EPA expands Clean Air Act loopholes for coal plants

Recently, the U.S. Environmental Protection Agency unveiled a proposal to replace the Obama administration’s signature climate initiative, the Clean Power Plan, which aimed to cut planet-warming carbon dioxide emissions from the nation’s power sector. EPA calls its “Affordable Clean Energy” proposal — ACE, for short — “a new rule to reduce greenhouse gas emissions” from coal-fired power plants.

There are just two problems with that characterization: First, ACE won’t do much of anything to reduce coal plants’ CO₂ emissions — in fact, it might increase them. And second, the rule isn’t really new at all — at least, there’s nothing fresh about its most notable component. Instead, it’s a warmed-over policy from the George W. Bush years, served by one of the same attorneys, Bill Wehrum, who cooked it up the first time around.

{mosads}Now, as then, Wehrum’s goal is to extend the already prolonged lives of the nation’s oldest, dirtiest, and deadliest coal plants — some of which have been operation since the 1950s.

For almost 50 years, coal plants have benefited from a design flaw in the landmark Clean Air Act of 1970. That law empowered EPA to set nationwide emission limits for industrial facilities like power plants. But for some of the most ubiquitous and harmful pollutants — like those that form soot and smog — EPA’s limits applied only to newly constructed facilities. Plants that were already in operation when the limits were issued didn’t have to comply — a practice known as “grandfathering.”

Congress didn’t intend for any plant to enjoy a permanent exemption from regulation. Instead, lawmakers assumed that, soon enough, old plants would either retire and make way for new models or undertake upgrades to stay competitive. Under the Clean Air Act, such modifications would render the plants subject to the same pollution standards as a newly built facility.

Unfortunately, congressional leaders failed to appreciate the extent to which grandfathering would distort plant retirement and renovation decisions. Setting strict (and expensive) pollution limits for new sources gave plant owners a perverse incentive to operate old plants for far longer than they otherwise would have. And making modifications a trigger for the application of new-source standards gave owners an equally strong incentive to avoid such upgrades — or, at least, keep them a secret.

By the mid-1980’s, plant owners had learned that, by quietly replacing the right components, they could more than double a plant’s expected 30-year lifespan — at half the cost of constructing a new facility. In one particularly egregious example, Milwaukee’s Port Washington plant undertook a four-year, $87.5 million overhaul under the guise of “routine maintenance.”

The Clinton administration cracked down on life-extension projects like Port Washington’s in the late 1990s. But when the George W. Bush administration took office in 2001, it sharply reversed course. Wehrum, then the lead attorney for EPA’s Office of Air and Radiation, pushed through several changes to the agency’s modification policies that would have insulated all but the most comprehensive renovation projects from triggering new-source pollution control requirements.

Wehrum’s most egregious “reforms” were struck down by a federal court. But, as EPA’s ACE proposal makes clear, Wehrum, who recently returned to EPA to head the Office of Air and Radiation after a decade in private practice, hasn’t lost his affection for old coal plants.

In theory, ACE is a set of “emission guidelines” for plants’ CO₂ emissions, a replacement for the finalized-but-never-implemented Clean Power Plan. In reality, it’s just a subtler version of Wehrum’s earlier attempts to undermine EPA limits on soot- and smog-forming pollution.

ACE purports to reduce coal plants’ greenhouse gas pollution by facilitating “heat rate improvements”—increases in the efficiency with which the plants convert coal to electricity. But while such investments modestly decrease the rate at which a coal plant emits CO₂, they can actually increase the plants’ total emissions. This is because the electric grid runs on a model of economic dispatch, in which the cheapest generators are deployed first and the most expensive last. The more efficient a coal plant becomes, the more often it is likely to be run.

Typically, plants that undertook some of the heat rate improvements contemplated by ACE would become subject to new-source limits on soot and smog-forming pollution. But that’s where Wehrum’s old tricks come into play. As part of the rule, EPA proposes to revise its modification policies in ways that would prevent efficiency-improving projects from triggering any new pollution-control obligations—even if those projects are unrelated to compliance with ACE. In other words, the agency is using its CO₂ guidelines as an excuse to create loopholes in other pollution limits—the same sorts of loopholes that Wehrum unsuccessfully championed in the Bush years.

The result will be increased reliance on the nation’s most outdated and dangerous power sources. Indeed, EPA’s own cost-benefit analysis estimates that replacing the Clean Power Plan with ACE will, in 2035, increase coal plants’ share of the electricity market by up to 13 percent and, in turn, cause up to 1,400 additional premature deaths from pollution exposure.

As others have pointed out, ACE won’t save the coal industry, which will continue to be buffeted by market forces beyond EPA’s control (like cheap natural gas and renewables). But if it becomes law, ACE will spare some individual coal plants, at least for a while. And by doing so, it will kill people.

 Jack Lienke is the regulatory policy director at the Institute for Policy Integrity. Richard L. Revesz is a professor and dean emeritus at the New York University School of Law. They are co-authors of “Struggling for Air: Power Plants and the ‘War on Coal.’”