Obama Unveils Climate Change Strategy: End of Line for U.S. Coal Power?

President Obama launched his climate change policy effort Tuesday in a speech that invoked Hurricane Sandy's assault on New York, the drought's devastation in the Midwest, and a recent heat wave in Alaska. "Americans are already paying the price of inaction," he said. "Our planet is changing in ways that will have profound impacts on all humankind."

"As a President, as a father and as an American, I'm here to say, 'We need to act,'" said Obama in a speech Tuesday at Georgetown University in Washington, D.C. "I refuse to condemn your generation and future generations to a planet that's beyond fixing." (See related "Five Reasons for Obama to Sell Climate Change as a Health Issue.")

With his sleeves rolled up as the sun beat down on the outdoor podium, Obama said he would direct the U.S. Environmental Protection Agency to write the first ever regulations limiting carbon emissions from U.S. power plants. He noted that there are no limits, "none, zero" on carbon pollution from power plants, even though sulfur and toxics like mercury are curbed. He said the scientific consensus was overwhelming and the time was overdue for action on the "unlimited dumping" of carbon emissions by power plants: "It's not right. It's not safe. And it needs to stop." (See related story: "California Tackles Climate Change, But Will Others Follow?")

Mary Anne Hitt, director of the Sierra Club's Beyond Coal campaign, hailed the step as a good start for tackling greenhouse gas emissions from the most carbon-intensive energy source. "Given that they've been putting the groundwork in place dating back to the beginning of the first term, it's been a long time coming," she said. "It's our single largest source of carbon pollution in this country—our coal fired power plants—and we are in a race against time."

U.S. power plants generate one-third of the nation's greenhouse gases.

A Supreme Court decision from 2007 gave the White House jurisdiction over existing plant emissions.  The U.S. Environmental Protection Agency (EPA) used that power to craft plans to cut carbon from new plants, but those regulations have been on hold while the agency addresses objections raised by the power industry, which has argued that the technology to meet the new standards does not exist.

The standard (about 1,000 pounds of CO2 for every megawatt-hour of electricity produced) would be tough for prospective coal plants to meet without incorporating new technologies like carbon capture and storage (CCS). And CCS currently doesn't make much bottom-line sense because there is no viable carbon market in the U.S. to fund the expensive technology. (See related story: "Amid Economic Concerns, Carbon Capture Faces a Hazy Future.")

Obama issued a memorandum directing the EPA to issue the regulation on new power plants by September, and to draw up proposed standards for existing power plants within one year.

"I think many people don't realize that there are no regulations in place whatsoever to limit carbon pollution from coal plants," Hitt added. "So it's long overdue. And to get these standards across the finish line during the President's term we've got to get started."

Frances Beinecke, president of the Natural Resources Defense Council, called power plant carbon-emissions standards "the single most important thing we can do, as a nation, to confront this widening scourge" of climate change. "The President nailed it," she said. "This can't wait."  (See related: "10 Ways Obama Could Fight Climate Change.")

Coal Cries Foul

While Tuesday's announcement may be a milestone real change will likely be slower to arrive. It could take years to ready the complex set of regulations and they may face legal challenges. Many Republicans view the proposal as an executive office "end-run" to enact regulations that wouldn't make it through Congress. Obama said that he continued to believe that Congress should work on a bipartisan market-based solution on climate change. "I still want to see that happen. I want to work with anyone to make that happen," he said. "But this is a challenge that does not pause for partisan gridlock. It demands our attention now."  (See related story: "Obama Pledges U.S. Action on Climate Change, With or Without Congress.")

Headwinds have already begun blowing from the coal industry, and from politicians who claim the regulations would curb economic growth and raise energy costs. On Monday, prior to the announcement, seven U.S. governors, including two Democrats, asked the President to reconsider the new curbs on coal.

Kentucky Governor Steven Beshear stressed the threat to his state's economy posed by higher electric rates.  "In Kentucky, which is primarily a manufacturing state with many energy-intensive industries, we estimate job losses in the industrial sector to be significant with even moderate increases in electricity rates," he wrote the EPA. "These industries supply the automobiles and appliances used by citizens in New York, California and other states that are not manufacturing-intensive."

