Monday, September 23, 2013

Power Plants Issued New EPA Regulations on Emissions

Story first appeared in USA TODAY.

Lawsuits are expected to challenge the Environmental Protection Agency's proposal Friday to limit emissions from new power plants, and the main reason is cutting-edge, anti-pollution technology.

The EPA announced Friday morning its proposal to cap the amount of heat-trapping greenhouse gas emissions from new power plants. Coal-fired plants -- unlike most natural gas facilities -- won't meet the standard without costly technology to capture and store carbon emissions.

There's the rub. No commercial, coal-fired plant worldwide has yet to use this technology, but at least two are now under construction — one in Canada's Saskatchewan Province, and the other in Mississippi's Kemper County, which is scheduled to open in May. Three other U.S. coal plants are planned, two in Texas and one in Illinois.

EPA Administrator Gina McCarthy said Americans have a "moral obligation to the next generation" to protect the environment, and its proposal, updated from an initial one last year, is a "necessary step to address a public health challenge."

Rather than killing the U.S. coal industry, "it sets out a path forward" for it, McCarthy said in a speech at the National Press Club in Washington, D.C.,, adding the standard relies on "home-grown technologies" and is both achievable and flexible.

Critics, including the coal industry, disagree and say it's not legal to require a technology that's not yet proved itself commercially. Supporters, including environmental groups, say the standard will create demand for the technology and spur industry cleanup.

"There's no demand for the technology now," but an EPA rule will change that, says Dan Weiss of the Center for American Progress, a research group that supports the limits. He says there are enough demonstration projects to prove that the technology, often called CCS (carbon capture and sequestration), works.

Not so, says Jeffrey Holmstead, a partner at the Bracewell & Giuliani law firm who was a senior EPA official under President George W. Bush. "CCS has not been adequately demonstrated," says Holmstead, who represents coal-fired plants. "It's not met the standard EPA has used for the last 40 years" that requires new technology also be cost-effective.

"It's a gray area," says Howard Herzog of MIT's Carbon Capture and Sequestration Technologies program, begun in 1989. "All the components are commercial. What's not is having a business model where they all work together," he says, citing the lack of a "turn-key" system.

"If you had to do it, you could,' he says, but it would be expensive. He say it's costly, because it's new technology, and there's no federal policy requiring it. He says it's simply cheaper now for power plants to release greenhouse gases, primarily carbon dioxide, into the atmosphere.

Herzog says power plants can capture up to 90% of their carbon emissions with CCS. The process typically has three phases. Carbon is captured and compressed, then transported (usually by pipeline) to a site where it's stored in deep underground rock formations.

In the Kemper County plant, it works a bit differently. After the carbon is captured, it will be sold to companies for enhanced oil recovery, says Amoi Geter, spokeswoman for Gulfport-based Mississippi Power, which is building the plant. Geter says about 65% of carbon emissions will be captured.

Coal-fired power plants are the single-largest source of U.S. electricity, providing 37% of the total last year. They also emit a disproportionately large share of greenhouse gases — far more that natural gas counterparts. While they provided 18% of all energy consumed nationwide in 2012, they accounted for 31% of energy-related carbon-dioxide emissions, according to the U.S. Energy Information Administration.

The EPA's proposal, which addresses only new power plants, is a dress rehearsal for a much larger one next year that will limit emissions from existing power plants. President Obama has directed the agency to propose a standard for existing plants by June and finalize it in 2015.

For new coal-fired plants, the EPA proposal caps emissions at 1,100 pounds of carbon-dioxide per megawatt-hour of power produced. A typical new plant, without CCS technology, emits about 1,800 pounds. In the initial 2012 proposal, the agency proposed a limit of 1,000 pounds.

The agency's updated proposal also sets a 1,100-pound standard for small natural gas plants that produce 850 megawatts or less of electricity and a 1,000-pound limit for larger units. Most natural gas plants would meet these caps without CCS technology.

Holmstead says the EPA's carbon rule, which won't be finalized until next year, is "effectively a ban" on new coal-fired power plants. "I'm quite confident there will be a legal challenge," he says. "There's a good chance it will be overturned in court, but that's a few years away."

Weiss agrees lawsuits will "absolutely" ensue, but he says the EPA gives plants time to adjust. The proposal allows plants to average emissions over a seven-year period if they meet a slightly tighter limit of between 1,000 and 1,050 pounds.

The coal industry says the EPA's proposed rule, if enacted, will lead to more coal plant closures and higher electric bills. It "would cause consumers' power bills to skyrocket over time and cause more pain at the plug than Americans have experienced at the pump," St. Louis-based Peabody Energy, the world's largest private-sector coal company, said in a statement.

