Where Might the New Energy Proposals Really Lead?

WASHINGTON—Resources for the Future (RFF) Senior Fellow Karen Palmer has posted a new blog: Economic Reregulation, Environmental Deregulation, and the Future of Coal-Fired Generation. In it, she takes note of two recent regulatory proposals announced by the Trump administration. Both are expected to breathe new life into coal-fired electricity generation in the US. But closer scrutiny raises an unexpected possibility: Are they necessarily as friendly to coal as they first appear to be?

One of the proposals is the FERC Notice of Proposed Rulemaking on grid resilience pricing. It was first put forward by Secretary of Energy Rick Perry in late September. The other is the US EPA’s October 10 announcement of a new rulemaking aimed at repealing the Obama administration’s Clean Power Plan (CPP) for reducing greenhouse gases from existing power plants.

Both announcements appear to be favorable to coal. The FERC notice seeks to forestall more coal plant retirements in the face of low prices. The EPA announcement removes the CO2 emissions reduction requirements under the current CPP, which weigh most heavily on coal-fired generators with their relatively high CO2emissions rate.

Dr. Palmer’s review of the policies, however, finds that the “answer is highly uncertain because both raise more questions than they answer.” Indeed, FERC staff have posted a list of 30 questions on which they are seeking input by the October 23 deadline for submitting comments on the proposed rule. And EPA has indicated in the preamble to its proposed rule that the agency has not yet determined when or even if it will promulgate a new rule to regulate CO2 emissions from existing generators to replace the rule it is proposing to repeal—let alone what form such a replacement rule would take.

After acknowledging that the regulatory and legal contexts of the two proposals are very different, Dr. Palmer asks if there are perspectives on system-wide supply of electricity services from the resilience context that will be brought into the climate regulation context. She concludes: “Widespread consensus exists on the need for both substantial decarbonization of the US electricity supply as well as electrification of transportation and other energy end uses to achieve the long-run goal of 80 percent reductions in economy-wide CO2 emissions from 2005 levels by 2050. ... Finding an environmental regulatory path consistent with more system-wide thinking will likely be necessary at some point, even if current signals from EPA suggest that this is unlikely in the short run.”

Read the full blog post: Economic Reregulation, Environmental Deregulation, and the Future of Coal-Fired Generation.