The Biden administration announced tougher limits on emissions from power plants, factories and other industrial facilities that cross state boundaries. The new standards, announced by the Environmental Protection Agency (EPA), are intended to place tighter constraints on emissions from 23 Midwestern and Western states that have coal and natural gas power plants and facilities. This interstate regulation, known as the “good neighbor” rule, strengthens and expands an earlier interstate air pollution standard that was enacted during the Obama administration. In finalizing the rule, the EPA included three western states in the regulation — California, Nevada and Utah, due mainly to emissions from their industrial facilities. The new rule includes increased flexibilities, giving power plants emission allowances that will decrease over time. EPA was able to finalize the new standards as the U.S. Court of Appeals for the D.C. Circuit rejected a challenge to EPA’s proposed rule by coal companies and others this month. This rule is but one of many the Biden Administration is planning to roll out in pursuit of its quest to kill coal plants in the United States, as IER has detailed.
Power plants, factories and vehicles emit nitrogen oxide, which, according to EPA, contributes to ozone, and other emissions. EPA estimates that the new rule would cut nitrogen oxide emissions from upwind states by roughly 70,000 tons by the summer of 2026 with about 25,000 tons of the nitrogen oxide reductions coming from power plants, which must begin following the new standard this year. Other industrial sources, such as cement plants, iron and steel mills, and glass manufacturers, have until 2026 to comply and would make up the remaining 45,000 tons. EPA estimates that the updated good neighbor rule will cut emissions of nitrogen oxide in the affected states by 50 percent from 2021 levels by 2027. This is despite the progress already achieved that reduced such emissions by 72 percent between 1980 and 2021.
The new standards would require coal and gas-burning power plants to invest in upgrading their pollution control equipment, making it more expensive for them to operate and increasing electricity prices for consumers. Some coal plants may have to shut down or switch to burning natural gas, rather than install additional pollution control equipment. The coal industry criticized the regulation, arguing that it would lead to job losses and unfairly burden states that generate most of their electricity from coal-burning plants. Cement companies also criticized the rule because their industry is being hit with the rule when its products are in demand because of an influx of federal investment in road and bridge construction. Cement-making is highly energy-intensive, which is one of the reasons its manufacture has largely shifted to China, where they burn coal for energy without restraint. The bipartisan infrastructure law expects substantially increased use of building materials manufactured in the United States–a policy objective seemingly at cross purposes with the new EPA rule.
EPA estimates the cost of complying with the revised rule to be about $910 million annually from 2023 to 2042, and, once fully implemented, would increase the cost of electricity by slightly more than 1 percent. The agency defends the rule by estimating that the benefits would outweigh the compliance costs by about $3.7 billion by 2026. The outcome, however, is that American consumers and businesses will pay more for electricity that is less reliable since the Biden administration is promoting intermittent wind and solar power. EPA is unilaterally making these decisions for 23 states — more than 18 of which use coal as their most common source of electricity generation.
The revised rule is one of many climate air regulations expected this year from the Biden administration, including stricter controls on emissions from cars, trucks, power plants and oil and gas wells. Collectively, they are designed to accelerate the nation’s transition away from fossil fuels and toward renewable energy, which has been President Biden’s goal since he took office, promising to end fossil fuels.
EPA’s Estimate of Electricity Price Increases Is Likely Low
Residential consumers of Kentucky Power, one of the utilities affected by the rule, saw their electric bills increase by 78 percent – from 9 cents per kilowatt hour to 16 cents per kilowatt hour between 2011 and 2022 because of the shutdown of the company’s Big Sandy coal-fired power plant and its conversion to natural gas. Further, residential customers of Louisville Gas & Electric (LG&E) saw their electric bills go up by 33 percent over the same period – from just over 9 cents per kilowatt hour to just over 12 cents per kilowatt hour. Kentucky’s national rank among states for the lowest cost of power rose from 4th to 18th. The rise of electric bills for Kentuckians occurred as approximately 6000 megawatts of coal-fired capacity shut down in the state over the past decade, which is enough electric generating capacity to provide electricity to every home in Kentucky for three years. More and more Kentucky families are facing energy poverty – forced to choose between food and paying their electric bills. And, Kentuckians are not alone in that regard as average electricity prices across the nation have increased by almost 30 percent between 2011 and 2021. Biden is keeping his promise to close coal plants “across America.”
Further increasing the problem is that utilities are closing down coal-fired capacity faster than the replacements of wind, solar and battery storage are being built and brought online. And, the power companies have largely shifted from long-term supply contracts for coal, which can be stored at the power plant until needed, to buying coal at spot prices, which prevents the coal companies from generating a regular amount of coal power. As a result, there are fewer coal mines operating, fewer coal miners working and higher prices for the coal that is produced since they have to generate power at low capacity factors.
Meanwhile, renewables are not producing at the very times when the electricity is most needed – such as during the recent cold snap in December, when power companies were forced to issue warnings for blackouts, brownouts and shortages, pushing customers to reduce usage just as the need for power was greatest.
Conclusion
The Biden administration is ruining the U.S. generating sector by issuing rules that will close coal plants or make them more expensive by forcing additional pollution control equipment on them. The result is higher electricity prices for consumers and a less reliable electric grid as wind and solar power operate only when the wind is blowing and the sun is shining. Further, the coal closures are occurring at a faster rate than wind and solar technologies can be brought online. Europe’s experience with this approach has led to a “deindustrialization” that is growing.
Senator Joe Manchin called the “good neighbor” regulation “reckless” and said it threatens the reliability of the electric grid. He wrote to EPA Administrator Regan, asking him to postpone the action. Clearly, this regulation will further raise prices on Americans, slow economic growth and threaten jobs, although this appears to be official government policy.
