GROWING A CLEAN ENERGY ECONOMY
WHY EMISSIONS REDUCTIONS FROM THE COAL-FIRED POWER SECTOR ARE IMPERATIVE
The American Clean Energy and Security Act (“ACES”) represents an historic opportunity
for our nation to move to clean energy and away from the business-as-usual energy policies
of the past, which are threatening our national security, our economy and our climate.
Coal-fired power plants currently account for more than a third of U.S. carbon emissions.i
It will be impossible to reduce greenhouse gas emissions by 83% by 2050 without reliable
emissions cuts from the coal electric sector. Yet the coal power industry has secured a carve
out from the ACES that will keep the status quo for the next fifteen years at least —
endangering the cap and crowding renewable energy out of the power market.
To avoid this scenario, the climate bill should preserve Clean Air Act authorities or create
equivalent provisions to control global warming pollution from coal plants. Right now, the
Environmental Protection Agency (‘EPA”) has the tools to help clean up our electric sector
in time to meet the ACES’ mid-term reduction goals. But the ACES strips EPA of its Clean
Air Act authority to set basic performance standards and require emissions reductions that
are currently achievable. The bill does not require our existing fleet of dirty coal plants to
meet reasonable emissions standards. With the benefit of low carbon costs and offsets,
these coal plants will be able to keep on running, even ramping up carbon dioxide
emissions, for the foreseeable future. As a result, we will depend on the same fleet for
nearly half of our power in 2030. At that point, it will be difficult, if not impossible, to
achieve the steep emissions cuts we must have to avoid the worst expected effects of global
warming.
At the same time, we will have missed a unique opportunity to aggressively develop
renewable energy resources that can provide cheaper energy in the long run and an
economic boost right away. “Cleantech” companies attracted over 80% of venture capital
investment in 2008 and have outperformed telecommunications, media, and other
For additional information please contact:
Sarah Saylor, ssaylor@earthjustice.org, (202) 667-4500 x 216 or Abigail Dillen, adillen@earthjustice.org, (212) 791-1881 x 221
industries.ii Special favors for coal will slow the growth of this emerging industry and
prevent the United States from becoming a global leader in the new clean energy economy.
Grandfathering Old Coal Plants
Under the law as it currently stands, EPA could enforce requirements under the Clean Air
Act § 165 (NSR) and § 111(d) (NSPS for existing plants) to compel old coal plants to clean
up or retire.iii However, the ACES waives these requirements and replaces them with a
performance standard that applies only to new plants. Thus, existing plants are all
“grandfathered,” meaning that they can run forever — and even expand their capacity —
without installing carbon controls.
Grandfathering has the unintended consequence of extending the life of existing plants
instead of investing in renewables or new coal plants with CCS technology. This same
perverse incentive has driven industry to keep running the oldest and dirtiest coal plants
grandfathered under the Clean Air Act in 1977. While Congress assumed that these old
plants would soon shut down or undertake retrofits, they have managed to avoid clean-up
requirements for over thirty years with devastating pollution consequences.
While new plants permitted after 2009 will be subject to performance standards in the
ACES that will require them to cut emissions of carbon dioxide in half by 2025, the bill
allows the entire fleet of existing plants to keep running without carbon controls. While all
carbon dioxide sources of 25,000 tons per year or more will be subject to the overall
emissions cap created in the ACES, free and cheap allowances and offsets iv will enable
these grandfathered plants to keep operating for the foreseeable future.v EPA projects that
only 6.9% of existing coal generation capacity will be retired by 2025, and most of this
retired capacity will consist of “marginal units with low capacity.”vi By comparison, EPA
projects that 58% of existing oil/gas capacity will be retired by 2025.vii In other words, coal
will not be required to reduce emissions, and other sectors will be forced to pick up the
slack.
