Policy, Diversity, and the Future of Coal in America

Policy, Diversity, and the Future of Coal in America

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On April 29, 2014, the Supreme Court upheld the EPA’s Cross-State Air Pollution Rule (or CSAPR) as “a sensible accommodation [and] a [permissible] exercise of executive authority.” Essentially, the rule addresses the issue of “downwind” states not necessarily being responsible for the emissions damage caused in the state because of interstate air pollution created by neighboring “upwind” states. The rule sets standards for upwind states.  Because the rule is yet another regulatory move (see EPA greenhouse gas regulations) adding enormous costs to the operations and construction of coal power plants, the ruling aides this administration’s goal of pricing coal out of the U.S. electric power portfolio–a large blow to current coal production and future technological advances for America’s most abundant energy resource. Read the Supreme Court’s decision here.

Should we be concerned?  At a minimum, we should understand trends in U.S. electric power generation and the scale of global energy demand growth over the next several decades.  Even with gains in energy efficiency, the U.S.’s growing population and economy, along with depreciating power plants, demands more electric power.  Since 1990, approximately 75% of all new U.S. electric power generation capacity is natural gas powered.  Though the shale and natural gas boom has been an economic savior, diversity is wise in all forms of investment—including the future of America’s energy.  Experts predict that, without technological advancements and upkeep, the majority of coal and nuclear plants will go offline by 2036.

Natural gas is a versatile fuel source widely used in manufacturing, for residential and business heating, for electric power generation, and as a transportation fuel source.  By discouraging advancements in cleaner coal technology and a new generation of nuclear power plants, and by pushing the industry to increased natural gas reliance, the economy is heavily leveraged on a single fuel source.  Because of the long-term nature of electric power investments, policymakers should consider whether U.S. policies (whether intentional or unintentional) are discouraging investment in coal and nuclear power, as well as the long-term risks associated with this trend.

Policy decisions such as CSAPR have a major impact on the future of energy investments. Encouraging clean technology innovations while neglecting coal and nuclear innovation ignores the full scope of America’s resources and common economic sense.  Government should focus on encouraging clean technology in all forms, especially those that are most cost-effective for decades to come.

Now, the Obama Administration is expected to soon announce options (i.e. requirements) for states to regulate greenhouse gases.  Like CSAPR, this will also be a long-litigated program with the ultimate effect of increasing energy costs and limiting energy options in the U.S.  Energy policy in the U.S. should encourage innovation and energy abundance, not scarGRAPH2city.

 

 

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