Equipment used to move coal sits parked at the American Electric Power Co. (AEP) coal-fired John E. Amos Power Plant in Winfield, West Virginia, U.S. (Photographer: Luke Sharrett/Bloomberg)

Trump Proposes Unwinding Obama's Coal-Plant Pollution Curbs

(Bloomberg) -- President Donald Trump’s administration on Tuesday unveiled its plan to dramatically weaken carbon dioxide limits on coal-fired power plants by shifting most of the regulatory burden to states in a further assault on the Obama climate legacy.

The Environmental Protection Agency’s "Affordable Clean Energy" proposal would replace the Obama-era Clean Power Plan’s sweeping changes in the U.S. electricity mix with more modest emissions curbs at individual power plants. It would set pollution guidelines based on assumptions about what improvements could be eked out through efficiency upgrades at the facilities, then give states the latitude to design their own plans for paring carbon dioxide emissions at the sites.

EPA Acting Administrator Andrew Wheeler said the proposal “would restore the rule of law and empower states to reduce greenhouse gas emissions” while providing “modern, reliable, and affordable energy for all Americans.”

“Today’s proposal provides the states and regulated community the certainty they need to continue environmental progress while fulfilling President Trump’s goal of energy dominance,” Wheeler said in a news release.

The EPA estimates its proposal could pare carbon dioxide emissions as much as 1.5 percent from projected levels without the Obama plan in place.

The move represents the latest bid by Trump to fulfill campaign promises to revive the coal industry and restore mining jobs. Although it is unlikely to dramatically alter the U.S. power mix -- or give a big boost to domestic coal demand, which has flagged amid competition from cheap natural gas and renewables -- industry advocates hailed the effort as curbing federal government overreach and leveling the playing field.

“The policy put forward by the previous administration was an illegal attempt to impose a political agenda on the country’s power system,” Hal Quinn, president of the National Mining Association said in an emailed statement. “The replacement rule respects the infrastructure and economic realities that are unique to each state, allowing for state-driven solutions, as intended by the Clean Air Act, rather than top down mandates.”

Trump is set to hold back-to-back campaign events Tuesday in West Virginia, the No. 2 coal-producing state, where in 2016 he pledged to “get those mines open” and told miners to “get ready, because you’re going to be working your asses off.”

Shares of U.S. coal miners rose modestly Tuesday. Peabody Energy Corp. rose almost 2 percent and Arch Coal Inc. climbed 1.3 percent at 11:18 a.m. in New York.

Environmental advocates and the architects of former President Barack Obama’s ambitious plan derided the Trump administration’s proposed replacement as political pandering and said it represented a U.S. retreat from the global fight against climate change. The move dovetails with a separate administration proposal to relax Obama-era greenhouse gas emission limits on vehicles and coming efforts to ease restrictions on the amount of methane that can escape from oil wells.

“The world’s on fire and the Trump administration wants to make it worse,” said Rhea Suh, president of the Natural Resources Defense Council. “This dirty power plan is riddled with gimmicks and giveaways. It would mean more climate-changing pollution from power plants.”

The Trump proposal may open a small window for a revival of coal even as it prolongs uncertainty over the U.S. electricity mix and casts doubt on investments by utilities making decades-long choices about new plants and upgrades.

Administration officials are on track to finalize the new regulation next year, following a 60-day public comment period on Tuesday’s proposal, but critics have already vowed to battle the effort in federal court and the legal disputes could take years to resolve. As it stands, Obama’s Clean Power Plan never went into effect; amid legal challenges from opponents who said it overstepped the EPA’s authority under federal law, the U.S. Supreme Court put the initiative on hold in February 2016.

Critics are already vowing to fight Trump’s replacement.

“If the Trump administration’s proposal to dismantle the Clean Power Plan is adopted, we will work with our state and local partners to file suit to block it, in order to protect New Yorkers, and all Americans, from the increasingly devastating impacts of climate change,” said New York Attorney General Barbara Underwood.

According to the EPA, once the plan is fully implemented, power sector emissions could fall 33 to 34 percent below 2005 levels -- roughly mirroring the same target as Obama’s initiative, which sought to cut those greenhouse gas emissions 32 percent relative to 2005.

Trump’s EPA says its replacement would be cheaper too, costing some $400 million less each year than Obama’s carbon dioxide curbs. The agency also forecasts a modest, potentially 0.5 percent reduction in retail electricity prices.

But there would be immediate costs to the environment and public health too. The EPA predicts its changes would mean an uptick in particulate matter pollution -- and the asthma attacks, respiratory diseases and premature deaths tied to it. There could be 470 to 1,400 additional premature deaths in 2030 under the most ambitious proposed power plant efficiency improvements, EPA predicted. Hospital admissions and emergency room visits for asthma would also climb.

