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Obama: Cut emissions at existing plants, fight climate change

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  • Many WV coal counties losing revenue

    Many WV coal counties losing revenue

    Monday, August 8 2016 10:15 AM EDT2016-08-08 14:15:05 GMT

    As Appalachian coal production continues its drastic decline, West Virginia’s coal-producing counties are  not only losing people as lifelong residents are forced to flee their homes in order to find work, but in many cases, they’re also relinquishing millions of dollars from their budgets.

    As Appalachian coal production continues its drastic decline, West Virginia’s coal-producing counties are  not only losing people as lifelong residents are forced to flee their homes in order to find work, but in many cases, they’re also relinquishing millions of dollars from their budgets.

President Barack Obama announced today his plans to address climate change, including limits on existing power plants, leaving West Virginia's coal industry wondering what's next.

The move adds to the administration's efforts already under way to limit pollution from new plants.  

"The President's Climate Action Plan" directs the EPA to complete carbon emission standards for existing and new power plants, promote American leadership in renewable energy, and advance investment in clean energy innovation.

It calls for a 21st-century transportation sector by further tightening fuel economy standards, by developing advanced transportation technology and by aggressively pushing energy efficiency.

And it seeks to prepare the nation for the effects of climate change through climate-resilient infrastructure, protecting the economy and natural resources, and supporting climate science.

Most directly affecting West Virginia will be the limits on emissions from power plants.

A blow to coal

The announcement could have major implications for West Virginia's coal economy -- coal burned for electricity is the single largest source of greenhouse gas emissions in the U.S. -- and also for its electricity sector, which is primarily based on coal and which has proposed recently to deepen its reliance on coal.

"You know it's very disturbing, because technology doesn't exist at this point," said Bill Raney, president of the West Virginia Coal Association, referring to carbon capture and sequestration technology that is seen as necessary to coal's viability in a carbon-constrained world, but which is not yet commercially available. "It just seems further indication that this administration has little care for the people of West Virginia and their jobs."

Raney said he is disappointed in the administration's action, particularly because the rest of the world wants West Virginia's coal for electricity.

"This administration wants to raise the price of electricity for every citizen," Raney said.  "It's just amazing to me because energy is one of the building blocks of the economy. We have every opportunity in this country."

Obama's plan largely puts the fate of future carbon emissions limits from old plants in the hands of the Environmental Protection Agency. The plan announces a presidential memorandum "directing the Environmental Protection Agency to work expeditiously to complete carbon pollution standards for both new and existing power plants." It does not provide specifics.

Raney said even without knowing the specific limits that might be imposed, the announcement is discouraging.

"What this administration is doing is punishing the existing infrastructure of this program," he said. "It's creating winners and losers and not allowing the economy to move as it would traditionally move."

What's worse, he said, is that the administration is skirting Congress and addressing its priorities via "administrative fiat." If the Appalachian coal industry, which he said is specifically targeted, survives this administration, it may be too late for a reversal.

"It makes absolutely no sense to me," Raney said.

Michael Dudas, an analyst with Sterne Agee, said before Obama's speech that any potential hurdles could be overcome by the industry.

While not totally unexpected from the Obama administration, the prospect of creating and implementing carbon emission limitations on U.S. industrial plants adds more uncertainty to the industry and equities, Dudas wrote.

"However, political and economic challenges would likely evolve and greatly push out potential impacts," he wrote.

Dudas points to the lengthy rulemaking process built into the EPA's procedures.

"We note that the Clean Air Act lays down a long drawn out process for any major rule-making," Dudas wrote. "We believe the extent of impact on coal-fired fleet from any proposed regulations would depend on how strict or flexible the proposed regulations are, Congressional maneuvering and length of possible court litigation. Regardless, we believe industrial demand and natural gas price economics would play a bigger role than government regulations."

Obama's climate battle

In his case for addressing climate change, Obama's plan cites a number of climate figures: last year was the warmest on record, and the 12 hottest years on record have been in the last 15 years.

Climate change, Obama said, threatens to bring about increased floods, heat waves and drought.

"While no single step can reverse the effects of climate change, we have a moral obligation to future generations to leave them a planet that is not polluted and damaged," Obama's plan states. "Through steady, responsible action to cut carbon pollution, we can protect our children's health and begin to slow the effects of climate change so that we leave behind a cleaner, more stable environment."

About one-third of greenhouse gases emitted by human activity comes from power generation.

