On June 2, the EPA announced new regulations aimed at CO2 emissions from existing power plants.  In this unprecedented proposal, the EPA is attempting to use authority under the 111(d) section of the Clean Air Act to set a different emissions target and standard for each state.  Although much of the conversation questions whether or not the EPA can legally set these standards, the fact remains that, if passed, they would greatly affect availability and prices of all forms of energy for industrial and residential consumers alike.  The Mississippi Energy Institute is researching this matter and will keep you briefed on updates as they occur.  In the meantime, as this is proposed and then argued in the Courts, more uncertainty is added to the future of the U.S. economy, and investment and growth will likely be deterred. Read more about the EPA’s proposal here.

While the Obama Administration’s move to cut coal emissions still faces plenty of legal and political challenges, the real test will be whether the new standards have any effect on the rest of the world.Five countries dominate the global consumption of coal. China, the U.S., India, Russia and Japan are the world’s biggest coal burners.

The U.S. is the second largest consumer of coal in the world today, but China’s consumption dwarfs all others. Last year, while the U.S. consumed 925 million tons of coal, China is estimated to have consumed 4 billion tons. Each year China consumes almost as much coal as the rest of the world combined.  If the U.S. completely shut down the U.S. coal fleet tomorrow, the impact on global carbon emissions would be less than one percent.

Mississippi contains 5 billion tons of coal reserves, all in the form of lignite (a soft, brown, low quality coal with relatively high moisture content). This equates to about 13% of total U.S. lignite reserves. Lignite has the lowest energy content out of the four main types of coal, but it has low sulfur, carbon, and nitrogen content. The use of lignite in Mississippi provides a local fuel for use in electricity and syngas generation (which can also be a process for producing various chemicals) and helps to diversify the state’s energy portfolio leading to increased reliability of supply and insulation against price swings in individual fuels.