How will changes to Building Block 1 of the Clean Power Plan, and a lowering of standards in U.S. EPA's rule for new sources, impact future growth for the coal industry? During today's OnPoint, Hal Quinn, president of the National Mining Association, discusses the impact of the rules on his industry and previews his organization's plans for fighting the Clean Power Plan in the courts.
Monica Trauzzi: Hello, and welcome to OnPoint. I'm Monica Trauzzi. With me today is Hal Quinn, president of the National Mining Association. Hal, thank you for coming on the show.
Hal Quinn: Well, thank you, Monica. It's good to be here.
Monica Trauzzi: Hal, U.S. EPA's final Clean Power Plan is more -- is a more aggressive standard, in many ways, to its draft proposal, but at the same time, the agency also acknowledged many of the stakeholder concerns that were raised during the public comment period. What positive steps -- let's start with positives. What positive steps did the agency make from draft to final?
Hal Quinn: Well, I think the only one that -- we're still looking through it, 1,500 pages, one paragraph out of a law, then it's been 1,500 pages in a regulation. So I think for some stakeholders, the -- pushing back the time frame two years is a welcome for them, but in our view, you know, these are changes that are without much difference at all, at the end of the day.
Monica Trauzzi: So Building Block 1 was adjusted in, what one could argue, your industry's favor. How will a relaxing in coal unit efficiency benefit your industry?
Hal Quinn: Well, it won't because what they've done is when they give on one building block, they take away from other building blocks, so they did away with efficiency, demand-side efficiency, that might have helped some of the coal-fired power plants. But the fact of the matter is, it's really a zero-sum game, and as you noted, they actually increased the stringency of the rule from its proposed form.
Monica Trauzzi: Which states are you most concerned about?
Hal Quinn: Well, I think if you look at any state with low-cost electricity, those are the states, as you're gonna find, are gonna be the most heavily punished, and they're the ones that, when you look at the changes from the proposed to the final, they're the ones who have, in some cases, stringencies that are increased twofold, and some by 50 percent. So most of those states have low-cost coal power, and they're the ones who are gonna get punished the most.
Monica Trauzzi: You say "punished" -- you use the word punished, but states are able to craft their own plans, and they have a range of options at their disposal to create a plan that works for them. So can't they craft a plan, a mechanism that will work for them and not see a rate increase?
Hal Quinn: No. I mean, I don't even think EPA would indicate that somehow you can comply with this rule and not see a rate increase. What this rule's designed to do is to take off low-cost electricity off the grid and replace it with more expensive sources. That's why you're gonna see these incentives for renewables and so forth. So, you know, the message in this rule is low-cost electricity is not welcome. That's not part of our energy future or energy security going forward.
Monica Trauzzi: According to the EIA, the Energy Information Administration, the electric power sector emitted 128 million metric tons of carbon dioxide in April 2015, the lowest for any month since April 1988, and that is linked to a decline in generation from coal and natural gas. So to get to where the U.S. needs to be in terms of reducing emissions, isn't a continued decrease in coal and natural gas necessary?
Hal Quinn: No. I mean, I think if you're gonna really -- if you're concerned about climate, then you're really gonna have to look at some technology solutions, and carbon capture is one of them, but it's not just a coal technology. It's a fossil fuel technology. In terms of decreases, most of the decreases in emissions from 2007 in this country are really -- probably 80, 85 percent are driven by the recession and a very tepid recovery.
Monica Trauzzi: Administrator McCarthy says every fuel will have a seat at the table with this plan. Coal will hold 27 percent of the market in 2030, according to this plan. So doesn't her statement hold true? Everyone has a seat at the table here, and your folks will also have a big seat at the table.
Hal Quinn: Well, you know, if we're given a seat at the table, watch a very diverse, robust electric group be dismantled, that's something we don't really wanna be there to witness. You know, the IHS Energy last year did a study that showed that the diverse grid we have saves consumers $93 billion a year. And that's what we're seeing being dismantled, rule by rule, mercury rule being the first one, and that's really a down payment on carbon and now this Clean Power Plan.
