Economy / Energy / Environment / Environmental Regulation / Politics

Who Will Replace King Coal?

On Wednesday, President Obama gave a speech at Georgetown University announcing a new climate change policy.  The announcement fulfills a promise he made in his State of the Union Address to move forward with executive regulation if Congress failed to act on climate change.  It also makes good on his promise to bankrupt the coal industry.

The President claims to support an “all-of-the-above” approach to energy which includes oil and gas production as well as renewables and energy efficiency. So how does his new climate change policy fit with his purported “all-of-the-above” approach?

There are three major policy changes in Obama’s speech:

  1. Energy Efficiency – The President is raising efficiency standards for appliances and extending fuel efficiency standards to transport trucks.
  2. Renewable Resource – The Department of the Interior will build more renewable facilities on federal lands.
  3. Carbon Emissions – The Environmental Protection Agency will being the process of regulating carbon emissions from power plants under the authority of the Clean Air Act.

This last change is perhaps the most significant because it involves an unprecedented use of the Clean Air Act and, for the most part, singles out the coal industry.

There’s no doubt something needs to be done about coal pollution. Electric utilities, many of which operate coal-fired power plants, are the biggest emitters of carbon in the United States (along with the federal government itself). By some estimates, power companies account for a third of the country’s total carbon pollution.

Even though our consumption of coal is rapidly declining, it’s still accounts for 37% of the country’s electricity. Reducing carbon emissions from coal will require an alternative source of electricity that is economically viable and readily available.  Energy efficiency and renewable resources will play an important role.  But they’re not a panacea.

One possibility is carbon capture and sequestration—so-called “clean coal technology”. This technology allows carbon emissions from coal to be captured, liquefied and stored underground. The US Geological Survey recently released a study detailing our vast capacity for sequestering carbon emissions. Indeed, the Department of Energy has promised an additional $8billion in funding for carbon capture. The only problem is that the technology is so expensive that the only entity currently investing in it is the US Government.

Natural gas has long been touted as an intermediate step on the path to a clean energy economy.  The United States has enjoyed a natural gas boom in recent years because of hydraulic fracturing technology.  But fracking faces enormous regulatory hurdles in the coming years. The President made a glaring omission by not addressing what is possibly the single greatest technological development in the US energy industry in the last decade. While he praised natural gas as an intermediate alternative to coal, he stopped short of endorsing hydraulic fracturing. The two go hand-in-hand.

Completely absent from the President’s speech, nuclear energy also faces major political obstacles. The question of what to do with nuclearpowernuclear waste has stalled development of nuclear power plants for years.  Nuclear energy is carbon-free and relatively safe. Moreover, it’s an essential part of any all-of-the-above energy policy.

Significantly reducing carbon emissions will require no less than the restructuring of an entire sector of our economy.  Of course, such a major shift will require that the President work with Congress rather than through executive fiat. There are plenty of Republicans, such as those at the American Action Forum, who advocate a revenue-neutral carbon tax. Such a tax could be done in conjunction with more oil and gas development on federal lands.

The President could start us on the right track  towards a truly all-of-the-above approach by endorsing hydraulic fracturing, opening up federal lands to drilling, and throwing his support behind pro-nuclear energy legislation. Without these measures, his climate policy will likely do more harm than good.

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