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Clean Power Plan repeal won't save coal

Cheap natural gas, not federal regulation, has strained the industry most.

By Rebecca Linke  |  October 12, 2017

Power Plant

A coal fired power plant in Rockville, Ind.

Why It Matters

The Obama-era Clean Power Plan repeal is underway. But the move from coal to cleaner energy will happen for economic, not regulatory, reasons.

The repeal of the federal Clean Power Plan will allow some states to “ride out the status quo,” but it won’t reverse the decline in coal consumption, MIT Sloan professor Christopher Knittel said.

“I’ve done analysis that suggests an 85 percent drop of coal consumption has come from lower natural gas prices. At most you can point to 15 percent coming from state level polices and minor federal level policies,” Knittel, whose research focuses on environmental economics, said. In some cases, solar is also less expensive than coal, but it and wind power benefited more than natural gas from the proposed Clean Power Plan incentives.

The Clean Power Plan was an Obama-era effort to curb carbon emissions from power plants by one-third by 2030. It was never implemented and a repeal process was announced this month by Scott Pruitt, the head of the Environmental Protection Agency.

Since the plan was proposed in 2015, many utilities started shifting to natural gas or renewable energies, even though the regulation was temporarily blocked by the Supreme Court in 2016 after multiple states and industry groups challenged it. But, Knittel said, it was affordability of natural gas, not the looming federal regulation, that had many states moving away from coal.

Since some of the regulations to curb carbon emissions originated at the state level — many pledged to still implement the Paris agreement even after the U.S. officially pulled out of it — the repeal won’t change much for them.

“Some states will be doubling down and incentivizing renewable technologies. Where we will be missing the big incentive is in red states that will be able to just ride out the current status quo,” Knittel said. “But we will still see coal plants struggling.”

The repeal may slow down the shift to cleaner energies — but the Trump administration is also expanding drilling for natural gas. That in turn will drive down natural gas prices, further increasing pressure on coal plants. “In many ways, the administration’s goals are counter to each other,” Knittel said. “I think the basic economics is pointing away from coal to natural gas.”

According to Knittel, the biggest disappointment from the Clean Power Plan repeal may be the impact on health. The regulations were estimated to prevent 3,600 premature deaths from air pollution, 1,700 heart attacks, 90,000 asthma attacks, and 300,000 days of missed school and work annually. “The co-benefits alone of the Clean Power Plan outweighed its cost. The legislation would have raised welfare just through fewer asthma attacks and heart attacks and other respiratory problems that come about through burning fossil fuels,” Knittel said.

With the repeal, the EPA will be asking the public to weigh in on what sort of regulations should take the place of the Clean Power Plan. But since the Supreme Court ruled in 2007 that greenhouse gases are a pollutant that the EPA must regulate, doing nothing is not an option. In the meantime, we can expect multiple lawsuits from states and environmental groups that want to keep the Clean Power Plan in place.