This week features an overload of potential topics but let’s start with this one: Can we put some adults in charge in certain seats of power in Washington. I’ve mentioned in previous posts, the EPA is running wild when it comes to mandating emissions requirements from power plants. Lisa Jackson, head of the EPA and her cronies make policy in a vacuum sometimes with no regard to implications, at all.
People can govern with the carrot – providing incentives to do the right thing; sugar – handouts to politically favored, typically dead end technologies or businesses (see tidbits below); and the stick – clobbering the politically unfavorable. In the EPA case, they use the flail or if they’re feeling nice, the billy club.
Straightening out the EPA’s unfeasible power plant emissions regulations is a challenge, but let’s start with next year in Texas. According to FuelFix.com, “In July [this year], the Environmental Protection Agency issued the final version of its Cross-State Air Pollution Rules, which require reductions in nitrogen oxide, sulfur dioxide and particulate emissions that cross state lines and contribute to ground-level ozone.” According to this article and the Electric Reliability Council of Texas (ERCOT), the law would shutter 1,400 MW of coal-fired generation next year. That’s about three typical large power plants. Texas was already on the brink of rolling blackouts this summer. Do the math.
According to The Wall Street Journal, EPA emission requirements due in three years, with a penalty of shutdown if not met, are impossible to meet in that timeframe. Duke Energy and Southern Company say their average scrubber retrofit time is over 50 months. I can imagine so. This is not like replacing the catalytic converter on your car. These are humongous pieces of equipment. If I recall correctly the retrofit of a scrubber on Alliant Energy’s Lansing, IA plant cost $70 million dollars and that plant provides 300-350 MW. It is relatively small. Thus the retrofit costs in the neighborhood of $200,000 per MW or $200 per kW, which is roughly equal to incentives for energy efficiency projects in end user facilities – which is also roughly equal to one year’s savings. Therefore, the scrubber retrofit represents roughly one-year of generating revenue from the plant. Customers pay.
According to the American Council for an Energy Efficient Economy, plants at risk for near term shutdown due to EPA blind thuggery produce anywhere from 6,000 to 60,000 MW of generating capacity. And we in the Midwestern rustbelt – great lake states from Ohio to Wisconsin and everything in between – have an inordinate share of these plants with 16% of TOTAL summer capacity at risk. I don’t know what our reserves are, but I doubt regulators would allow construction of 16% excess capacity. In other words, we would be in deep doo doo and subject to roaming blackouts in hot weather.
The Wall Street Journal reports the EPA estimates full compliance with the ozone law would cost $90 billion per year. The US uses 3.6 trillion kWh annually, half of it from coal. Thus the new ozone law would cost a nickel per kWh of coal generated electricity. That’s a 50% or more price increase in the rust belt – huge.
What’s the benefit? According to the EPA, 12,000 lives. That’s $7.5 million dollars per “saved life”. And 12,000? That’s about 30% of a rounding error. How is this number derived? I don’t expect to read obituaries stating Johnny Appleseed died of ozone complications at the age of 42. And who are these victims? Probably rickety elderly folks. Thirty-five year old fathers of three I doubt will succumb to a few more molecules of ozone.
Moreover, consider most power plants are built away from population centers on lakes and rivers and their exhaust stacks are, what, 500 feet high? Ozone generated as a result of power plants is thus dispersed widely before it reaches breathing altitudes. Uh, this is why exhaust stacks are so tall. Conversely, automobiles and especially short haul trucks and buses spew their exhaust essentially in your face right on the street level by your place of work, parks, and at your home. I was behind a concrete truck the other day, and if that thing didn’t spew more particulate and hydrocarbon in a day compared to a 500 MW coal fired power plant, I’d be amazed, really. Every time the thing accelerated it coughed an opaque cloud of soot – and I mean, BLACK. There are thousands of these things on the road, again in your face.
Ozone is a molecule of three oxygen atoms as opposed to the two-atom type we need to live. Ozone is used as a cleaner and a purifier. It is used to sanitize water and numerous indoor air quality enhancers have touted ozone generation as a great thing, although not endorsed by me, to be clear. It is used to sanitize hospitals, laundry, food, and in the manufacture of pharmaceuticals. One time I checked into a hotel and mistakenly, all they had for me was a smoking room so they said, if you wouldn’t mind we will clean the room with ozone for you. Per Ms. Jackson, I was lucky to have survived. Even so, once I unpacked at home, everything smelled like an ashtray.
Ozone is also created when lightning sizzles through the air. I was reading last night that some place in Venezuela produces lightning that keeps our needed ozone layer high the sky intact. Sounds like a Hugo Chavez scam to me. Lightning provides the fresh, post-thunderstorm smell I’ve been told – but doesn’t plain old rain smell fresh too? Since ozone is a gas, how do these cleaning operations avoid these extremely low levels the EPA is targeting? If they used any level of ozone required to clean the hotel room, it must be enough to kill a couple hundred of the aforementioned 12,000. This could be the second coming of asbestos.
On Friday of last week, the President to his credit, or more cynically in a Hail Mary to hold the rust belt states next year, suspended the implementation of Ms. Jackson’s agenda. But at the same time this is the problem and a big reason the economy remains in the crapper. Uncertainty. Two year this or that, even if it’s the right idea, is a bad idea because people obviously think, what then? And what’s a utility going to do? Start investing a few hundred million to upgrade plants when they don’t know whether or when the rules will go into effect? Utilities are over a barrel, dudes.
Could it be that Ms. Jackson’s real agenda is shutting down the coal industry and not so much about keeping a few thousand folks with pacemakers, stents, and a bowl full of daily prescription drugs around for another year? If we want to end coal, let’s have it out in public, in the political arena where there is a price to pay – not by stealthy backdoor pranks.
If were a utility executive, I would be stuffing with every energy bill mailing or emailing the goings on with these issues and how it would impact customer bills. I would be as factual and neutral as possible. Otherwise, when the hammer comes down and prices go up the utilities will take a bludgeoning while those responsible will be saying “Not me. It’s the utility’s fault.” This is standard MO in Washington.
I’m no coal advocate, but I am an advocate of truth and honesty, minimizing economic impact – and making public policy in public, through the political system, not by unelected, unaccountable hacks with an agenda.
In other news, solar panel companies are failing left and right, with Chapter 11 filing for panel maker Solyndra last week. The feds backed a half billion dollar loan and Solyndra also succeeded in burning up a billion dollars in venture capital. The venture capital is an indication of the problem. Most everyone it seems thinks these alternative energy forms and technologies are like the tech sector of the last 30 years. It is NOT. There is no Moore’s Law for solar panels and electric cars. Indeed, one of the solar-panel-company failures was that of an Intel spinoff. Venture capitalists will learn quickly but I doubt Washington ever will.
Next in line: electric-car battery makers and companies like Tesla that make electric cars only. I haven’t seen anything yet. This is just a prediction and I’ll be sure to let you know when these manufacturers of things nobody wants or needs start to drop like dominos.
Lastly, on the bright side, the Energy Center of Wisconsin featured an interview with long-time EE advocate and author David Goldstein. It was very good and I will report on that and of course add my commentary, maybe next week. Or maybe not.
 My term. The ACEEE must be nice to the EPA.