‘Best System’

The approach shows the Trump administration abandoning Obama’s expansive view of what constitutes the “best system of emission reductions” for a more narrow, facility-focused interpretation that conservatives say is within the bounds of the Clean Air Act that provides the framework for air pollution regulations.

“The announcement of a replacement rule may largely represent a political milestone for a president who promised to end his predecessor’s ‘war on coal,’ but we also view it as a significant policy action that could to make it difficult for a differently oriented successor to establish greenhouse gas limits on any stationary sector via executive discretion,” ClearView Energy Partners managing director Kevin Book said in a research note to clients.

Under the Trump plan, the EPA would establish broad guidelines on the technologies that can be used to pare carbon dioxide emissions and then give states three years to develop their own plans for paring that pollution.

Permit Reviews

It also would overhaul the triggers that prompt new permit reviews -- and potentially expensive new pollution controls -- that have been criticized as onerous by owners of power plants, refineries and other industrial sites. The changes, aimed at power plants, would better enable the kind of efficiency upgrades envisioned under the Trump proposal, EPA Assistant Administrator Bill Wehrum told reporters on a conference call.

It might not be enough to dramatically alter the landscape for U.S. coal, which is losing U.S. customers as utilities increasingly turn to natural gas and renewable power to generate electricity. Although the Trump administration forecasts a 4.5 percent to 5.8 percent increase in the production of coal for generating electricity under its proposal, analysts say the shift is unlikely to reverse a spate of already announced closures of coal-fired power plants.

“We won’t see any new coal plants but it could help some units for a few years,” said Kit Konolige, an analyst with Bloomberg Intelligence. “Coal plants keep closing even though we knew something like this was coming from the Trump administration.”

The proposal might have the most impact in the Midwest and Southeast, where aging coal power plants continue to be profitable for utilities, and state regulations are less likely to punish emissions, Konolige said.

West Virginia Attorney General Patrick Morrisey said in a statement that the replacement rule would reverse “years of havoc on coal mining in the Mountain State.”

Since 2010, power plant owners have either retired or announced plans to retire 630 coal-fired facilities in 43 states -- nearly 40 percent of the U.S. coal fleet, according to data by the American Coalition for Clean Coal Electricity, a trade group representing utilities such as Southern Co. and producers such as Peabody Energy.

The EPA is not altering its landmark 2009 conclusion that greenhouse gases threaten health and human welfare -- a finding underpinning the power plant regulation and compelling the Trump’s move Tuesday. Conservatives have filed a half dozen petitions challenging the endangerment finding, though Acting Administrator Andrew Wheeler has signaled he is not eager to reconsider the issue.

Efficiency Improvements

Trump’s proposal for modest efficiency improvements at power plants falls far short of what’s needed to combat climate change, environmentalists said. Such changes “will barely make a dent in cutting heat-trapping emissions from the electricity sector, and could even, under some circumstances, lead to increased emissions depending on how much the plants are run,” Ken Kimmell, president of the Union of Concerned Scientists, said in an emailed statement. “The law could not be more clear: It requires EPA to adopt the ‘best system of emissions reduction,’ but the EPA has instead opted for the ‘lamest system of emissions reduction.”’

Senator Sheldon Whitehouse, a Democrat from Rhode Island, said the Trump proposal “guts a solid and sensible plan” to fight climate change and aims to replace it “with a fossil fuel handout.”

“This craven obedience to polluting interests will lead to serious consequences for American communities and our economy, as well as for the planet we call home,” Whitehouse said by email. “Economists, scientists, central bankers, and real estate insurance and finance professionals are all warning of dire consequences of climate change, and we get this?”

The Trump administration proposal was cheered by business leaders and conservatives who said the Obama initiative illegally sought to compel more renewable power and quash coal. The proposed replacement rightly restores regulatory power to states, they said.

“Today’s announcement is an important step toward a more collaborative process that fits within EPA’s statutory authority and will result in achievable progress through more practical, state-driven programs,” said Karen Harbert, president and CEO of the U.S. Chamber of Commerce’s Global Energy Institute. “This revised approach will help continue the trend of lower electric power sector emissions while preserving America’s energy edge and respecting environmental law.”

Jim Matheson, head of the National Rural Electric Cooperative Association, said the Trump proposal is more workable. “The Clean Power Plan would have resulted in stranded assets and stranded debt, significantly increasing electricity costs for many consumers,” Matheson said by email.

©2018 Bloomberg L.P.