A new burst of coal-fired power plant construction now underway – the largest in decades – will put 43 new coal plants on American soil in the next five years, and all of them will escape the performance standards written into the climate bill now moving through Congress.
The 43 plants are either already under construction, near construction or permitted. They fall under a designation called "progressing projects" in a report (attached below) published by the National Energy Technology Laboratory, and under provisions in the American Clean Energy and Security (ACES) bill now awaiting Senate action, they would all be grandfathered in without direct restriction on their CO2 emissions.
"I'd definitely call it a bubble," said Erik Shuster, the author of the report, who works in NETL's Office of Systems Analysis and Planning.
Between 2000 and 2008, less than 5,600 MW of new coal-fired electric generation capacity came online, according to Shuster's analysis. The 43 progressing plants are projected to add four times that generating capacity – 22,236 MW – in the coming five years. Collectively, they will produce more than 150 million tons of new CO2 emissions every year for many decades.
The ACES bill contains tough performance standards that would essentially require new coal plants to capture and store at least 50 percent of their CO2 emissions no later than 2025, but these 43 progressing projects – and potentially others – would escape those standards, thanks to a change in a single word in the legislation now more than 1,600 pages long.
When the discussion draft of the climate bill was first released by Reps. Henry Waxman (D-Calif.) and Ed Markey (D-Mass.) in late March, it stipulated that coal plants "finally" permitted after Jan. 1, 2009, would be subject to new performance standards. But the word "finally" was changed to "initially" in the version that was approved by the House and sent to the Senate.
With that single word change, the 43 progressing coal plants were grandfathered into the clean energy future and will escape any CO2 emission standards for coal plants if the measure becomes law.
In addition, the pending legislation preempts the EPA from regulating coal plants for CO2 emissions, leaving this new fleet of coal plants out of the reach of regulatory control as well as the new law.
The Sierra Club, which recently announced that its Beyond Coal campaign had helped to halt construction of a 100th coal plant since 2001, is working to improve the legislation.
"We're looking to the Senate to strengthen the bill in order to help clean up the oldest, dirtiest coal plants while accelerating the transition away from coal going forward," said Mary Anne Hitt, the campaign's deputy director.
History Repeating Itself?
The grandfathering of coal plants is something that Congress has done before, with disastrous environmental results. When the Clean Air Act was passed in 1970 and 1977, Congress decided to exempt existing coal plants from the new clean air standards. Lawmakers believed they could control emissions without causing economic disruption by imposing standards only on brand new coal plants.
Analysts were predicting then that existing coal plants would be replaced by cleaner burning plants within one to three decades, and they backed up their projections with historical evidence. Between the end of World War II and the 1960s, utilities had been retiring their older plants after 35 to 45 years of use and building new ones to replace them. Lawmakers also intended for the grandfathered plants to eventually come under Clean Air Act regulations when they made substantial modifications and triggered New Source Review.
What actually happened after the passage of the Clean Air Act was contrary to these expert expectations. The grandfathering provision, together with incentives created by deregulated energy markets, instead encouraged utilities to delay construction of new plants and to extend the lives of aging, high-polluting plants.
"The owners of the plants very carefully flew them under the radar," said Seth Kaplan, a senior attorney specializing in climate issue at the Conservation Law Foundation. "They became very skilled at making incremental upgrades to avoid triggering New Source Review."
Grandfathering ended up being a perverse subsidy that discouraged innovation, prolonged the use of inefficient technologies, and allowed for continued air pollution. Few of these coal plants have been retired to the present day. The average age of a coal plant in the U.S. is about 40 years.
Over the years, there were many attempts to bring grandfathered coal plants under tighter control, with fierce battles fought during the Clinton administration. A study conducted in 1999, which called for legislation to bring these grandfathered plants under Clean Air Act regulation, showed that 94 percent of the aging plants, after complying with modern regulations, would remain competitive. They would spew out significantly lower amounts of acid rain causing emissions, and the cost of the upgrades would raise electric rates a mere 4 percent, the study found.
Corrective legislation, however, was never enacted, and during the eight years of the Bush administration, EPA enforcement of the Clean Air Act was lax within a larger context of the administration's reluctance to acknowledge global warming and act on climate solutions. Progress was made primarily at the local level, due to efforts by individual states to regulate aging plants within their own borders.
When the Supreme Court ruled in Massachusetts v. EPA in 2007 that the EPA could regulate CO2 under the Clean Air Act, there was some expectation that these grandfathered plants could finally be brought under a compliance regime. Legal experts believe that under various provisions of the act, EPA could develop CO2 performance standards to improve the efficiency of the nation's aging fleet of existing plants.
Experts also believe that new coal plants could be required to use "best available control technology" (BACT) to control emissions if EPA maintains its authority to regulate CO2 under the New Source Review (NSR) provision of the Clean Air Act.
But the ACES bill would take away that authority. Sections 831-835 specifically amend the Clean Air Act to prohibit the listing of CO2 as a "criteria pollutant" and the consideration of greenhouse gases in New Source Review.
Instead, Congress reserves for itself the authority to set performance standards for new coal plants, which it stipulates in detail in Section 812. But 43 coal plants "initially" permitted before Jan. 1, 2009, will be exempt from the standards, which if the legislation is signed into law without modification, will create another fleet of grandfathered coal plants on American soil.
"When you create the possibility of circumventing a regulation, you create unanticipated opportunities for gaming the system," Kaplan said, "especially when lots of money, big companies and smart people are involved. You shouldn't be surprised if the mice in the maze are so motivated they chew through the wall."
In 2005, the EPA estimated that the average U.S. coal plant emitted 4.6 million metric tons of CO2 during each year of operation. Assuming that the average new plant would be 20% more efficient, the 43 new coal plants would collectively emit almost 160 million metric tons of CO2 a year – which alone would represent close to 8% percent of the total 2005 U.S. coal plant emissions of 2.1 billion metric tons of CO2.
The only tool the ACES bill creates to combat those new emissions is the gradually descending cap on carbon it imposes, but Kaplan and many others believe it is weaker than it should be to do its job effectively.
"If the cap was as strong as it should be, it would send an economic signal that would push against the coal plants," Kaplan said. "But the ultimate lesson of grandfathering is that once you create a path to non-compliance, you can't assume it won't be travelled indefinitely."
The National Energy Technology Laboratory's report also identifies an additional 44 coal plants that have been "announced" by industry. It is unknown if any of these have initial permits that would allow them to be grandfathered as well. Nor does the NETL report track if any of the new progressing plants would lead to the closing of any existing coal plants.
NETL used to collect and disseminate its own data on coal plant construction, but it now buys the information from a private company, and so it is not at liberty to release the detailed information underlying its report for public scrutiny. It would be useful information for lawmakers to have as ACES works its way through Congress. The measure is struggling to deliver overall emissions reductions of 17% below 2005 levels by 2020 – still an inadequate target by both scientific and international standards.
This newest bubble of grandfathered coal plants will be pulling emissions in the opposite direction for many decades to come.
"Every time you build a high carbon piece of infrastructure, it's as if you're dropping a depth charge on the future," Kaplan said. "That's the end result we need to visualize now."