Will we ever have a national energy policy?

Posted on April 18, 2012 by Michael Rodburg

USEPA continues its program of death by a thousand cuts to the coal industry, but does the agency’s actions reflect a coherent national energy policy? On March 27, 2012 the EPA issued its new source performance standards for new power plants limiting CO2 emissions per megawatt-hour of produced electricity to a level about that of state-of-the-art, combined-cycle, gas-fired power plants. Importantly, industry observers claim that the level is far below what the best coal-fired power plants can achieve at least without commercially unavailable and quite expensive carbon capture technology.  While certain exceptions within the rule preclude stating that EPA has banned the use of coal in new plants, it comes pretty close.  That reminds me of an often repeated statement of an old client of mine back in the 1970’s whose recycled solvent fuel business and the EPA just didn’t get along that well—he would remark that “if coal were discovered today, EPA would never allow it to be burned.”  He appears to have been ahead of his time.

Of course one winner in this is natural gas.  With new sources of natural gas from shale and fracking having driven natural gas prices downward relative to coal and oil, old King Coal has been facing a distinct price disadvantage for years.  EPA had further disadvantaged coal and oil as a result of last year’s cross-state air pollution rule.  Last December, EPA’s MATS rule (mercury and air toxics standards) for power plants further adversely affected coal. Is EPA’s latest effort merely the coup de grace?

Don’t get me wrong.  I’m not a coal apologist.  One need not be a fan or sworn enemy of either natural gas or coal, of free markets or environmental regulation, to realize that something is going on that is important to our national energy situation with no one particularly in charge.  After all, coal mining, transportation and existing uses drive tens of thousands of jobs and the economy of such disadvantaged states as West Virginia.  Presidents and presidential candidates have decried our lack of a national energy policy for 30 years with meager results. 

My point is otherwise: What does the overall national interest—economic, energy and environment—have to say about the relative use of coal vs. natural gas vs. petroleum vs. nuclear power?  Should EPA’s rule, based on concerns for global warming and not immediate health and safety, trump everything else?  Should we increase our reliance on natural gas at the expense of coal?  Should we be at the mercy of market forces without regard to our long term, sustainable future?  Should we simply use a bumper sticker (“Drill, baby, drill”) instead of reasoned policy? 

What passes as policy is a series of regulatory silos each with its own raison d’etre—FERC, NRC, EPA, DOE. And, of course, Congress, some of whose members can’t wait to kill alternative energy policies (solar), decry subsidization for renewables while rejecting as nearly immoral attempts to eliminate out of date tax subsidies for oil and gas (Subsidies at today’s prices?  Give me a break!). EPA’s new rule, in isolation from everything else, is merely another example of our lack of a coherent national policy on energy.  It may be a good environmental rule, but is it good for the country?