EPA Review Reverberates Through U.S. Energy Industry

Inaction is action when it comes to climate change.

EPA administrator Lisa Jackson drove that point home yesterday when she announced she would review a Bush-era memo stating that carbon dioxide is not a "regulated pollutant" under the Clean Air Act.

Within hours, Jackson’s “hold on, let’s think about this” announcement was reverberating through the energy industry.

AES Corporation, one of the world’s largest power companies with almost $14 billion in revenues in 2007, announced it would withdraw an application to build a new coal-fired power plant in Oklahoma. The company, which would not comment beyond its three-sentence announcement because it is in a quiet period before announcing quarterly earnings, said the decision to withdraw plans for the 600MW plant was “part of our broader strategy to re-evaluate our growth plans.”

The EPA review effectively put a moratorium on all coal-fired plant projects, says David Bookbinder, Chief Climate Counsel for the Sierra Club, which asked the EPA to reconsider the Dec. 18, 2008, memo from ex-agency Administrator Stephen Johnson.

Proposed coal plants on federal land, such as the Bonanza Plant in Utah and the White Pine and Tuquop plants in Nevada, are already on hold. In Florida, a Seminole Electric plant in Palatka under litigation could have its permit revoked if the EPA decides to regulate greenhouse gas emissions.

In Louisiana, at least three proposed coal-fired power plants or plant expansions that are now undergoing state review could be affected: Little Gypsy, Big Cajun 1 and Big Cajun 2. The EPA went after the owner of Big Cajun 2 today when it sued Louisiana Generating, alleging that the company violated the Clean Air Act by not installing modern pollution control equipment when the plant underwent major modifications. The Justice Department characterize the case as part of "a national initiative targeting electric utilities whose coal-fired power plants violate the law."

Jackson says it's clear that the Clean Air Act can be used to address more pollutants. As she told The Associated Press yesterday:

If EPA is going to talk and speak in this game, the first thing it should speak about is whether carbon dioxide and other greenhouse gases endanger human health and welfare. It is a very fundamental question. 

With the new EPA's review of the Johnson memo coming up and the agency's obvious willingness to act on greenhouse gases, Bookbinder says, "states would be well-advised not to issue permits until EPA has finished its process, because it is likely EPA will say, ‘Look, you need to do best available control technology for carbon emissions.'"

Jackson’s promised review of the Johnson memo – which included a warning that the memo should not be considered the final word on the Clean Air Act – is also buttressing attempts by several governors to halt construction of new coal-fired plants in their states.

Michigan Gov. Jennifer Granholm put seven proposed power plants on hold late last month in an effort to shift her state to clean, sustainable power, and she has been battling legislators and energy companies ever since.

In Kansas, Gov. Kathleen Sebelius has vetoed three attempts by her state’s legislature to ram through approvals for two huge coal plants proposed by Sunflower Electric, and she may be forced to issue a fourth veto soon.