Photographer: Ty Wright/Bloomberg

Coal argues EPA is hiding impact of carbon rule

November 2, 2016 Mark Drajem  & Ari Natter

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Just last week API was arguing that the market on its own would prompt natural gas to supplant coal, allowing states to meet their emission reductions required under the Clean Power Plan. It all sounded so easy. (Read more about it here.)

But for the fuel to be supplanted, coal, the scenario isn’t quite so rosy.

The National Mining Association submitted a supplemental legal filing to the D.C. Circuit, arguing that EPA’s modeling initially showed that 214 GW of coal capacity would be in place this year. In its update of the Cross-State rule, published last week, EPA is now showing that there is 268 GW of coal generation, in line with the EIA’s estimate, it said. “EPA’s latest modeling confirms its repeated statements that the rule will transform the power sector,” Peter Glaser, a lawyer for the National Mining Association, said in the supplemental brief.

Why does this matter?

Because more coal capacity today means there will be steeper cuts needed to reach the mandated emission reductions. Or, at least, that’s the theory. But, critics will see a few counterpoints: First, the EPA report that NMA references shows a drop in coal capacity to 209 GW by 2020. Second, capacity is not the same as use: There may be greater capacity than anticipated at this time, but emissions from coal plants — i.e. the use of those coal plants — has been falling.

Math is Hard

The Environmental Protection Agency isn’t sure how long it will take to re-evaluate the employment impact of its air pollution rules in line with a recent federal court’s order, but it could take more than two years, the agency said.

The agency will seek advice from its Science Advisory Board to determine the best approach, a process that is expected to take more than a year, the EPA told the U.S. District Court for the Northern District of West Virginia in a brief responding to an Oct. 17 order, Rachel Leven reports. EPA was ordered to evaluate the job impacts of its rules aimed at coal-fired power plants.

Still More Changin’

AEP posted its first loss in 10 years as it wrote down $2.3 billion mostly because its coal plants will keep losing more unless they’re able to charge more. But there are areas of growth: AEP plans to invest approximately $9 billion in its transmission business over the next three years, more than half of the company’s total capital investment forecast, it said in a statement. It will invest another $1 billion in renewable energy projects over the next three years.

Florida Follow Up

“Polls are tightening” — and it’s not just in the presidential race. Florida’s solar amendment had support of 84% of voters a month ago, but that has dropped to 60% this week as newspapers across the state have come out against the measure, according to a Saint Leo University poll. The initiative needs 60% of the vote to pass. (For the full story from Ari Natter and Mark Chediak, click here.)

The Solar Energy Industries Association says their own polling data shows support for the amendment has declined by more than 20 percentage points, with 51% supporting it, and 38% opposed.

Also Today

  • SunPower Corp., the second-largest U.S. solar manufacturer, won federal approval to sell a 50-MW solar farm in Nevada to Avangrid Inc.
  • Ercot, Texas’ electricity regulator, forecasts a winter peak demand of more than 58,000 MW, which would surpass the all-time winter peak of 57,265 MW set Feb. 10, 2011.
  • See below where we go In Depth on Jay Faison and, also, on 2017: the Year of the Pipeline.
  • MISO reworked its auction rules and will now set capacity auctions three years forward instead of the existing two months, according to a regulatory filing.


“I believe a wise political leader should take policy stances that conform with global trends,” Xie Zhenhua, China’s top climate negotiator, said of Donald Trump’s pledge to back out of a global climate pact. Reuters reported the statement, calling it a rare comment from the Chinese leadership about a foreign election.

Tweet of the Day

.@EricHolthaus Read this on WA state’s carbon tax proposal, I-732, and then, knowing it’s not perfect, vote yes anyway. #YesOn732
.@JonathanChait Sorry, I only vote for policies that fix everything.

Chart of the Day

Gasoline in New York jumped the most in almost eight years, and its premium to crude prices soared 60 percent after an explosion and fire in Alabama shut the largest fuel pipeline in the U.S., killing one person and injuring more. Traders rushed to book cargoes from Europe.

The Year of the Pipeline

Can we all agree right now that 2017 will be The Year of the Pipeline? Monday’s fatal blast in Alabama is just one sad sign that pipelines need attention.

The Colonial Pipeline, the nation’s biggest fuel pipeline, said that its gasoline line would resume operations Saturday. Colonial was forced to shut its two main pipelines after a crew working near the site of a prior spill hit the line with construction equipment, setting off an explosion and fire. One person was killed and five others sent to hospitals. It’s the second major disruption on the pipeline in two months, Laura Blewitt reports. Alabama declared a state of emergency.

Colonial — and to a lesser extent the smaller Plantation Pipe Line Co. — play a key role in supplying the U.S. Southeast because there aren’t any refineries between Alabama and Pennsylvania that produce substantial quantities of transportation fuels. The region is supplied primarily by pipelines from refineries along the U.S. Gulf Coast, according to the U.S. Energy Information Administration.

Meanwhile, the bottlenecks in natural gas pipelines are causing headaches as well: Natural gas for heating may surge to $20 to $25 per MMBtu in New England for some of the coldest days this winter, the highest in the world, as pipeline bottlenecks limit supplies during frigid weather, Naureen Malik reported.

