
U.S. Environmental Protection Agency Administrator Scott Pruitt holds up a hard hat he was given during a visit to a coal mine in Pennsylvania in 2017. The EPA recently proposed revoking the Clean Power Plan carbon reduction rule and could potentially seek to replace the policy with another plan. |
Replacing the U.S. Environmental Protection Agency's Clean Power Plan with a policy emphasizing efficiency improvements to lower carbon dioxide emissions could still trouble some U.S. coal plants, industry supporters warned.
The EPA is seeking comments on a potential replacement for the Clean Power Plan and in early comments from coal supporters, several expressed concerns that efficiency standards may not be a workable solution. The variability of coal plants and their respective ability to achieve higher heat rates, one measure of plant efficiency, complicates other hurdles to using efficiency standards to consistently reduce emissions, such as the tendency for heat rate improvements to degrade over the life of a plant.
"Importantly, heat rate improvements that result in consistent CO2 reductions at existing coal-fired units remain a challenge," Southern Co. told the EPA.
The challenge for coal generators is compounded by a shift away from using coal assets as a source of baseload power. Baseload generally refers to a large amount of stable power, while peaking power sources fluctuate to match availability or demand.
The idea that baseload power is essential to a resilient grid was part of why some coal and nuclear supporters backed a rejected proposal to offer incentives to certain generators. Recently, the availability of cheap alternatives has pressured coal plants that once ran at much higher capacity factors, even though older coal plants have closed.
"Ten years ago over 90% of the coal fleet was operating in what would be considered baseload operation," wrote General Electric Co., which is involved in multiple aspects of energy generation, including manufacturing products for coal plants. "Today that operation is below 60%, with increasing flexible or seasonal operation of coal plants."
Arizona Electric Power Cooperative Inc. warned in its comments that the heat rate of a coal unit will vary as coal units designed for baseload operation shift toward load-following or peaking service and urged the EPA to take that into account in any efficiency standards. AES Corp., a Virginia-based power generator, recently said it was considering dropping utilization rates of its coal assets to around 20%, essentially using its coal plants as "large batteries" in tandem with fluctuating, but cheap, renewable energy.
"Because renewable generation sources are necessarily variable (the wind does not always blow and the sun does not always shine), fossil-fueled generation must be responsive to changes in demand to take up the slack and will operate at less than optimal efficiency," Texas-based Vistra Energy Corp. wrote in comments, adding that lower marginal costs of renewables are displacing coal generation, which must be increasingly flexible to demand.
Murray Energy Corp. said the company, other U.S. coal producers and power generators could face bankruptcy and other significant economic harm if any new regulation pushes more coal capacity offline. The company called for the agency to abandon the idea of replacing the rule and to do away with the EPA's endangerment finding for carbon dioxide that led to the initial rulemaking.
Ohio Environmental Protection Agency Director Craig Butler told the EPA that much of his state's coal fleet is already well maintained and highly efficient, and any remaining heat rate improvements would likely require "substantial major upgrade projects." FirstEnergy Corp., an Ohio-based power producer, told regulators if an existing plant had potential to improve heat rates, it would have already done so.
"Given the limited number of efficiency projects still available to most plants and the ephemeral nature of their benefits combined with their high cost, establishing a group of efficiency improvement projects as a basis for [best system of emission reduction] would have minimal impact and be cost-prohibitive," FirstEnergy wrote.
The Institute of Clean Air Companies urged capturing low-hanging efficiency upgrades to reduce emissions but said doing so would require the EPA to reconsider its new source review rule, a separate policy that triggers more stringent emissions standards when a power plant undergoes a major upgrade.
While upgrading aging plants presents a challenge, the prospect for new coal plants in the U.S. remains dim.
Longview Power LLC President and CEO Jeffery Keffer has touted his company's Morgantown, W.Va., plant as a model for replacing older units in the current coal fleet with more efficient plants like the Longview coal-fired facility. S&P Global Market Intelligence data shows that plant operated at about an 85.9% capacity factor in 2016. Keffer said newer, efficient plants could readily replace old coal-fired plants and provide more reliability.
"I think with a little rational and realistic view of just what is available in terms of sources of energy from fuels, people will recognize that coal should continue to play a role," Keffer said.
The idea of an "inside the fenceline" approach to replacing the Clean Power Plan, meaning generators would be required only to make changes within the power plant site, was mentioned in the EPA's request for comments and the agency pointed to North Carolina's efforts on that front.
The North Carolina Department of Environmental Quality wrote in to say that heat rate improvements alone would result in minimal reductions in carbon dioxide emissions. It added that most measures used to establish emissions guidelines will likely result in utilities looking to shift to cleaner, more efficient generation sources.
"EPA should now consider generation shifting not just a low-cost means of compliance but the best system of emissions reductions as chosen by the electric power industry," the agency wrote.
