Thought Piece by Stephen Heins


[Gina McCarthy has announced that the EPA has effectively stopped working on a cap and trade scheme and their other ambitious plans related to the Clean Power Plan (CPP), Waters of the United States (WOTUS), etc. to prepare for the orderly transfer of power. For the record, it is safe to assume that energy, environmental safety, wireless broadband and the electrical grid will continue to play important roles in America’s future.  Steve]

The Transformers

Stephen D. Eule

We’ve been telling readers for some time how the Environmental Protection Agency (EPA) now argues that its once “transformative” Clean Power Plan (CPP)—upon greater reflection and a weak legal justification—really isn’t that “transformative” after all.

That’s what the agency recently tried to get away with in arguments before the DC Circuit in a legal challenge brought by the Chamber and a host of other businesses groups and states. EPA now claims that most of what the CPP is supposed to accomplish was going to happen anyway. So what’s the big deal?

One of many questionable claims EPA’s made is that CPP will not lead to a significant number of coal plant closures because most of these closures would happen anyway in 2016, years before CPP’s first compliance period starts in 2022.

In a series of wonky “EPA’s Fuzzy Math” blogs, the Energy Institute was the first to document how drastically EPA had changed its baseline projection between the proposed CPP rule and the final CPP rule—changes that pushed a lot of the “transforming” into the “no CPP” base case, making the rule seem less costly than it actually is.

One of the things we highlighted in a blog entitled “EPA’s New and Improved Future” was how completely unrealistic EPA’s estimate of coal plant closures was in the baseline estimate it prepared for the final rule.

At that time, the Energy Information Administration (EIA) was reporting there was 291 GW of coal-fired generating capacity in service as of May 2015. We noted between that date and the end of 2016, EPA’s revised base case “. . . expects coal-fired capacity to plummet an astonishing 78 GW [to 214 GW]. Put another way, EPA now believes that 27% of the coal fleet in existence three months ago [in May 2015] will be history next year, and all without CPP. Talk about wishful thinking!”

Wishful thinking it turned out to be.

We now learn from Inside EPA that that the agency has finally faced reality. In a recent modeling run  analysis done supporting the October release of its Cross-State Air Pollution Rule Update, EPA now estimates that coal plant capacity at the end of 2016 will be about 268 GW, not the 214 GW it was estimating in its CPP final rule. As the nearby chart shows, that’s a huge difference much more in line with EIA’s coal generating capacity figures.

Of the 78 GW EPA said in 2015 would retire by the end of 2016, only 23 GW actually did, an overestimation of 69%! With these short-term projections failing so miserably, imagine how far off EPA’s equally rosy long-term projections will be, and more importantly, how much more expensive and disruptive those failed projections will make CPP compliance if the rule is upheld and implemented.

It probably won’t surprise you to learn that EPA did not draw to the attention of the DC Circuit court this remarkable change of opinion concerning coal plant retirements, either in its arguments before the court or subsequently.

But the National Mining Association did. Its lawyers sent a stinging letter to the court saying: “Petitioners briefs showed EPA far underestimated the effects of the Clean Power Plan (CPP) by exaggerating the amount of coal generation that will retire even without the rule. Specifically, EPA’s ‘base case’ (the future without the rule) indicated that, in 2016, 20% of U.S. coal capacity would simply disappear even if the rule were not adopted, reducing generation to 214 gigawatts . . . EPA has now tacitly conceded Petitioners point . . .”

They go on to state the obvious: “EPA’s latest modeling confirms its repeated statements that the rule will transform the power sector.” And as we’ve shown elsewhere, it’ll cost a bundle, too.

We told you so, and we don’t mind saying we did.