By Emily Holden (@emilyhholden)
Today's EPA Carbon Rule Brief:
- The EPA released a draft rule yesterday that aims to bring down carbon emissions from the power sector 30 percent by 2030, starting with baseline emissions levels from 2005. The reduction targets differ widely for each state, ranging from 11 percent for North Dakota to 72 percent for Washington, as SNL reports and an interactive EPA map demonstrates.
- SNL reports the regulation will "significantly erode coal demand and coal jobs," but Bloomberg's Mario Parker reports the blow isn't as fatal as it has been portrayed by industry advocates. New York Times' Clifford Krauss and Diane Cardwell say the rule will spur the natural gas and renewable energy industries without killing coal.
- Behind the scenes, some people in the power industry were relieved that the EPA settled on a 2005 baseline, Wall Street Journal reports. Eric Holthaus at Slate says the baseline lets the industry off easy and much of the coal that would have been burned domestically will be shipped overseas.
- The EPA reports that electricity prices will rise about 6 percent in 2020, Daily Caller reports. The proposal will speed changes in how Americans get power, according to Washington Examiner, including by boosting natural gas plants, Houston Chronicle reports.
- See our special Monday afternoon debrief of analysis stories and reactions to the rule.
Today’s Washington Brief:
- The rule has become a campaign talking point, according to Politico. And the National Republican Senatorial Committee already launched a robocall campaign tying vulnerable Democratic incumbents to the limits for power plants, The Hill reports.
Today’s Business Brief:
- Tim Puko at Wall Street Journal's MoneyBeat digs into how the rule will affect electricity, coal and natural gas markets.
- The rule throws ailing nuclear reactors a lifeline, E&E reports.
Today's Chart Review:
Proposed Emissions Reductions for States
Mark Your Calendars (All Times Eastern):
Tuesday: Woodrow Wilson Center discussion on territorial dispute in South China Sea @ 9 am
Tuesday: Senate Environment hearing on farming, fishing, forestry, hunting in era of climate change @ 10 am
Tuesday: Brookings Institution discussion on economic consequences of delaying climate policy @ 1:30 pm
Wednesday: Senate Environment hearing on NRC's post-Fukushima actions @ 10 am
Wednesday: Energy Storage Association conference @ Noon
Wednesday: Resources for the Future seminar on the future of insurance @ 12:45 pm
Thursday: Energy Storage Association conference @ 8:30 am
Thursday: Resources for the Future seminar on EPA's greenhouse gas regulations @ 9 am
Thursday: United States Energy Association briefing on geologic carbon storage resources @ 10 am
Thursday: Senate Foreign Relations hearing on Ukraine @ 10 am
Thursday: Solar Energy Industries Association and GTM Research webinar on solar quarterly report @ 1 pm
Friday: Energy Storage Association conference @ 8 am
22: Natural Gas
23-24: Utilities and Infrastructure
OPINIONS, EDITORIALS, PERSPECTIVES
30: New York Times
31: Wall Street Journal
32: Washington Post
RESEARCH REPORTS, ISSUE BRIEFS, CASE STUDIES
34: International Energy Agency
1) The One Thing Republicans Didn't Say in Response to the EPA's Climate Change Plan
from Washington Examiner by Sean Lengell
Even as Republican lawmakers denounced the Environmental Protection Agency's new rules on power plants, they avoided one argument: that climate change is not real. For years, congressional Republicans have voiced doubts over the science behind climate change in tones ranging from merely skeptical to certain that it is not happening. Yet no Republican leader on Capitol Hill — and few if any party back-benchers — challenged the existence of climate change when criticizing the proposed Environmental Protection Agency restrictions. Instead, Republicans focused on other popular GOP talking points, saying that forcing power plants to significantly reduce carbon dioxide emissions would lead to higher energy prices for consumers, compromise the nation's electrical grid, hurt the domestic coal industry and cost American jobs.
2) States Would See Widely Different Requirements Under EPA's CO2 Rule
from SNL by Andrew Engblom
The U.S. EPA's June 2 proposed rule to reduce carbon emissions from existing power plants by 30% compared to 2005 figures would allow some states to emit much more carbon dioxide per MWh than others, while also requiring some states to make much deeper cuts compared to their historical emissions rates. Under the proposal, North Dakota would be allowed to emit as much as 1,783 pounds of CO2 per MWh generated in the state in 2030, while Washington state could emit only 215 pounds of CO2 per MWh in the same year. Similarly, some states would be required to make significantly larger cuts than others under the proposed rule. Washington again makes the list as the state required to make the largest change, a 72% reduction, followed by Arizona and South Carolina at 52% each, Oregon at 48% and New Hampshire at 46%. On the other side of the equation North Dakota would be required to make the smallest cut, an 11% reduction, followed by Maine and Rhode Island at 14% each, Hawaii at 15% and Iowa at 16%.