New England will also need to keep importing LNG this winter to meet demand. About three to four tankers per month will dock at Engie SA’s Everett terminal near Boston, Madeline Jowdy, senior director of global gas and LNG at Pira Energy Group in New York, said Oct. 28.

So, what’s to be done about it?

— Clinton has a massive infrastructure plan, but (as the Wikileaks e-mails show) pipelines are a divisive issue for her supporters. Unions love them; greens hate them. Anything that would make it easier to get pipelines could get ugly.

— Trump adviser Peter Navarro released a plan that would provide tax credits to pipelines, railroads and other large-scale projects to cover much of the equity required. This
would lower the cost of financing the project by 18% to 20%, he wrote.

We asked some of our favorite D.C. advocacy groups to find out what they think helps remedy these problems. Maybe we missed it, but it doesn’t sound like groups have set, off-the-shelf ideas ready to go. Federal funding of pipelines or natural gas infrastructure doesn’t seem like a priority; financing isn’t a huge barrier, either, we are told. There could be an effort to shorten reviews by FERC. The Heritage Foundation issued this, yesterday:

“Streamlining the environmental review and permitting processes for new pipelines and grid investments is a welcome step for managing new supplies.”

The Political Education of Jay Faison

Zachary Mider featured the tech entrepreneur turned GOP clean-energy advocate in this week’s Bloomberg Businessweek. Faison initially wanted Republican lawmakers to advocate for a price on carbon. It didn’t take, and the group Faison set up, ClearPath, has changed course:

He hoped that, by dedicating his time and $175 million to the cause, he could show Republicans they had a role to play in saving the planet. Others have attempted this mission, but few have been as determined as Faison—and no one has invested as much money. Yet he’s encountered such indifference and hostility that he’s been forced to scale back his ambitions and shift sharply to the right. It’s been a lesson in what happens in politics when the irresistible force of cash meets the immovable object of dogma….

Last fall and winter, Faison brought in a new group of advisers and overhauled his platform in a way that burnished his conservative bona fides. Where once he’d floated the idea of a market mechanism to discourage emissions, in consultation with a group of carbon-tax advocates, he now dropped such talk and scrubbed the advocates’ names from ClearPath’s website, along with virtually any mention of wind or solar power. The new platform proposes cutting red tape on nuclear and hydropower development, expanding the use of natural gas, and encouraging research into carbon-capture technology that might one day make “clean coal” a reality. Around the office in Charlotte, they called it ClearPath 2.0.

One thing Faison is excited about is this: Toshiba has shipped a 25 MW turbine to a plant in Texas. It says that it will use a combination of natural gas, oxygen and high-pressure CO2 to generate electricity, and then could take the CO2 that remains to either get fed back into the turbine, or pumped underground for enhanced oil recovery or storage. Toshiba is working with Exelon on this project, and says it aims to get the plant operating next year.

Races to Watch

Fla. 13: Rep. David Jolly (R) v. former Gov. Charlie Crist (D)

Former Florida Gov. Charlie Crist, now a Democrat, has sought to tar Republican incumbent as a proponent of expanding drilling off the coast of the Sunshine State.

The accusation earned a “Mostly False” from the Tampa Bay Times, but that hasn’t stopped groups such as the League of Conservation Voters from throwing $200,000 into the race to help defeat Jolly.

Jolly for his part is has received over $10,000 from Jay Faison’s ClearPath Foundation.

“Protecting our resources is not just a matter of preserving the natural beauty of our state, but it is essential to maintaining Florida’s reputation as the top tourist destination that our economy depends on,” Jolly said on his campaign website.

Cook Political Report: Leans Democratic
Sabato’s Crystal Ball: Leans Democratic
Rothenberg & Gonzales Political Report: Lean Democrat

Outside the Beltway

TransCanada Reaches $3 Billion Deal to Sell Power Business
TransCanada Corp. is selling its U.S. Northeast power plants and marketing business for $3.7 billion in deals that’ll help pay for its purchase of Columbia Pipeline Group Inc. The company is selling part of the business to Helix Generation LLC, an affiliate of LS Power Equity Advisors, for $2.2 billion and another part to Great River Hydro LLC, an affiliate of ArcLight Capital Partners LLC for $1.07 billion.

Brazil Auctions Power-Line Concessions, Mostly for Wind Power
Brazil auctioned concessions to install 21 lots of transmission lines out of 24 lots offered, most of which will deliver energy from future wind farms to the national grid, according to Aneel, Brazil’s electricity regulator.

AEP’s First Loss in a Decade Is the Latest Sign of Coal’s Demise
Coal just dealt American Electric Power Co. its first quarterly loss in a decade.
AEP Chief Executive Officer Nick Akins said Tuesday that the utility — and one of the biggest coal burners in the U.S. — “took a complete bath” on investments in its Ohio power plants in the third quarter. It reported a loss of $765.8 million after writing down $2.3 billion, mostly because of coal plants that’ll keep losing money unless they’re able to charge more.

China Seeks to Export Power Amid Signs It Built Too Many Plants
China is seeking to build up export markets for its power amid signs the nation has invested too much in new generation plants. State Grid Corp. of China, which runs the majority of the nation’s electricity distribution network, is considering how to build links to India, South Korea, Japan and Southeast Asia, a move that would require billions of dollars of investment in long-distance, high-voltage power lines.