Wheeler’s “Dirty Power Plan” Is Wrong for the Midwest
Newly-anointed Environmental Protection Agency head Andrew Wheeler proposed last week a long-rumored rule replacing—and thoroughly gutting—the Clean Power Plan, the Obama EPA’s landmark climate initiative that set the first-ever limits on dangerous carbon pollution from power plants.
The replacement, perplexingly being marketed as the “Affordable Clean Energy Plan” or “ACE” (spoiler alert: it is neither affordable, nor promotes clean energy), unfortunately takes a leap backward. This worse-than-nothing proposal props up coal-fired power plants and upends this Administration’s legal and moral obligation to regulate climate change-fueling carbon pollution and protect public health and the environment.
As NRDC attorney David Doniger aptly put it, it’s more akin to a “Dirty Power Plan.”
But what does this all mean for the Midwest?
This region is one of the most carbon-intensive in the country, with a long and storied history of reliance on coal-fired power. But even so, emissions from the power sector here in the Midwest (and across the country) have been in freefall for years. This is because the industry is transforming, shifting away from the high-pollution, increasingly expensive coal plants of the last century toward a clean energy sector.
We’re doing this faster and cheaper than predicted. And we show no signs of turning back.
The question is, just how much damage will this Administration and Wheeler’s Dirty Power Plan do in the meantime as the Midwest continues to strive for a clean, safe and prosperous energy future?
Midwest States Are Taking the Lead on Clean Energy
The Midwest is the focal point of a profound shift in how the power sector generates electricity. Coal-fired power once dominated the region’s electric generation mix, but coal (and for that matter—nuclear) can no longer compete in today’s landscape of flattening demand, rock-bottom natural gas prices, and abundant (and increasingly cheap) wind, solar and energy efficiency.
One of the many fascinating elements of this shift, though, is just how rapidly renewable energy has dropped in price, beating industry expectations. It turns out that the carbon emissions reductions proposed in the Clean Power Plan three years ago were based largely on the predicted shift toward clean energy and are now sluggish compared with what we actually see happening in the power sector.
To put this in context, the Clean Power Plan called for a 32 percent CO2 reduction from 2005 levels by 2030. NRDC analysists have crunched the numbers and discovered that by the end of 2017—13 years ahead of the deadline—emissions were already down 28 percent.
Similar trends are occurring in the Midwest.
Illinois and Ohio are already years ahead of the 2030 Clean Power Plan targets, with Illinois pulling ahead of the pack at 86% of the way there as of the end of 2017. Michigan and Missouri are both on track to meet their 2030 targets, with announced coal retirements by Detroit Edison, Consumers Energy, Kansas City Power & Light, and Ameren Missouri expected to close the gap.
What this points to is that any revisions to the Clean Power Plan targets should be focused on making them stronger, not weaker (turns out policymaking is not this Administration’s forte, but I digress…). Note that if the Clean Power Plan were updated today, based on current renewables trends and cost data, we’d find even deeper cuts possible—considerably strengthening that original goal to 55 percent below 2005 levels.
But getting back to the Midwest, the precipitous drop in emissions here is hardly surprising when you look across the region.
Clean energy success stories abound, with renewable and energy efficiency companies throwing open their doors to applicants, corporate investment in clean energy skyrocketing, and state and local officials doubling down on policies to further solidify the region’s focus on clean energy as an economic driver. Even in the heart of coal country, market trends and consumer demand are motivating electric utility companies to ditch coal for renewables and other lower-emission resources.
Indeed, Environmental Entrepreneurs confirmed this month that the clean energy sector is a major employer in the region, with nearly 715,000 Midwesterners employed in renewable energy and energy efficiency jobs.
Examples of the power of state, local, and corporate leadership are prevalent:
Illinois enacted the Future Energy Jobs Act in late 2016, a sweeping clean energy bill—signed by a Republican Governor, no less—that is transforming the state landscape with a nation-leading energy efficiency program and an ambitious focus on wind and solar power investments (up to $15 billion in projected development) to replace the state’s shrinking coal fleet. Illinois has also seen one of the fastest rates of clean energy job growth in the country. In 2017, Illinois experienced over a 7% increase in renewable energy jobs—the largest out of any Midwest state. That translates to over a thousand new jobs in one year.
In Michigan, Consumers Energy and DTE Energy—Michigan’s largest utilities—have pledged to reduce carbon emissions in their territories 80 percent by 2040 and 2050 respectively. For Consumers Energy, that draw-down of emissions will be accompanied by thousands of MWs of new wind and solar generation in the next 15 to 20 years. The utility is setting its sights on over 1/3 of its energy being generated from renewables by 2030, nearly quadrupling current renewable energy generation in its territory.
In Ohio, Republican Governor Kasich has defended his predecessor’s renewable energy and energy efficiency law, recognizing the importance of state policy to ensuring a strong, jobs-friendly business climate. Large multi-national corporations looking to invest in the Midwest agree, with announcement after announcement of new corporate-led clean energy projects; from Facebook’s plan to build a $750 million data center in central Ohio, powered exclusively by renewables; to General Motors’ announcement to power four of its Ohio plants with 100% clean energy by the end of 2018.