U.S. greenhouse gas emissions were below their 2007 all-time peak of 7.3 trillion metric tons CO2 equivalent during Obama's first term, attributed largely to economic downturn and to electric utilities' shift from coal to natural gas as newfound supplies made gas more competitive with coal.

They're rising again now, according to the U.S. Energy Information Administration.

While the Obama administration established tough new fuel economy standards during his first term, carbon dioxide from the generation of electricity from fossil fuels remained unaddressed.

Facing sharp criticism from environmental groups, Obama has indicated repeatedly that he would address climate change in his second term, starting with his election night acceptance speech and continuing with his second inaugural address and 2013 State of the Union addresses.

Challenges for generation

Beyond concerns the president's announcement raises for West Virginia's coal industry, the state's power producers could be heavily affected as well.

Even as states and electric utilities have moved to diversify their fuel sources into newly abundant and cheap natural gas and into renewables, 99 percent of power produced by electric utilities in West Virginia in 2012 was generated from coal, according to the EIA.

The state's major power producers, AEP and FirstEnergy, both see demand growing in the future, and both have proposals before the Public Service Commission to meet that demand by buying additional coal-fired assets.

AEP assumes in its proposal a price on carbon emissions that is less than half of the $36/ton "social cost of carbon" that the Obama administration currently is using, while FirstEnergy figures in no cost for carbon emissions.

But industry consultant and witness for the West Virginia Citizen Action Group David Schlissel noted the importance of a cost on carbon emissions to the utilities' proposals.

"Any restrictions on greenhouse gas emissions raises the risk for the owners of coal-fired power plants," Schlissel said in reaction to Obama's plan.

"The proposals by both FirstEnergy and AEP seek to transfer that risk to regulated West Virginia customers," he said. "What the president is proposing certainly should give the public service commissioners pause in terms of evaluating those proposals. It makes them much riskier than they were just yesterday."

Neither utility was prepared to comment Tuesday morning.

Targeting existing power plants "is a game changer," said Ned Helme, president of the Center for Clean Air Policy, but he urges the EPA to be flexible in how utilities may comply.

"Combined heat and power technologies that produce electricity along with useful heat are promising and should be encouraged by the regulations," Helme said. "Another hopeful direction is increased reliance on abundant natural gas. By recommending a flexible approach, EPA's rules can reduce carbon pollution cost effectively and produce jobs that revitalize America's manufacturing sector. … President Obama's announcement should be seized upon by the states as an opportunity to increase economic growth, not stifle it."

Broader economic effects

Coal power plants generate more electricity and create and sustain more jobs than any other energy source, said National Mining Association President and CEO Hal Quinn in a statement.

"So policies that shut off coal energy damage the nation's job and economic engine, while also raising costs to American consumers," Quinn said. 

"New coal plants are best-in-class global leaders in generating efficient, clean, reliable and affordable electricity," he said. "Existing coal plants are being upgraded to be cleaner than ever before to supply reliable electricity that keeps our country growing and competitive. Our policies need to be aligned with our national interest so that coal continues to create jobs and keeps America competitive."

Environmental Entrepreneurs, a nationwide network of business leaders and investors, had another view. 

"Carbon pollution isn't just hurting our planet and our health, it's also hurting the bottom lines of companies all across America," read a statement from E2 co-founder Nicole Lederer. "President Obama has given us a commonsense approach to reduce the mounting economic costs of climate change by cutting carbon pollution, while at the same time sending a clear and critical market signal that will continue to drive American leadership and innovation in the clean energy sector."

For the effect on West Virginia's economy, Ted Boettner, director of the West Virginia Center on Budget and Policy, said that any federal action to limit carbon pollution needs to include a plan for working West Virginians. That would include diversifying not only the state's energy sector, but other industries such as forestry, agriculture and tourism.

"Instead of denying the negative impact climate change is having on our communities, state policymakers need to put pressure on the White House and Congress so working families in our state benefit from reducing carbon emissions through investments in clean energy innovation, renewable energy, and energy efficiency," Boettner said.

He called on state policymakers to, for example, push the White House to expand its Task Force on Climate Preparedness to provide transition and economic development assistance to communities negatively impacted by a reduction in coal production to existing power plants.


The EPA will have to propose guidelines, which could take a number of years. States then will have 21 months to submit plans for meeting the guidelines, and the agency also would have to build in time to accept public comment on those. Beyond that will be a compliance timeline of some years, as well as delay through litigation.

Any regulation on emissions from existing plants probably wouldn't come fully into play for a decade or more.

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