In early August, the United States followed Canada in introducing a regulation to reduce the carbon pollution emitted by thermal power plants. Media headlines proclaimed that the “tough,” “ambitious” and “historic” measures contained in the US Clean Power Plan will “slash” emissions in 2030 by 32 percent from 2005 levels, in contrast to the “negligible effect” and “snail’s pace” of the 2012 Canadian rules. An analysis of the two regulations may therefore surprise.
The 2012 Canadian regulation requires any new coal-fired electricity generation unit, and old units that have reached the end of their useful life, to perform at the level of an efficient combined cycle gas turbine facility, or close. Since two-thirds of Canada’s coal-fired units will reach the end of their useful lives by 2030, this “clean or close” choice will leave total Canadian thermal power plant emissions in 2030 at approximately 60 Mt per annum — a 50 percent reduction from 2005 levels that will leave Canada with one of the cleanest power systems in the world.
The American regulation is nearly identical to the Canadian scheme for new power plants, but radically different for existing ones. Political deadlock has prevented the enactment of comprehensive US climate change legislation, forcing the Obama administration to address carbon dioxide emitted by thermal power plants via the Clean Air Act (CAA). The CAA requires performance standards to be set at an achievable level that reflects “the best system of emissions reduction (BSER) that has been adequately demonstrated.” Since there is not yet a proven capture-and-storage technology to reduce carbon emissions at source, the Environmental Protection Agency (EPA) has been forced to improvise. The EPA’s creative solution is a “best system” for carbon emissions reduction composed of three “building blocks” — making an existing coal fleet more efficient; fuel switching; and increasing renewable energy — with this BSER then applied to the different power generation circumstances in each state to produce 50 different state targets for 2030.
Media reports have suggested that the Clean Power Plan will “require” US power plants to reduce carbon emissions “by 32% from 2005 levels in 2030.” In fact, there is no 2005 baseline in the EPA guidelines, and no firm national reduction requirement. Rather, the 32 percent reduction (down to a still large 1,630 Mt per annum) is merely a projection of the cumulative effect of the 50 different state plans needed to hit the 50 state targets. Change the assumptions in the EPA model, and the 2030 projected outcome or “target” will change.
Nevertheless, it’s a good bet that the United States will achieve this 32 percent reduction projection. Power plant emissions have already fallen 16 percent from 2005 levels of 2,400 Mt, due to the widespread replacement of coal with natural gas, and the EPA has admitted that emissions are likely to fall by the same amount over the next 15 years, given prevailing market forces, with the plan acting more as a floor than a ceiling. Indeed, if there is one EPA regulation that is driving carbon emissions reductions, it is probably the new Mercury and Air Toxics Standard for power plants, which is accelerating the shutdown of aging coal-fired plants for financial reasons.
Climate change has become a passionate and partisan war that is long on preconceived notions and short on facts. The Canadian coal-fired power rules are more effective than acknowledged by environmental activists. Meanwhile, the US Clean Power Plan is neither as stringent as suggested by supporters, nor as onerous as claimed by those who oppose a “war on coal,” with its political impact far greater than its actual environmental effect. Ultimately, both regulatory regimes seek to replace coal feedstock with lower-carbon substitutes at a pace that minimizes the stranding of assets and threats to power grid reliability — not surprising in democratic societies with periodic elections. As such, the different national outcomes in 2030 — a substantially larger reduction from 2005 emission levels in Canada than in the United States — are a function less of differences in the regulations than the very different national circumstances in which these comparable regulations will be applied.