The Obama administration has now released its long-awaited plan for pointing the electric power industry towards less reliance on coal-fired electric generation.
The Energy Times reached out to AEP, one of the nation’s leading coal-powered utilities, and Howard Herzog, one of the nation’s pre-eminent coal generation experts,to get AEP's position statement and Herzog's personal views. Herzog, senior research engineer with the MIT Energy Initiative, graciously responded.
AEP has long supported and taken action to reduce our greenhouse gas emissions. We have cut CO2 emissions from our power plants by more than 15 percent annually since 2005, and we will achieve additional reductions in the years ahead as our generation mix changes. By the end of 2016, we’ll have retired or refueled 28 coal-fueled generating units totaling 7,900 megawatts.
We are still reviewing the 1,600 page rule, so it is too soon to say if it’s reasonable. We provided extensive input to U.S. EPA, and we hope they listened to our concerns about grid reliability and electricity costs. It is important to remember that the true impact of the Clean Power Plan on the cost of electricity and the ability to maintain a reliable power supply won’t be clear until we have implementation plans that detail how the states propose to achieve CO2 reductions. That process will take several years.
The initial compliance target has been extended to 2022. That’s positive because it provides more time to evaluate how the individual state plans will collectively impact the reliability of the transmission grid. But simply moving the date forward a few years won’t be enough to address the negative reliability impacts if the initial reduction targets are still too stringent. We are still evaluating the state-specific reduction targets to determine how difficult they would be to achieve for the states where we operate.
Any plan to effectively reduce greenhouse gas emissions must be accompanied by a thorough assessment of the impact on the electric grid, allow adequate time for implementation, respect the authority of states and other federal agencies, and preserve a balanced, diverse mix of fuels for electricity generation. We will remain engaged in the process and intend to continue pursing reasonable ways to reduce CO2 emissions that preserve reliable and affordable electricity service for our customers.
I have mixed emotions about the just released Clean Power Plan. I am happy that the US is finally taking significant action to address climate change. However, I am fearful that relying solely on the Clean Air Act, which gives authority for this action, is a bad long-term strategy. I do not see how it gets us to our ultimate goal of reducing greenhouse gas emissions by 80 percent or so by 2050. While there is strong support for renewable technology, incentives for other low carbon technologies like nuclear and carbon capture and storage are nowhere near sufficient for their long-term development. Without a broad portfolio of low carbon technologies available, as we ratchet down the emissions limits, costs will eventually become politically unacceptable.
Just as there is an overwhelming consensus of climate scientists that say climate change is “real”, there is an overwhelming consensus of energy economists that say market mechanisms, specifically putting a price on carbon either through a tax or a cap, is the most efficient and cost-effective way to deal with climate change. So if the ultimate result of the Clean Power Plan is to spur Congress to pass comprehensive climate policy that relies on market mechanisms, it will be a good thing. On the other hand, if this just leads to more command and control type regulations, we will end up paying much higher costs for each ton of emissions reduction, as well as falling far short of our ultimate emissions reduction goals.