And in Missouri, that state’s largest utility, Ameren, has committed to cutting carbon emissions from its power fleet 80 percent by 2050. Projects have also been greenlit to build the state’s largest wind farm, to generate green tariffs that incent corporate investment in renewables, and grid modernization to support the coming wave of clean energy onto the power system.
But unfortunately, this proposed “Dirty Power Plan” does nothing to accelerate or even recognize the direction that the Midwest’s power sector is headed. Rather, the replacement plan reads more like an industry wishlist than a serious attempt at the kind of federal leadership that is so desperately needed to ensure this fast-growing economic sector in the Midwest is here to stay.
It’s a lost opportunity, and a cynical one at that.
The Dirty Power Plan Could Keep Midwest Plants Online and Impact Air Quality
To be clear, market forces at the state and regional level and technological advances in renewable energy and efficiency have driven today’s lower-carbon reality in the Midwest (and the nation).
But when the final Clean Power Plan was released in 2015, it was nonetheless an opportunity for this region to leverage federal leadership to support and accelerate the state-level shift from fossil fuels to clean energy. Unfortunately, the replacement released this week pulls the rug out from under that opportunity (see NRDC expert blogs dissecting the plan).
Make no mistake, this replacement serves a single purpose—as a shell for the Administration’s relentless attempts to bail out the failing coal industry. It is the yin to the yang of the Trump administration’s months-long efforts to use the Department of Energy and the authority of the Federal Energy Regulatory Commission (FERC) to subsidize and rig the market to prop up dying coal-fired power plants.
How this will play out in the Midwest is still unfolding as our team digs into the ACE’s murky depths.*** But one key piece is emerging—it could ensure that some of our region’s oldest and dirtiest coal plants operate more, stay online further into the future, and exacerbate poor air quality. As if that weren’t enough, adhering to the ACE’s terms and going the dirty route may actually put more costs on consumers’ shoulders than we would have seen with the emissions pathways under the Clean Power Plan.
Shocking, but certainly not surprising given what we’ve seen of this Administration’s priorities.
***Note: The Administration’s analysis justifying the ACE is faulty and fraught with inconsistencies designed to present the rule in a favorable light. Similarly, last Fall EPA cooked the books on the Obama-era CPP to justify its repeal,underestimating the benefits and overestimating the costs of cutting emissions. NRDC will be conducting independent analysis redressing those shortcomings and providing a more accurate account of the ACE rule, and its comparison to the CPP targets.
Digging into the fine print of EPA’s proposal reveals that several GW of coal capacity in the Midwest could get a lifeline under the ACE as compared to future scenarios under the Clean Power Plan, potentially squeezing out state efforts to transition to cleaner options.
There are two reasons we could see this unfortunate outcome in the Midwest:
First, the ACE’s central (false) premise is that there can only be one way to regulate the power sector—and that is by focusing on only those minor “tune-ups” (in industry parlance, “heat-rate improvements”) that are possible at the plants themselves. This ignores the interconnected nature of the power system, and all the options available on other parts of the grid—like renewable energy and energy efficiency—that are far more impactful at cutting emissions.
But another consequence of this absurdly narrow focus is that the ACE could actually cause emissions to go up.
Yes, you read that right. NRDC attorney Lissa Lynch aptly summarized this effect:
Heat-rate improvements can even backfire. Miniscule efficiency improvements may slightly reduce a coal plant’s emission rate (that is, the quantity of CO2 emitted per megawatt hour of generation), but a coal plant that operates more efficiently may be called upon to run more hours, increasing the total amount of CO2 emitted overall. The proposal acknowledges the possibility of this “rebound effect.”
Second, this potential to see higher emissions from our Midwest coal plants could then be exacerbated via a dusty concept originally cooked up during the George W. Bush years—to end-run the Clean Air Act’s “New Source Review” program. Under that program, plants undergoing construction, renovations, or operational changes trigger agency review and would be required to get with the times by installing better pollution-control systems. But the ACE would upend this requirement—and the air quality concerns that are at the heart of it.
You wouldn’t need much of an imagination to predict how this could unfold in the Midwest. We could very well see some of the region’s oldest and most costly coal plants get a new lease on life. They could run more and end up staying online further into the future, regardless of how aged and dirty they are.
It would set our region’s emissions progress back.
So...What Comes Next and How Does the Midwest Fight Back?
It’s still unclear exactly how market forces in the Midwest would interact with these alarming provisions in the Administration’s newest industry giveaway. It’s unclear whether, if given the opportunity, coal plant owners in our region would even take the ACE up on its offer and make costly investments in high-risk generation that nobody seems to want anymore.
But one thing is clear given this week’s developments: the increasing importance of state and local efforts to combat climate change and protect public health.
The Midwest has already invested in an impressively robust and rapid shift toward a clean energy economy, making it one of the fastest growing job creators in the region. But more needs to be done to reach the 2030 and 2050 carbon-reduction and economic goals that states and local leaders across our region have committed to. To get there we need to make deeper commitments to invest in renewables and efficiency, and we need to do it even faster.
While we wait for the return of federal leadership on climate policy, we know that Midwest Governors and Mayors will redouble their efforts to pick up the slack.
In the meantime, NRDC and our state, local and regional allies will see the Trump Administration in court.