Rick Honaker: Overregulation of power plants hurts economy

February 5, 2014 

Rick Honaker is professor and chair of the University of Kentucky's Department of Mining Engineering.

The problem of overregulation of coal-fueled power plants, which does the most harm to people least able to afford high energy costs, has grown as a political issue.

Coal accounts for 40 percent of the nation's electricity production, and its use keeps electricity affordable. Yet the Environmental Protection Agency has imposed a greenhouse-gas regulation on new coal plants that's impossible to meet with currently available technology.

If allowed to stand, the New Source Performance Standard, as it is known, would essentially ban construction of any coal plants, even those using the most advanced technologies such as ultra-supercritical pulverized coal processes or integrated gasification combined cycle.

The implications of having to comply with this anti-coal rule are enormous.

It puts at risk a half-million jobs in coal mining and construction if new plants can't be built. It means the nation's GDP will lose billions of dollars.

It will be a severe blow to state and local governments that depend on coal taxes for a sizable portion of their tax revenue. And the economic damage will be most severe in states with the highest share of manufacturing, since those are the states where coal use is greatest.

Although the regulation by itself is bad enough, its promulgation poses a far larger question. With coal plants being subjected to a half-dozen or more environmental regulations now being enforced from Washington, Congress needs to address what to do about the astronomical cost of compliance.

Among the rules affecting coal-fired power plants are those requiring emission controls for mercury and a cross-state air pollution rule requiring reductions in emissions of sulfur dioxide and nitrogen oxides in the eastern United States.

The overriding issue raises two important questions: Wouldn't people be better off if the government focused on other non-regulatory ways to achieve its environmental goals? And wouldn't the environment itself be better off?

Consider the greenhouse-gas regulation. If instead of overlooking advanced technologies that are proven and already available, the EPA were to allow their use, coal's carbon footprint would be reduced while protecting electricity consumers.

That's the case with ultra-supercritical pulverized coal plants that can improve efficiency by 50 percent compared to conventional coal plants, and therefore burn 50 percent less coal and reduce carbon dioxide emissions by 50 percent.

An ultra-supercritical plant began operating in Arkansas in 2011. Several more units are producing electricity in Europe.

Another worthwhile coal technology is integrated gasification combined cycle, which gasifies coal and burns the synthetic gas in a combustion turbine. IGCC plants are operating in Florida and Indiana.

It's time for a national debate on the cost of environmental regulation. A good place to begin is with its impact on consumers who will incur much higher electricity bills once the greenhouse-gas regulation takes effect. EPA is already preparing to issue a separate greenhouse rule for the nation's operating coal plants.

That utilities may be forced to shift to natural gas, which has a history of price volatility, speaks volumes about the seriousness of the issue, and the concerns about the ever-increasing cost of environmental protection.

Rick Honaker is professor and chair of the University of Kentucky's Department of Mining Engineering.

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