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February 2015 Policy Study, Number 15-3

   

Obama-Inspired EPA Carbon-Dioxide Regulations May Bankrupt Iowans

   

Introduction

   

 

“So, if somebody wants to build a coal power plant they can. It’s just that, it will bankrupt them…”
 – Barack Obama, San Francisco Chronicle, January 17, 2008.[1]

“Nearly 250,000 Iowans owed a record $47.7 million at the end of last year's winter, Iowa power companies reported to the state utilities board.”
The Des Moines Register, November 23, 2014.[2]

 

It has taken President Barack Obama (then United States Senator Barack Obama) seven years to follow up on his plan to shut down the U.S. coal industry, but he is finally on the verge of succeeding at bankrupting – if not the coal plant builders and operators – then American families.  This is even without the costs and difficulties families have in dealing with Iowa winters.

 

The United States Environmental Protection Agency (EPA) in June 2014 issued a proposed carbon dioxide (CO2) regulation under the Clean Air Act Section 111(d), called the Clean Power Plan (CPP), which calls for reducing CO2 emissions from fossil-fuel-based electricity power plants by 30 percent by 2030.[3]  This is from the documented 2005 levels and is broken out into individual state requirements.  Most of these power plants are coal burning, and retrofitting and upgrading these systems over the next 15 years will cost the utilities – and consumers – billions of dollars.

 

Under the CPP proposal, existing power plants must limit their CO2 emissions to 1.1 pounds per kilowatt hour (kWh) of production.[4]  Currently the average is 2.14 pounds per kWh.  The estimated cost to power providers to make the necessary equipment changes and upgrades is estimated by the EPA to be $50 billion annually. 

 

The main way of attempting to reduce the CO2 emissions is through the Carbon Capture and Storage (CCS) technology.  Currently, there is only one coal-fired power plant in the entire world which is successfully using CCS.  It is a government-owned facility located in Saskatchewan, Canada. 

 

The SaskPower’s Boundary Dam project came online in September, after a $1.4 billion, and over budget, upgrade and retrofitting.  The facility, located northwest of Minot, North Dakota, is the largest source of energy for the entire Saskatchewan province.  Key to the potential success of this project is its location near Canada’s southern oil fields.  The captured carbon is being piped approximately 40 miles by Cenovus Energy, which built a new pipeline specifically for this purpose, and used for enhanced oil recovery.[5] 

 

“Enhanced oil recovery” is the technical term for fracking – something else which the environmentalists are opposed to and want to see stopped.  According to a newspaper story about the opening of the new facility, unused CO2 will be “sequestered” or stored about two miles underground in a brine and sandstone water formation.[6]

 

Worldwide, there are only two other commercial-scale CCS projects even under construction.  One is the Kemper project by Southern Company in Mississippi, and the other is the W.A. Parish Petra Nova project by NRG Energy near Houston, Texas.[7]  Both projects are “Under Construction,” according to the Massachusetts Institute of Technology CCS Institute, but are dealing with significant financial and regulatory roadblocks resulting in significant delays and cost overruns. 

 

The Kemper project is now exceeding the original costs of $2.4 billion by $3.2 billion, with the total estimated final cost, after five years of construction, to be over $5.6 billion.[8]  The W.A. Parish project will not start construction until the “end of 2016” and the captured CO2 will be shipped 82 miles by pipeline to be used in enhanced oil recovery.   Yet, in only about five years – by 2020 – the EPA expects significant progress by all coal-fired energy plants in the U.S. towards having this technology in use. 

The public comment period on the CPP rule ended December 1 and has drawn thousands of responses, including lawsuits and joint statements, both pro and con from every state in the union and a wide variety of business and special interest groups. The regulation is supposed to be finalized this spring, and state proposals of how they intend to comply are due between the summer of 2015 and 2016. 

 

The EPA claims that this regulation will reduce monthly residential electricity bills by 8 percent by 2030, following an initial increase in electricity costs over the next six years.[9]   The EPA also promises that “American families will see up to $7 in health benefits” (per year).[10]  Given the Obama administration’s poor record on actually delivering promised cost and tax reductions, and on promised regulatory benefits, many are skeptical of the EPA’s claims. 

 

The public health risks of CO2 supposedly alleviated by this regulation include heat stroke and heat-related deaths, smog and “some” particle pollution, extreme weather events such as hurricanes, rain and flooding, and insect diseases such as Lyme disease and West Nile virus.[11]  Much of the global warming industry, and these regulations, are based on the premise that CO2 is a greenhouse gas and is bad for our atmosphere, irrespective of the fact that all green plants on the earth need CO2 to exist.  In reality CO2 is a tiny part of our overall atmosphere (400 parts per million) and global warming predictions continue to be discredited. 

 

Even if one accepts the premise that CO2 is bad and must be reduced, the track record of the Obama administration in reducing the costs of anything the government regulates is poor.  For example, we were promised health-care costs for our families would be reduced by $2,500 per year under Obamacare.  “ObamaEnergy,” anyone?

 

An important consideration in this discussion is the fact that fossil fuels such as coal and natural gas are controllable and manageable energy sources, versus wind and solar, which are not.  As “dispatchable” energy sources, coal and natural gas are critical to the base-load energy generation needed to keep the lights, air conditioning, and heat on in U.S. homes 24/7/365.  Without reliable, consistent base-load energy, American families are no better off than those in developing world countries, such as Liberia, where separate homes and businesses must run diesel generators individually at great cost and with significant environmental damage.

 

   

 

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