Geter says Mississippi Power has raised rates 15% this year and plans an additional 3% increase next year to help pay for the new Kemper County plant, whose price tag has risen from an initial $2.4 billion to $3.8 billion, of which at least $270 million is federal funding.

Obama administration officials say greenhouse gas emissions have high hidden costs. They say coal emits not only carbon dioxide, which raises Earth's temperature, but also sulfur dioxide, nitrogen oxide and heavy metals (such as mercury and arsenic) and acid gases (such as hydrogen chloride), which have been linked to acid rain, smog and health issues.

"The industry wants to be able to blame EPA" for its economic troubles, says David Doniger of the Natural Resources Defense Council, an environmental group. But he says low prices for natural gas, even wind, are bigger factors in coal's current and future prospects than EPA's proposed rule.

Environmentalists say the rule, though, is a major step toward cleaner air. Julian Boggs of Environment America, an advocacy group, says: "We can kiss goodbye any more dirty power plants."

Monday, September 16, 2013

U.S. energy lifting economy more than expected

Story originally appeared on USA Today.

Rising U.S. oil and natural gas production is having a bigger impact on the U.S. economy than estimated a couple years ago, according to a leading economic consulting firm.

Newly found sources of domestic oil and natural gas are having an even bigger impact on the economy than first projected, adding more than $1,200 last year to the discretionary income of the average U.S. family, a new study says.

The explosion in domestic energy production now supports 1.2 million jobs, directly or indirectly, says consulting firm IHS, in a study released Wednesday. That number will grow to 3.3 million by 2020, and new energy's contribution to U.S. families' disposable incomes will hit $2,000 per household per year by 2015, said IHS.

IHS' numbers are larger than findings by other economists, which also point to a major impact from shale oil and gas. The introduction of technologies like hydraulic fracking and horizontal drilling, which made it practical to recover previously unused oil reserves, has helped drive a 58% increase in natural gas reserves since 2007, cut the price of natural gas by nearly three-fourths, and sparked more than $120 billion in U.S.-based investment last year, IHS said. Its study was partly financed by a number of energy and manufacturing industry groups.

"Anyone who doubts the reality of this is not paying attention,'' said John Larson, vice president of IHS and co-leader of a team of 13 contributors from the firm's energy, economics and manufacturing-industry consulting groups. "You're seeing the production numbers in both gas and oil to support it.''

The biggest impact on many U.S. households is lower electricity and heating bills, accounting for about 75% of the average household's gains, Larson said. About $800 of that represents lower prices for natural gas-fueled heat and cooking, and $100 to $150 is from electricity rates lower than they otherwise would be, he said.

Government data back up most of this analysis. Residential natural-gas prices, which vary widely by state, have fallen between 12% and 32% since 2008, according to the U.S. Department of Energy. Electricity prices, however, have risen slightly on average. IHS' numbers were based on assumptions about what households would have spent if U.S. natural gas prices stayed near 2008 levels, Larson said.

Natural gas prices in much of Europe are three times U.S. levels, and Asian prices are even higher, reflecting the lack of new supplies there, he said.

Cheaper electricity also shows up in the price of other manufactured goods, and some families get a paycheck from producing oil and gas, or working for companies that ship petroleum or make supplies for drilling and pipelines, he said.

Earlier, IHS had only estimated the impact of new gas supplies, without attempting to quantify the effects of new oil supplies pouring out of places such as North Dakota and the Eagle Ford shale in Texas. In December 2011, it had said the shale gas industry was supporting 600,000 jobs by 2010.

Moody's Analytics, another leading economics consulting firm, estimates that 1 million of the 2.7 million jobs gained in the U.S. between 2002 and 2012 were related to shale oil and gas drilling, Moody's economist Chris Lafakis said.

Growth in shale-related employment since 2008 was almost four times as much as Moody's forecast in 2009, and is growing twice as fast as the overall economy despite a hiring lull caused by lower natural gas prices, Lafakis said.

'It's difficult to overstate the shale revolution's profound contributions to the US. economy,'' Lafakis said.

More domestic production is also slashing crude oil imports, which fell 19% in the first half of this year, according to the Census Bureau. That shaved $31.6 billion off the nation's trade deficit.

In 2011, U.S. oil and gas companies added almost 3.8 billion barrels of crude oil and related reserves, an increase of 15%, the biggest jump since the U.S. Energy Information Administration began publishing proved reserves estimates in 1977, the government said last month.