EPA’s Clean Power Plan replacement unlikely to have much impact on clean energy

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No one should be surprised that Andrew Wheeler, the former coal lobbyist who U.S. President Donald Trump put in charge of the Environmental Protection Agency (EPA), has issued what may be the weakest possible solution to comply with the U.S. Supreme Court’s 2o17 ruling that EPA must regulate greenhouse gas emissions.

Unlike the Obama Administration’s Clean Power Plan (CPP), the “Affordable Clean Energy” (ACE) plan issued this morning will not compel states to switch from coal-fired generation to other resources including national gas and renewable energy. Instead, it calls for changes to coal-fired power plants including operating them in a more efficient manner and potentially upgrading equipment.

However it is questionable whether or not the plan will even do that, as the policy turns the onus to act on states, which have three years to issue plans to comply with ACE. Given the political climate at the state level in coal-producing states like West Virginia, Ohio and Wyoming, it is unlikely that they will offer robust measures.

But despite the overall weakness of this plan, it is also unclear if this new policy will have a significant impact on renewable energy deployment or even wholesale power markets, for several reasons.

It was not clear that Clean Power Plan (CPP) was going to be a game-changer for the U.S. electricity sector. While opinions varied regarding its overall expected impact, on analyst who pv magazine spoke with described the policy as “trend-following”, and the delaying of the first compliance period to 2022 inherently undermined CPP’s ambition.

Meanwhile, clean energy has been moving forward in the market.

“All the trends are that we are seeing new demand for and investment in renewable energy, energy storage and distributed energy resources,” Advanced Energy Economy’s General Counsel for Regulatory Affairs Jeff Dennis told pv magazine. “One of the flaws in this rule is that it tends to ignore those trends

 

Stalling the end of coal

The U.S. coal sector is dying. 37 GW of coal plants were taken offline between 2010 and the end of 2015, and new ones are not being built. The boom in low-cost natural gas extracted from shale using hydraulic fracturing was killing the nation’s aging coal fleet well before more recent declines in price and increased deployment of solar and wind.

More than anything, ACE appears to be a stalling tactic by President Trump’s EPA, which is tasked with complying with a court ruling that runs directly counter to its interest in propping up the coal industry and lack of interest in taking action to reduce greenhouse gas emissions.

“It does stretch out that timeline with how there has to be compliance,” notes AEE’s Jeff Dennis.

But while this recent action may help to slow the decline of coal, it cannot on its own reverse the downward spiral that the coal industry has found itself in. In an June analysis, Rhodium Group predicted that low cost renewables, energy storage and gas will replace 80 GW of coal capacity by 2025.

This does not mean that there will not be impacts. “I think at bottom what it is going to do is to direct new market uncertainty,” declares Dennis of Advanced Energy Economy.

But the lack of a direct hit on clean energy does not mean that the rule is popular in the clean energy industries. “We don’t need to contrive out-of-market solutions to keep expensive and polluting power plants afloat in order to provide Americans the electricity they need,” reads a portion of a statement by Solar Energy Industries Association (SEIA) CEO Abigail Ross Hopper.

Nor was the decreased ambition to take on climate change lost on those parts of the nation that are actively transforming their energy systems to reduce greenhouse gas emissions.