EPA: We're Not Picking Fuels!

Facing a sudden shift from coal to natural gas, the Environmental Protection Agency is likely to revise its Clean Power Plan to give states more clean energy options, EPA Administrator Gina McCarthy signaled in Chicago Friday.
"We may have designed it in a way that would reduce flexibility for states to make choices among the fuels that they may want to use. That's the issue that I am trying to address," McCarthy told about 120 people gathered Friday at the University of Chicago's Booth School of Business and another 200 people watching online.
Some states have warned EPA of an impending "cliff" in 2020. In order to comply with the first carbon-reduction standard that year, state officials may have to scramble to the most readily available fuel—natural gas—which is only 50 percent cleaner than coal. And they worry they may be unable to install pipelines in time.
"That's why the cliff was brought to us as a potential for over-reliance on one fuel versus another," McCarthy said. "Not because states would want to do it that way, but because we may have designed it that way by the way in which we designed the rule. That's the issue, and I am not going to design this rule to tip the hand of how I think states should act, because I'm not thinking that way. My only issue is carbon pollution reduction."
The EPA's timetable of deadlines, which demands about a 30 percent reduction in carbon emissions by 2030, is also negotiable, McCarthy said last month in an appearance in Washington. If states shift rapidly from coal to natural gas, they could render the energy market less hospitable to solar, wind, and nuclear energy.
On Friday, McCarthy stressed — three times — that EPA has no favorites among fuels.
"It's not my job to pick fuels. It is my job to get at pollution," McCarthy said . "And I can do that best if I allow states to do their jobs well."
But the agency has modeled each state's likely responses to the plan, so it has some idea what fuels will win. For example, it expects coal to drop from its present 39 percent of the fuel mix.
"Our figures show it will still stay at about 30 percent in 2030," McCarthy said.
The Clean Power Plan is not the only pressure on coal. Cheap natural gas has made coal less competitive. Some coal plants have closed, rather than make upgrades, in the face of pollution-enforcement actions. And coal faces a suite of other environmental regulations enacted by the Obama Administration, including restrictions on cross-state air pollution, mercury and other toxins, cooling-water intake structures and disposal of coal ash.
Some coal plants were expected to retire because of aging, but the pace of closures is unprecedented.
Power companies retired 100 coal-fueled units from January 2012 to May 2014, before they faced the prospect of the Clean Power Plan, according to the General Accounting Office (pdf) . Another 138 coal units are expected to retire by 2025, with most of those closures occurring before the end of 2015 .
The closures amount to about 13 percent of coal-fueled net summer generating capacity, or 42,192 megawatts, according to GAO.
McCarthy appeared Friday at “The Next Frontier of Climate Change,” a forum on state and local climate actions hosted by the New Republic magazine and the Energy Policy Institute at Chicago (EPIC). Moderator Jeffrey Ball, an energy policy expert from Stanford University, asked McCarthy whether the Obama Administration could take credit for U.S. emission reductions so far—expected to fall this year to 15.4% below 2005 levels—or if market forces, like cheap natural gas from fracking, and less expensive solar panels, deserve the credit.
"What we did with the Clean Power Plan is actually look at the transition that's happening in the market anyways," McCarthy said. "We are not forcing solar to be built today. It's being built because it's getting cheaper all the time. People like it. People want it. We have aging utility infrastructure. We have to think about tomorrow, not what we did in the 60s. So we're taking advantage of changes already happening. We're not taking credit for it, we're taking advantage of it, and we're projecting where those changes are heading so that we can see how we can move toward a low carbon future in a way that sparks the technology innovation and the job growth that are going to get us leaps and bounds ahead as we move forward."
One effect of the Clean Power Plan, according to McCarthy, is to send market signals that help steer investments to cleaner energy sources. Those investments inspire technologies that accelerate the pace of change, which is why, McCarthy has said, pollution-reduction benchmarks are usually not just met in the U.S., but happily exceeded.
The question is whether the Clean Power Plan, in its draft form, is steering too much of that investment to natural gas.
"People are pointing out to us we may have designed it in a way that would shift investment in different ways and we should be more neutral in that," McCarthy said. "What I do not want is to limit choices within the states as opposed to letting market choices in the states, and the states themselves, design that in the way that they think their future should go."
The final version of EPA's Clean Power Plan is due out this summer, when states also must submit their compliance plans.
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