Policy: Environment & Energy

Emails show EPA ignored request for more realistic cost ranges for coal regulations

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Beltway Confidential,Opinion,OMB,EPA,Ashe Schow,Energy and Environment,Coal,Government Regulation

Environmental Protection Agency officials ignored requests from the Office of Management and Budget to include a more realistic cost range for implementing stringent coal regulations for new coal plants, according to emails released by regulations.gov.

Prior to the EPA releasing its New Source Performance Standards, which would severely limit the building of new coal-fired power plants due to a requirement for those plants to include carbon capture and storage technology, the OMB raised multiple questions regarding the implementation of the regulations, including cost and feasibility of the technology.

“EPA’s assertion of the technical feasibility of carbon capture relies heavily on literature reviews, pilot projects, and commercial facilities yet to operate,” the OMB wrote. “We believe this cannot form the basis of a finding that CCS on commercial scale power plants is ‘adequately demonstrated'.”

The OMB also suggested the EPA include the full range of costs for implementing the technology instead of the low range, as the draft rule included.

“The commenter believes that it would be appropriate for the proposed rule to consider the full range of cost estimates developed by [the Department of Energy’s National Energy Technology Laboratory], recognizing the level of uncertainty in these estimates,” the OMB wrote.

For both queries, the EPA agreed to further clarify the cost uncertainty and feasibility of the technology in the preamble of the proposed rule. For the cost aspect specifically, the EPA agreed to alter the preamble to include “the uncertainties associated with the estimates and indicate that the costs may be higher than estimated.”

But on Sept. 9, just 11 days before President Obama directed the EPA to propose standards for new coal plants, the OMB again requested that the EPA adjust its cost analysis to include the higher cost range because the CCS technology was not demonstrable yet.

“Despite NETL’s best efforts to accurately estimate costs, it is widely accepted among cost estimation professionals that projections of [nth-of-a-kind] costs for technologies that are still under development are typically lower than the actual costs that are eventually realized,” the OMB wrote.

“Nth-of-a-kind” technology refers to future technology, and is often cheaper because “first-of-a-kind” technology hasn’t had all the kinks worked out and is less efficient. Think about how expensive cellphones used to be and how accessible they are now.

“ ‘Next-of-a-kind’ costs will not be realized before more demonstration projects proceed,” the OMB wrote.

Ten days later, on Sept. 19, the OMB suggested language that would further clarify the EPA's cost range.

The EPA’s rule originally included the vague “15 percent ± 30 percent” range for the cost analysis, but the OMB was able to change it to a more accurate and telling “-15 percent to +30 percent.”

However, the EPA responded to OMB’s edits by removing a sentence further explaining the optimistic cost projects included in the draft rule: “Despite the application of process contingencies and other best efforts to realistically project the cost of emerging technologies, it should be noted that such cost projections are often shown to be optimistic when actual costs are realized” was removed by the EPA.

The reason for such a clarification to be removed, Kevin Culligan of the EPA said in an email to OMB, was that the sentence wasn’t factual.

“We believe that the text starting with ‘despite the application…..’ should be deleted because it is conjecture and not factual (and ignores the other side of the story, because it is often shown that projections like this are unnecessarily pessimistic and costs,” Culligan said.

So the EPA removed what they considered “conjecture” in favor of what was essentially conjecture — but the kind that would benefit its cause to reduce carbon emissions from coal plants.

Except that the rule won't have an impact on reducing emissions and is more about positioning the U.S. as a supposed leader on global warming initiatives.

That's evidenced by the fact that while the OMB urged the EPA to include an accurate cost analysis showing how expensive carbon capture technology would be, the EPA colluded with environmentalists to make the rule even more stringent.

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