Monica Trauzzi: They've included a reliability safety valve in the rule. Are you not confident that that's something that would work?
Hal Quinn: Well, let me put it this way. If you have a product that you have to put a safety valve on, that means probably the product is inherently unsafe. So I think by the time you reach to push that button, you already have trouble, and the question is, why wouldn't you design a policy that would avoid the situation in the first instance?
Monica Trauzzi: NMA has filed for a stay on the rule with EPA. Is that considered a long-shot option for you?
Hal Quinn: Well, it's a prerequisite. So we filed an administrative request for a stay. We don't see any reason why they couldn't grant it. There wouldn't be any harm to the environment. Let's admit -- they even admit their -- the impacts on climate from this rule are going to be negligible. But we filed it, and if they decline, we'll be seeking one from the courts.
Monica Trauzzi: Right. So beyond this administrative stay, what are your legal steps? Walk me through them.
Hal Quinn: Well, the first step will be when they publish the rule in the Federal Register. We will file our legal challenge to the rule, and we expect many states to join in filing their legal challenges. We will then also, at the same time, file with the court a request for a stay of the rule pending judicial review.
Monica Trauzzi: And will you see expedited consideration?
Hal Quinn: Well, if we have a stay, we won't need expedited consideration, but if a stay is not granted, then certainly we will see expedited review as we have in the past.
Monica Trauzzi: We were talking before the show about what we might see Congress do. What are your expectations for congressional action on this, and will any of it actually have any legs?
Hal Quinn: Well, it will have some legs. We'll see if it ever gets down to Pennsylvania Avenue. We have -- the "Ratepayer Protection Act" was passed in the House last month, which stayed the rule pending judicial review as well as give governors an option of opting out if this rule threatens reliability and the low-cost electricity they have in their state. Today the Senate Energy Committee's considering Senator Capito's legislation called the "ARENA Act," which has similar provisions. So those are two things that are moving, and I suspect that maybe at some point you'll see later in the year a congressional resolution to -- that would vote down the rule in the House and the Senate.
Monica Trauzzi: All items that potentially do not have the votes to pass.
Hal Quinn: They might not pass completely, but at the same time, we also have many governors looking at this regulation very closely, deciding is this something they wanna participate in. So all this all comes together in terms of outcry of concern about the -- about this policy.
Monica Trauzzi: Let's talk about the new unit rule that was also released on Monday. There was a bit of a relaxing of the standards there. How could that affect the potential for future growth in your industry?
Hal Quinn: Well, what they did was they did lower the emission rate. Well, the emission rate was actually increased for a new coal unit, but it still requires 20 percent capture of carbon, so before it was 40, now it's 20. Forty wasn't technologically proven, and 20 isn't either, so it's sort of a nudge. It's really a head fake, and it seems to me that if you were gonna look at carbon capture and demonstrate it, you'd probably do 40 rather than 20 anyway because you're gonna get economies of scale. It'll be more expensive, but over the longer run, it'd be economies of scale. So I don't really see that as somehow making that a more viable solution right now, as opposed to, if they really wanted to decrease emissions from new coal units is allow a high-emission -- a high-efficiency, low-emission units, like ultra-supercritical coal, set the standard at that level.
Monica Trauzzi: So what's the state of play, then, on carbon capture and storage technology? Is kind of all hope lost for an economically viable CCS solution?
Hal Quinn: No, I think if technology, the research continues and we get some demonstration projects, but we're -- but the policies are getting way out in front of what's technologically and economically feasible, and I think that's really starting to turn people off about whether it's really worth pursuing at this point in time, which would be very unfortunate 'cause it is a longer-term solution.
Monica Trauzzi: All right, we're gonna end it there. Thank you for coming on the show. Thank you for your thoughts.
Hal Quinn: Thank you, Monica.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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