If the electricity-generation business was destined to build few coal-fired units anyway, why does the US need a regulation ensuring that outcome?
The question arises from the rationale behind the US Environmental Protection Agency's claim that greenhouse-gas (GHG) emission standards it proposed on Sept. 20 for new power plants "are not expected to have notable costs and are not projected to impact electricity prices or reliability."
EPA cites government and industry projections "that new power plants that are built over the next decade or more would be expected to meet these standards even in the absence of the rule."
In those projections, gas-fired combustion units dominate power-plant construction.
New gas-fired generators can meet the standards EPA now proposes without adding emission controls. New coal-fired units would have to capture and store at least some of the GHGs emitted by their operations. The equipment required and extra energy used are expensive.
If forecasts are right about gas and coal prices and about technological development, EPA might be right about its proposals not raising electricity costs.
But how often are forecasts—by the government or anyone—right about energy prices and technologies?
If markets really have closed the door on future coal-fired power generation, EPA has locked it and swallowed the key.
Refiners need to worry about the agency's eagerness to foreclose expansion of an important American industry.
Somewhere in EPA's busy chambers, new-source GHG emission standards are under development for refineries. The agency was to have proposed refinery standards late in 2011. And under the Clean Air Act, when EPA sets standards for new stationary sources of GHG emissions, it's supposed to issue guidelines for existing sources, too.
What EPA plans for refinery GHG emissions remains in suspense. In other regulatory areas, the agency hasn't acted greatly concerned about the effects of its initiatives on refining costs or fuel prices.
Meanwhile, as they await clarity on GHG regulation, refiners might profit—EPA's assurances notwithstanding—by trimming their use of electricity.