3) Emissions Cap Is a Relief for Some Power Plants, Coal Firms
from Wall Street Journal by Alicia Mundy and John W. Miller
The coal industry quickly and loudly criticized proposed new U.S. emissions rules for power plants, saying that the proposal was tougher than expected and posed a threat to the industry. But behind the scenes, some people in the industry said were relieved...The coal and utility industries had been hoping that the agency would apply emission-reduction standards from a baseline of 2005, since emissions from electric plants have dropped since then. Yet despite rounds of increasingly intense phone calls and meetings between energy lobbyists and the administration, the White House had taken 2005 "off the table," a lawyer for coal interests said Friday. The coal industry feared that the EPA draft would use a more recent, and thus tougher-to-meet baseline, for example, 2012, he said.
4) Hopes for Impact of Carbon Rules in U.S. Are Modest
from New York Times by Clifford Krauss and Diane Cardwell
The new carbon pollution rules the Obama administration announced on Monday will help spur the natural gas industry and renewable energy like wind and solar power, but executives and analysts said they did not see the nation’s reliance on coal disappearing anytime soon. The intent of the Environmental Protection Agency proposal — to reduce carbon pollution from the nation’s power plants 30 percent from 2005 levels by 2030 — is to reduce the dependence on coal, which generates roughly 40 percent of the country’s electricity. To achieve that target, states will have broad flexibility, meaning that reductions in coal use will come not only from relying more on other power sources, but also from making homes and buildings more efficient, both of which are already happening.
5) EPA Admits Climate Rule Will Raise Electricity Prices
from Daily Caller by Michael Bastasch
...The decrease in coal-fired power will also cause natural gas prices to rise up to 11.5 percent as an additional 1.2 trillion cubic feet of natural gas is used to make up for the lack of coal power in 2020.
“Average retail electricity prices are projected to increase in the contiguous U.S. by 5.9% to 6.5% in 2020,” the agency reported. Prices will have increased by about 3 percent by 2030, the agency added. But the EPA added that electricity prices will fall by nine percent after 2030 because of lower energy demand and increased energy efficiency further cuts consumption.
6) China Plans Absolute CO2 Cap from 2016
from Reuters by Kathy Chen and Stian Reklev
China, the world's biggest emitter of climate-changing greenhouse gases, will set an absolute cap on its CO2 emissions from 2016, a top government adviser said on Tuesday. The target will be written into China's next five-year plan, which comes into force in 2016, He Jiankun, chairman of China's Advisory Committee on Climate Change, told a conference in Beijing.
7) New Obama Climate Regulations Could Help U.S. Pressure China
from TIME by Bryan Walsh
The U.S. carbon regulations are only a beginning, and will only have lasting benefit for the world if they help encourage the major future emitters—the big developing nations like China and India—to take similar steps to reduce their own rapidly growing carbon emissions.
8) EU Calls on Deeper U.S. Emissions Cuts to Protect Climate
from Bloomberg by Reed Landberg
The European Union said the U.S. must do more to reduce greenhouse gas emissions than the proposal President Barack Obama’s government released today if it’s to keep talks on limiting global warming on track. The decision announced by the Environmental Protection Agency in Washington calls on existing power plants to reduce fossil fuel pollution by 30 percent from 2005 levels by 2030. It’s the most comprehensive climate-protection plan yet from Obama’s administration.
9) U.S. Green Groups See Need to Nudge Obama's 'Opening Bid' on Carbon Cuts
from Reuters by Valerie Volcovici
In large part, the wide-ranging reaction to President Barack Obama's signature effort to cut power plant carbon emissions could have been written months in advance. Key Republicans and many industrial groups decried it as a job-killing war on coal that would drive up power prices; environmentalists and many Democrats hailed it as a landmark measure making good on Obama's pledge to tackle climate change. Behind the bombast, however, more measured voices found a proposal that was not as severe as critics had feared nor as ambitious as proponents had hoped for.
10) Climate Rule Becomes Campaign Talking Point
from Politico by Darren Goode
EPA’s proposed climate regulation quickly became campaign fodder Monday for some of the year’s most closely watched races, underscoring the peril for some Democratic candidates as the Obama administration takes another step in its so-called “War on Coal.” Democrats facing tough races made varying calculations about whether to attack the rule — and if so, how harshly — or embrace it. Coal-state Democrats like West Virginia Rep. Nick Rahall and Senate candidates Alison Lundergan Grimes and Natalie Tennant lambasted the power plant rule, despite President Barack Obama’s plea Sunday for lawmakers from his party to champion the proposal.