Stifling the Growth of a Clean Energy Economy
With all of the incentives that the ACES provides to keep old coal plants running, EPA
projects that we will still rely on coal to supply nearly half of our electricity in 2025.viii So
long as coal dominates the power market, it will crowd out renewable energy. With coal
generation remaining essentially flat through 2025 and electricity demand decreasing as a
result of efficiency gains,ix investment in renewable energy and green jobs will falter. EPA
projects that the ACES will result in 5% less growth in the wind and solar sector through
2025 as compared to baseline.x
There is the potential to jumpstart the economy with a large-scale investment in renewable
energy. If we fail to realize this potential, we face significantly higher electricity costs in the
future. In the absence of a thriving renewable energy industry, EPA projects that
compliance with the cap after 2030 will require massive expansion of nuclear and CCS coal
capacity — the two most expensive energy sources available.xi Not surprisingly, EPA also
projects spikes in consumer energy prices starting around 2030 under the ACES.xii
Putting the Cap at Risk
With old coal plants retaining the lion’s share of the power market, the ACES also puts the
cap in jeopardy. Steady reductions in greenhouse gas emissions from the coal-fired electric
sector are necessary to ensure compliance with the cap’s 2030 and 2050 targets. As a recent
report by the Massachusetts Institute of Technology (“MIT”) makes clear, there is “no
credible pathway toward GHG stabilization targets without emissions reductions from
existing coal plants.”xiii Yet the ACES does not lay out a viable path to achieving those
reductions.
Weak near-term reduction targets invite the coal industry to defer major emissions
reductions until the cap tightens in 2030.xiv Thus, EPA projects that 93% of today’s coal
plants will still provide nearly half (45%) of our electricity in 2025, and only 9% of all coal
plants will be using carbon capture and sequestration (“CCS”) technology to reduce their
greenhouse gas emissions.xv This means that in 2025, we will be dependent on the same
carbon-intensive power infrastructure that we have now, and when the cap tightens in
2030, we will not have the clean energy alternatives in place to make the dramatic
reductions from our electric sector that are required. We know today that we need to
transition away from existing plants to meet the 2030 and 2050 targets. Waiting fifteen
years puts us on a crash course to burst the cap.
Creating a Level Playing Field
Closing the loopholes for coal plants in the ACES will ensure that this historic legislation
delivers on its promise to offer real help in the national effort to fight global warming and
promote clean energy alternatives. One way to do this would be to remove the Clean Air
Act waivers in the bill. At a minimum, old coal plants, whether or not they decide to
expand or rebuild, must be required to clean up on a reasonable and certain timeline,
making sure they keep pace with modern technology. For example, a performance standard
could be written to apply to existing plants on a graduated schedule as they age. And, if
industry decides to invest in new capacity at old plants and increases greenhouse gas
emissions they should be required to meet the same performance standards that are
applicable to new plants.
EIA, Emissions of Greenhouse Gases Report, Report #: DOE/EIA-0573(2007), “Total Emissions” & Table 11 (Dec. 3, 2008),
http://www.eia.doe.gov/oiaf/1605/ggrpt/carbon.html#electric.
ii
The Pew Charitable Trusts, The Clean Energy Economy: Repowering Jobs, Businesses, and Investments Across America (June 2009),
available at http://www.pewglobalwarming.org/cleanenergyeconomy/Clean_Energy_ Economy_Report.pdf.; National Venture
Capital Association, CleanTech Advisory Council, “NVCA Recommendations to Obama Administration and new Congress on
Energy Policy” (Dec. 11, 2008), available at http://www.nvca.org/index.php? option=com_content&view=article&id=90&Itemid=23;.
Michael Burnham, N.Y. Times, June 10, 2009, available at http://www.nytimes.com/gwire/2009/06/10/10greenwire-green-jobs-sectorpoised-for-explosive-growth-63481.html.
iii 42 U.S.C. §§ 7411(d), 7475.
iv EPA Office of Atmospheric Programs, Analysis of the American Clean Energy and Security Act, H.R. 2454 in the 11 th Congress 12 (April
2009) (EPA is projecting carbon emission prices at $13 per ton in 2030 and $27 in 2040. By contrast, the European Union’s carbon
market already prices emissions at over $20 per ton.).
v Id. at 28 (concluding that “lower allowance prices and higher costs to build new technology make existing coal cost-competitive in
the shorter-term”).
vi Id.
vii Id.
viii EPA Report at 26.
ix Id.
x Id. at 27.
xi Id. at 17.
xii Id. at 19.
xiii MIT Energy Initiative, Retrofitting of Coal-Fired Power Plants for CO2 Emissions Reductions 4 (March 23, 2009).
xiv EPA Report at 11.
xv Id. at 26-28.
i
For more information contact: Sarah Saylor, ssaylor@earthjustice.org, (202) 667-4500 x 216 or
Abigail Dillen, adillen@earthjustice.org, (212) 791-1881 x 221