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Sunday, June 29, 2014

Clearing the air

Industrial Machinery animated GIFThe new rules curbing power plant emissions in the U.S. will have far reaching impacts both within the U.S. and around the world.  Curbing emissions from power plants is part of President Obama’s Climate Action Plan which he announced in 2013. 

Last September, the Environmental Protection Agency (EPA) released proposed standards to curb U.S. greenhouse gas (GHG) from new power plants. 

On June 2nd of this year, the EPA announced it will restrict emissions including carbon, nitrogen oxides, and sulfur dioxide by more than 25 percent by 2030 from all power plants. The EPA guidelines also include plans to prepare the U.S. for the effects of climate change, including strengthening roads, bridges and shorelines.

To circumvent the obstinacy of Republicans, the President is using his executive authority and putting forward the new rules under the Clean Air Act. The historic announcement will reduce carbon pollution from power plants by almost one third (30 percent) from 2005 levels by 2030. Even more significantly, they may spur global action that enables us to secure a binding climate treaty in 2015.

President Obama has previously pledged to reduce U.S. GHG emissions by 17 percent by 2020 compared with 2005 levels. America is already a third of the way towards meeting the national average of a 30 percent reduction in emissions. Some states, especially those in the north-east have already cut their power plant emissions by 40 percent compared with 2005 and over 1,000 mayors have signed agreements to cut their cities’ emissions.

The new power plant emissions standards are significant because energy generation is the single largest source of GHGs, accounting for nearly 40 percent of the emissions that cause climate change.

Two camps

A number of environmental organizations including the Sierra Club and the Natural Resources Defense Council lauded the proposal as a “historic step to combat climate change.” Republicans and business groups including the National Association of Manufacturers (NAM) and the Chamber of Commerce are vociferously resisting the new rules saying they will undermine U.S. competitiveness, hurt the economy and cause an energy crisis. 

Ceres and their green investor network heralded the announcement as “a critical step” to dealing with climate change. A 120-day public comment period will allow both camps to offer their views before the final rules are released in 2015. We can expect a fierce battle over the issue during this year’s mid-term elections.

Coal power

Coal power is going to be substantially curtailed under the new rules. Even before the new rules were announced about one third of coal plants online in 2009 have closed or are slated to close. The closure of coal plants is significant because coal-fired electricity generation is the most carbon intensive energy source in the U.S. and as such, it is responsible for the lion’s share of the nation’s GHG emissions.  

Coal is responsible for 40 percent of American power generation and 74 percent of the country’s CO2 emissions from the electricity sector. The new rules will impact the nation’s 1,300+ coal-fired power plants and many of these plants are unlikely to be able to meet the new standards.


The new rules have incorporated a good deal of flexibility so that each state can develop a unique plan based on their differing energy mixes. In addition to cleaner forms of energy, states can also choose to focus on energy-efficiency schemes as a way of meeting EPA standards. States have until 2016 (or 2017 if they need more time) to come up with a strategy for meeting the targets. The new rules will come into force in all states in 2020.  If states do not submit a compliant plan, EPA will make one for them.


There are two legal facets that have a bearing on the new rules for power plants in the U.S. The first is the Supreme Court’s ruling that the EPA is obligated to regulate carbon under the Clean Air Act. The second involves the fact that these new rules are flexible and pay heed to both technical feasibility and economic impacts. This will make it more likely that the rules will survive inevitable legal challenges.

Renewable energy and emissions trading

These new rules will drive rapid growth of renewables and clean energy jobs. In addition to supporting the growth of renewable energy, the new rules will also help to grow emissions trading programs, under which renewable energy facilities would receive credits, which could be sold to coal plants. 

States can set up their own emissions-trading programs, or participate in existing programs. Nearly a dozen states have already implemented their own market-based programs to reduce carbon pollution. Emissions trading will help to prevent energy shortages which could occur if all coal plants were forced to close at once.


The new rules will also spur green innovation. A few illustrations were provided in a recent analysis by Lux Research. This report suggests the rules will contribute to improvements in the efficiency of natural gas powered turbines, demand for commercial and utility scale solar power, energy efficiency programs, as well as carbon capture and sequestration (CCS) for surviving coal plants.

Health and economic benefits

As explained by EPA chief Gina McCarthy, this move will not cause energy prices to skyrocket, in fact it will save vast sums of money from medical bills associated with pollution. Coal-fired electricity generates airborne toxins like mercury, which causes neurological problems, and sulfur, which contributes to respiratory ailments. It has been repeatedly demonstrated that curbing pollution will reduce medical problems and premature deaths.

While all Americans will benefit from the new rules, the most vulnerable communities stand to benefit the most from the new rules. This includes people of color, the elderly, and those in low income communities. The plan will help to reduce asthma among black and Latino youth who are twice as likely to be hospitalized for this condition and four times as likely to die than their white peers.

“In just the first year that these standards go into effect, up to 100,000 asthma attacks and 2,100 heart attacks will be avoided — and those numbers will go up from there,” President Obama said. Overall, the economic value of these savings far outweigh the tiny increases in costs.

Global impact

The new rules will enhance the U.S. bargaining position at international climate talks and pressure other nations to get onboard.  The standards give the U.S. government the credibility it requires to lead international efforts to combat climate change. It may even provide the impetus to encourage other countries to sign a globally binding climate treaty by the end of 2015.

As described by Andrew Steer, the chief executive of the World Resources Institute, the new rules are a “momentous development” for America’s efforts to deal with climate change.
“These new standards send a powerful message around the world that it’s time to face the global threat of climate change,” Steer said.

There is reason to believe that the new rules may already be having an impact. Just one day after the new rules were released, China, the world’s biggest greenhouse gas emitter, announced that it’s considering a cap on carbon emissions.

Impediments to progress

The fact that Republicans control the House of Representatives means the President cannot promise to do anything requiring congressional action. Further, international treaties require ratification by two-thirds of the Senate and that is highly unlikely. However, we may be able to see an international agreement that does not require Senate ratification.

Beyond domestic political resistance, two of the biggest hurdles to a global climate deal may come from Australia and Canada, both of whom are racing to cash in on their fossil fuel reserves. 

According to a report in the Morning Herald, Australian Prime Minister Tony Abbott is in the process of putting together an alliance of British Commonwealth countries to reject a climate agreement.

Despite the insane lack of foresight from some national governments, the idea of reigning in emissions represents little more than common sense. The absence of emission limits is ecologically untenable and contrary to the short term thinking of some, failing to reign in climate change is ultimately economic suicide. As the EPA tweeted, “When it comes to climate change, the most costly thing to do is to do nothing.”

The new rules signal the end of coal and the beginning of a cleaner future in the U.S. and perhaps even the wider world.

Richard Matthews is a consultant, eco-entrepreneur, green investor and author of numerous articles on sustainable positioning, eco-economics and enviro-politics. He is the owner of The Green Market Oracle, a leading sustainable business site and one of the Web’s most comprehensive resources on the business of the environment. Find The Green Market on Facebook and follow The Green Market’s twitter feed.