11) EPA Plan Stokes Posturing in Midterm Elections
from Wall Street Journal by Reid J. Epstein and Kristina Peterson
President Barack Obama's plan to reduce carbon emissions is escalating environmental policy fights in energy-rich states, home to many of the marquee races that could determine which party controls the Senate after November's elections. Democrats running in conservative-leaning states in Appalachia and other energy-producing areas quickly distanced themselves from the draft rule released Monday by the Environmental Protection Agency.
12) GOP Targets Vulnerable Dems on EPA rule
from The Hill by Timothy Cama
The National Republican Senatorial Committee (NRSC) is launching a robocall campaign tying vulnerable Democratic incumbents to Monday’s proposed carbon emissions limits for power plants. Starting Tuesday, the group will call swing voters in Louisiana, Colorado, Alaska and Virginia, where the NRSC said incumbents have not done enough to stop the Environmental Protection Agency’s rule. The NRSC is citing estimates from the U.S. Chamber of Commerce that the rules could cost 224,000 jobs a year.
13) 5 Big Obstacles for EPA Rule
from Politico Pro by Erica Martinson
The carbon rule that the EPA issued Monday is President Barack Obama’s last, best hope for a legacy on climate change, and could fulfill environmentalists’ hopes for dramatically lessening the United States’ reliance on coal. But first, the proposed rule has to overcome some obstacles: The courts, the states, opponents in Congress and whoever occupies the White House after 2016.
14) A Top Obama Aide Says History Won’t Applaud the President’s Climate Policy
from Harper's Magazine by Mark Hertsgaard
President Obama has just unveiled a new EPA regulation that would limit the emission of greenhouses gases from the nation’s power plants. This is his most high-profile attempt to combat climate change since taking office. Yet in an article to be published in the July issue of Harper’s Magazine, senior Obama adviser John Podesta predicted that history will judge Obama’s climate-change efforts as sadly insufficient. In a two-hour interview conducted just weeks before his return to Obama’s inner circle as White House Counsel, Podesta told me that the president had been willing to take risks and expend political capital on the climate issue. “But fifty years from now, is that going to seem like enough?” Podesta asked. “I think the answer to that is going to be no.”
15) How the EPA’s Plan Will Impact Electricity, Coal and Natural Gas Markets
from Wall Street Journal by Tim Puko
Investors see coal as a sure loser, even at this early stage. The target of cutting emissions 30% by 2030 from the level set in 2005 would cut coal consumption in the power sector by 267 to 285 million tons between 2013 and 2030, according to FBR Capital Markets...Exposure to coal is the biggest risk for utilities, putting companies like American Electric Power Co. Inc., FirstEnergy Corp. and NRG Energy Inc. at the biggest risk, according to UBS Securities LLC...Gas, with half the emissions of coal, is likely to get the biggest immediate bump, gaining share from coal in the U.S. power mix.
16) A Huge Majority of Americans Support Regulating Carbon from Power Plants
from Washington Post by Scott Clement and Peyton M. Craighill
A lopsided and bipartisan majority of Americans support federal limits on greenhouse gas emissions, according to a new Washington Post-ABC News poll that also finds most are willing to stomach a higher energy bill to pay for it. Fully 70 percent say the federal government should require limits to greenhouse gases from existing power plants, the focus of a new rule announced Monday by the Environmental Protection Agency. An identical 70 percent supports requiring states to limit the amount of greenhouse gas emissions within their borders.
17) Rah-Rah to ‘Nuts’: Five Faces of EPA Emissions Emoting
from Wall Street Journal by Reid J. Epstein
No surprise here: Many Democrats are big fans of the Environmental Protection Agency’s new proposed rules to govern carbon emissions while Republicans are aghast that President Barack Obama’s administration would try to implement curbs on coal-based power plants. House Speaker John Boehner (R., Ohio) called the plan “nuts” while Sen. Bernie Sanders(I., Vt.) said “much more must be done to avoid a planetary crisis.” But there are different flavors of outrage and approval. Here’s a Washington Wire look at five different types of reaction to the EPA rules from Capitol Hill and beyond.
18) Energy Supply Requires $40 Trillion Investment to 2035, IEA Says
from Bloomberg by Grant Smith
Meeting the world’s energy supply needs by 2035 will require $40 trillion of investment, as demand grows and production and processing facilities have to be replaced, the International Energy Agency said. More than half of that amount will be needed to compensate for declining output at mature oil and gas fields, and the remainder on finding new supplies to meet rising demand, the Paris-based agency said in a report today.
