Production of coal in the United States would drop by one-fifth in the next five years and almost one-third by 2025 under the Obama administration's regulatory crackdown on carbon emissions from electric power plants, the Energy Department's statistical branch said on Friday.
Retirements of coal-fired power plants would double, with about 50 gigawatts more in lost capacity compared with business as usual, the new analysis by the department's Energy Information Administration found. At first, power plants would mainly switch to natural gas, but over time, solar and wind capacity would soar.
The agency emphasized that there is "considerable uncertainty" in any such analysis, not only because of market surprises and innovation, but also because the EPA's plan gives extraordinary leeway to the states in determining how best to meet the clean-power goals.
In the end, this analysis, based on sophisticated modeling by the government's leading experts, reached exactly the conclusion that everyone expected: Eliminating carbon pollution means walking away from coal.
The Clean Power Plan, as the administration's proposed rule governing emissions from existing fossil-fuel-fired power plants is known, is the centerpiece of the Obama administration's climate policies, aimed at cutting emissions to 30 percent below the 2005 level by 2030.
It has been ferociously opposed by the coal industry, because demand for coal is bound to decline no matter how the states manage to cut carbon dioxide emissions: either by switching to natural gas, by building up wind and solar power, by increasing efficiency in the production and consumption of electricity, or by setting up regional cap-and-trade arrangements that let the marketplace decide what's most effective.
Until now, the EIA, which scrupulously avoids letting policy recommendations creep into its data runs, had not estimated how new rules governing carbon emissions from power plants would play out in terms of energy supply and demand.
In its most recent long-term Annual Energy Outlook report, issued a few weeks ago, EIA did not take account of the proposed regulations because they have not yet been finalized. The EPA plans to issue final regulations this summer. They are certain to face court challenges by the industry and by coal-friendly states.
Without new rules, EIA had noted, United States carbon dioxide emissions would change only modestly between now and 2040.
But with new rules clamping down on coal-fired power, it said on Friday, emissions of CO2 in 2030 would be between 484 million tons to 625 million tons lower than without the regulations. The power sector would still emit 1.5 billion to 1.7 billion tons of carbon dioxide in 2030, but that would be 29 percent to 36 percent lower than its emissions in 2005. (The ranges reflect various scenarios described in the 103-page report.)
In terms of electricity costs, the EIA confirmed a claim that EPA has made since it first proposed the rules – that higher prices per kilowatt-hour of electricity would be offset by efficiency gains and conservation, leaving consumers paying less. "Decreases in demand more than offset the price increases," the agency said.