Today, the EPA announced new limits on greenhouse gas emissions from power plants. For once, industry and environmental groups are in agreement: these new limits, they say, will effectively ban the construction of new coal plants. As Michael Brune, executive director of the Sierra Club, put it, the new limits mark the “end of an era.”
The new regulations are, essentially, a way to achieve the same goals that were sought by the cap-and-trade bills proposed in 2009. While these bills failed in Congress, the EPA can now set limits on greenhouse gases without Congressional approval, thanks to a 2007 Supreme Court Decision (Massachusetts v. EPA).
As with any regulation, the new EPA limits will have various costs and benefits. The primary benefit, of course, will be a reduction in greenhouse gas emissions, and presumably, a reduction in global temperature increases over the course of the next century. Assuming the CO2 reductions will be comparable to those projected in the bills that failed to pass Congress in 2009, those reductions will result in a whopping 0.1ºC reduction in temperature increases over the next century (i.e. a predicted rise of 2.85ºC instead of 2.96ºC).
What will consumers pay for this potential reduction in the global temperature? In the recent past, the cost increases in power plant construction due to increased regulations have been offset by operational improvements at existing power plants. Instead of building new plants, utilities have opted to improve their existing facilities. For instance, in the mid-1980s, nuclear power plants operated at only 55% of their capacity, due to outages and routine maintenance. Today, they operate at more than 90% of their rated capacity. So while no new nuclear power plants have been built since the 1980s, the amount of energy we get from nuclear has nearly doubled over that same period. Unfortunately, however, there’s little room for improvement above the 90% mark. This means that increasingly, as we switch to more expensive alternatives, such as wind and solar, consumers will be forced to bear the full brunt of the cost.
One hope for consumers lies in the incredibly low natural gas prices resulting from the U.S. shale gas bonanza—made possible by hydraulic fracturing (“fracking”). But, while shale gas has been a wonderful development for the U.S. economy, it still pales in comparison to the abundance and affordability of coal. Also, unlike coal, natural gas has many alternative uses, such as use in plastics manufacturing, fertilizer production, and home heating. This is why, in 1978, Congress actually banned the use of natural gas for electric generation—at the time it was deemed too precious for electric generation. So, while natural gas is affordable today, that does not mean that dramatic increases in demand, due to a ban on coal, will not drive up prices in the future.
On the bright side, if coal and nuclear power remain effectively banned through regulation, and the new abundance of natural gas is unable to singlehandedly power every sector of the national economy, at least then we will know concretely, inescapably, the true cost of going green.