19) U.S. Index Futures Little Changed With S&P 500 at Record
U.S. stock-index futures were little changed, after the benchmark Standard & Poor’s 500 Index rose to its third consecutive record, as investors awaited data to gauge the strength of the recovery in the world’s biggest economy...Futures on the S&P 500 expiring this month fell 0.1 percent to 1,919.1 at 6:54 a.m. in New York. The equity gauge rose 0.1 percent yesterday to a record 1,924.97, reversing an earlier loss of as much as 0.4 percent. Dow Jones Industrial Average contracts slipped 16 points, or 0.1 percent, to 16,706 today.
20) IEA Expects World to Rely More on Middle East Oil
from Wall Street Journal by Benoit Faucon
A top energy watchdog said the world will need more Middle Eastern oil in the next decade, as the current U.S. boom wanes. But the International Energy Agency warned that Persian Gulf producers may still fail to fill the gap, risking higher oil prices. In its first update to the agency's energy investment outlook in more than a decade, the IEA--which represents some of the world's largest consumer nations--said it sees "growth in oil demand [becoming] steadily more reliant on investment in the Middle East." Surging American production from tight oil--extracted from shale formations in places like Texas and North Dakota--has led the agency and other oil-market analysts to predict the U.S. could leapfrog the world's largest oil producers, Saudi Arabia and Russia, by 2020.
21) New US EPA Rule May Hit Oil Refiners with Higher Power Costs: Sources
from Platts by Brian Scheid
The Obama administration's latest proposal to reduce carbon dioxide emissions is largely aimed at the more than 600 US coal-fired power plants. But oil refiners should expect higher electricity costs the rule could bring, sources said Monday. The Environmental Protection Agency says the proposal, released Monday morning, would reduce emissions 30% from 2005 levels by 2030. Diana Cronan, a spokeswoman for the American Fuel & Petrochemical Manufacturers, said the proposal is expected to have an indirect effect on refiners, since the new regulations on power plants could increase electricity prices. After crude oil, electricity is the second highest cost refiners face, she said.
22) EPA Rule Gives New Boost to Gas
from Houston Chronicle by Jennifer A. Dlouhy
Natural gas is poised to be one of the biggest winners of the Obama administration’s new plan to slash carbon dioxide emissions, accelerating the electric sector’s move away from coal toward the cleaner-burning power source. Despite a modest climb in coal use for electric generation in 2013, it already has fallen out of favor in the power sector, as utilities increasingly turn to natural gas for its cheaper, lower-emission profile. The Environmental Protection Agency’s proposed standards — requiring states to pare carbon dioxide emissions 30 percent over 2005 levels by 2030 — are likely to hasten that switch.
Utilities and Infrastructure
23) Utilities Size Up Emission Cap for Power Plants
from Wall Street Journal by Amy Harder and Cassandra Sweet
The 645-page proposal is so complex that companies said they were trying to sort out the potential impacts, which are likely to vary widely by region. Coal consumption is highest in the Midwest, the Ohio Valley and the Southeast, including Florida and Georgia, and coal-burning states tend to have lower electricity prices.
American Electric Power Co. of Columbus, Ohio, said it is concerned that in many states where the company operates, carbon cuts could be more than 30% by 2030.
24) New EPA Rules May Speed Up Changes in How You Get Power
from Washington Examiner by Zack Colman
New rules on carbon emissions likely won't cause a change in direction as much as a change in pace for the U.S. electricity system. Regulations proposed Monday by the Environmental Protection Agency could accelerate several trends currently reshaping how the average American household gets its power.
That includes more prominent roles for third-party power and services firms that have chipped away at the traditional dominance of electric utilities. Natural gas, which has eaten away at coal's share of the electricity pie in recent years, will gain a larger market share. The way state regulators design and approve rates also could change.
25) New EPA Carbon Rule Expected to Significantly Erode Coal Demand, Slam Coal Jobs
from SNL by Taylor Kuykendall
The U.S. EPA said its newly proposed rule restricting greenhouse gas emissions at existing power plants, dubbed the Clean Power Plan, will lead to major reductions in coal production and employment.
"EPA projects coal production for use by the power sector, a large component of total coal production, will decline by roughly 25% to 27% in 2020 from base case levels," the rule states. "The use of coal by the power sector will decrease roughly 30% to 32% in 2030." The EPA's base case analysis represents market conditions without the impacts of the proposed Clean Power Plan. The base case forecast does include impacts of EPA regulations and settlements in place through 2013, including the Mercury and Air Toxics Standards and the Clean Air Interstate Rule, but does not include the impacts of the Cross-State Air Pollution Rule, which the U.S. Supreme Court validated in April.
