 as some power producers switched to more competitively priced natural gas.

According to the EPA, the new proposal will take these four steps to reach the president’s carbon emission goal by 2030:
• Cut carbon emission from the power sector by 30% nationwide below 2005 levels, which is equal to the emissions from powering more than half the homes in the United States for one year;
• Cut particle pollution, nitrogen oxides, and sulfur dioxide by more than 25% as a co-benefit;
• Avoid up to 6,600 premature deaths, up to 150,000 asthma attacks in children, and up to 490,000 missed work or school days—providing up to $93 billion in climate and public health benefits; and
• Shrink electricity bills roughly 8% by increasing energy efficiency and reducing demand in the electricity system.

According to the EPA, the new plan will be implemented through a state-federal partnership under which states identify a path forward using either current or new electricity production and pollution control policies to meet the goals of the proposed program. The proposal provides guidelines for states to develop plans to meet state-specific goals to reduce carbon pollution and gives them the flexibility to design a program that makes the most sense for their unique situation, the EPA said.

Also, states will be able to choose the right mix of generation using diverse fuels, energy efficiency and demand-side management to meet the goals and their own needs, federal officials said.

“It allows them to work alone to develop individual plans or to work together with other states to develop multi-state plans,” the EPA said.

Also, federal officials said today’s proposal includes a flexible timeline for states to follow for submitting plans to the agency—with plans due in June 2016, with the option to use a two-step process for submitting final plans if more time is needed.  States that have already invested in energy efficiency programs will be able to build on these programs during the compliance period to help make progress toward meeting their goal, the EPA said.

ARKANSAS IMPLEMENTATION MOVES
John Bethel, executive director of the Arkansas Public Service Commission, said state regulators with the PSC and Arkansas Department of Environmental Quality will begin holding stakeholders meeting later this month to begin developing plans on the new EPA regulations.

Originally, the EPA set the deadline to finalize the standards by June 1, 2015. States, including Arkansas, were required to submit their implementation plans to EPA by June 30, 2016. Given today’s announcement, those dates could now change.

Teresa Marks, director of the Arkansas Department of Environmental Quality, said her department and PSC officials have scheduled a meeting to discuss the EPA proposal on June 25 with about 20 stakeholder groups representing utilities, state agencies, environmental advocates, energy efficiency experts, consumers and other interest parties. 
 
The Arkansas environmental chief said she was pleased state regulators will have the flexibility to adapt a plan that is going to fit the needs of Arkansans. She added that her department has the unenviable task of briefing the groups about the controversial guidelines.

“I think we have a lot of work ahead of us to determine what options or combinations of options will work best here in Arkansas,” Marks said of the 645-page proposal. “We will be pouring through it over the next several weeks.”