26) Coal Seen Surving as Efficient Power Plants Boost Demand
28) White House Throws Ailing Reactors a Potential Lifeline
from E&E by Hannah Northey
The Obama administration today threw a potential -- and limited -- lifeline to the country's ailing nuclear industry, highlighting the ability of existing reactors to help states curb emissions. U.S. EPA unveiled a proposal for curbing emissions from existing power plants that pointed to the United States' fleet of about 100 reactors as playing a critical role -- alongside ramping up efficiency and shifting to natural gas and other low-carbon alternatives -- in cutting the utility sector's greenhouse gas emissions by 30 percent compared with 2005 levels by 2030. At issue is EPA's finding in the proposal that preventing the closure of "at-risk" existing reactors could avoid up to 300 million metric tons of carbon dioxide during the initial compliance phase of 10 years.
29) Making Solar Panels in China Takes Lots of Dirty Energy
from Bloomberg by Christina Larson
Manufacturing solar panels can be a dirty business, from the mining of raw materials to the chemical-laced process of purifying silicon to the assembly of silicon wafers. Solar energy is a renewable source, of course, but it’s essential to examine the full supply chain to gauge its total environmental impact. One potential concern is the use, containment, and disposal of toxic chemicals. Another is the energy-efficiency of the manufacturing process and the source of the energy used.
OPINIONS, EDITORIALS, PERSPECTIVES
30) Nearing a Climate Legacy
from New York Times by Editorial Board
The greenhouse gas reductions required by the Obama administration’s proposed rule on power plants will not get the world to where it has to go to avert the worst consequences of climate change. But they are likely to be enormously beneficial: good for the nation’s health, good for technological innovation, good for President Obama’s credibility abroad, and, in time, good for the planet and future generations.
31) The EPA’s Emissions Plan Should be Just the Beginning
from Washington Post by Editorial Board
THE OBAMA administration has finally rolled out its centerpiece climate change policy. It is a praiseworthy, solid step, taken in the face of withering opposition. Even so, it is not enough. But the main point is that this plan is a down payment on a comprehensive climate plan, not the most efficient policy nor a suitably ambitious response to climate change. Assuming the proposal survives the inevitable legal onslaught, opponents will no doubt insist that the climate issue is dealt with. Global warming activists got their regulations, so why do any more? A few reasons...
32) Carbon-Income Inequality
from Wall Street Journal
President Obama vowed last year that he wouldn't wait on Congress to bless his anticarbon agenda, and the rule his Environmental Protection Agency proposed on Monday is equal to that promise. The agency is bidding to transform and nationalize U.S. energy the way ObamaCare is doing to medicine, but in this case without even the pretense of democratic consent. The EPA's goal is to cut carbon emissions by 30% by 2030 from near-peak 2005 levels, which will inevitably raise the price of electricity and thus all other goods down the energy chain. The 645-page rule is targeted at the 1,000 or so U.S. fossil fuel power plants, but it more or less orders states to adopt cap and trade or a carbon tax. A Democratic Congress debated and rejected this anticarbon program in 2010, and there isn't a chance it could get 50 Senate votes now.
33) This One Weird Trick Will Help You Cut Carbon Emissions Overnight
from Slate by Eric Holthaus
By choosing a baseline year of 2005 for the target 30 percent reduction, the administration lets industry off relatively easy. As of 2011, the United States had already achieved a 9 percent reduction in economy-wide CO2 emissions since 2005, thanks in large part to the boom in natural gas. Carbon from power plants is down 16 percent, according to the draft EPA rule text. States will get to factor in those gains to their 2030 targets. What’s more, much of the coal that would have been burned domestically since then is just getting shipped overseas. U.S. coal exports have nearly tripled since 2006, adding to the heat-trapping pollution that accelerates global warming, even though domestic numbers show a decline.
RESEARCH REPORTS, ISSUE BRIEFS, CASE STUDIES
34) World Energy Investment Outlook - Special Report
from International Energy Agency
Over the period to 2035, the investment required each year to supply the world’s energy needs rises steadily towards $2 000 billion, while annual spending on energy efficiency increases to $550 billion. This amounts to a cumulative global investment bill of more than $48 trillion, consisting of around $40 trillion in energy supply and the remainder in energy efficiency. The main components of energy supply investment are the $23 trillion in fossil fuel extraction, transport and oil refining; almost $10 trillion in power generation, of which low-carbon technologies – renewables ($6 trillion) and nuclear ($1 trillion)1 – account for almost three-quarters, and a further $7 trillion in transmission and distribution.