"I believe that our nation is best served by an 'all of the above' energy strategy that incorporates all forms of energy," Indiana Governor Mike Pence wrote in his own letter to President Obama.  "We need our wind, solar, nuclear, natural gas and coal resources to power our economy and provide the quality of life Hoosiers and other Americans are accustomed to experiencing."

Kentucky and Indiana are among the states most reliant on electric power generation from coal, according to the latest EIA figures, and have historically enjoyed some of the nation's lowest electricity prices as a result.

Robert M. "Mike" Duncan, president and CEO of the American Coalition for Clean Coal Electricity (ACCCE), issued his own statement touting coal's environmental improvement over the past decades and expressing concern for the future.

"If EPA proceeds with regulations, they should be based on adequately demonstrated technology and provide an achievable time frame to allow the coal industry to continue advancing clean coal technologies," he said. "If the government creates standards that are not practical, they risk not just shutting down existing plants but also halting the development of additional clean coal technology facilities. Taking America's most significant source of electricity offline would have disastrous consequences for our nation's economy."

Anticipating charges that the new rules would kill jobs and hurt the economy, Obama said past U.S. environmental actions—on chemicals, on fuel economy, on ozone depletion—always spurred innovation that proved doomsayers wrong. "If you look at our history, don't bet against American industry," he said. "Don't bet against American workers. Don't tell folks that we have to choose between the health of our children or the health of our economy."

Heated political debate over the proposal could further muddle Obama nominee Gina McCarthy's chances of confirmation as EPA administrator, which has languished for more than a month. McCarthy currently runs EPA's air office.

While coal currently dominates the electric power structure its share has slipped rapidly, falling from almost 50 percent of all U.S. electricity in 2005 to just 40 percent today according to EIA statistics. Coal's loss is due to gains in both natural gas and renewable energy sources like wind and solar.

The latest EIA figures show 589 coal plants were operating at the end of 2011. Sierra Club's Hitt noted that the retirement of large, coal-fired plants, many of which date back half a century or more, is already under way.  "Since the beginning of 2010 we've had 145 coal-fired power plants announce that they will be retired," she explained.

But other plants have planned to invest big money in retrofits with the hope of keeping the coal fires burning. The Tennessee Valley Authority's Gallatin Fossil Plant, near Nashville, is set for a $1.1 billion environmental upgrade, a suite of sulfur dioxide scrubbing and ozone-busting equipment that operators hope will enable it to produce power through the next century. (The Sierra Club and other groups have filed a lawsuit to block the planned upgrades at Gallatin.)

Now, the new suite of regulations might either validate that commitment or make it look like a very expensive mistake.

Gas Boom

In pursuing his climate change policy now, Obama has an advantage that was not entirely clear when he took office four years ago: the ready availability of a coal alternative—abundant natural gas. The practice of high-volume water fracturing to release gas trapped in shale deposits, known as fracking, has drastically reshaped the U.S. energy picture.

Natural gas formations including the Marcellus in the Northeast, Barnett and Eagle Ford in Texas, Fayetteville in Arkansas, and Haynesville in Louisiana have provided enough gas to not only satisfy domestic demand but to launch plans for the U.S. to export natural gas as well.

New restrictions would accelerate the switching from coal to natural gas that is already under way in the U.S. electricity market. As long as natural gas prices remain low, that will keep the costs of the plan down, can said Kenneth Medlock III, director of the Center for Energy Studies at Rice University's Baker Institute in Texas.

"In a lot of ways the sort of renaissance we've seen in 'upstream' in North America, particularly in natural gas, made the decision to come down a bit more heavy-handedly on coal easier," Medlock explained. "One of the things you worry about is whether new regulations will bring burdensome energy costs. Lots of relatively low-priced natural gas really limits the chance that electric rates will rise dramatically and that's long been the cry of coal."

But those hoping to see the era of coal power wind down will still have quite a long wait, Medlock said, if they cast their eyes worldwide.

"King Coal is not going to die," he said. "There has been tremendous demand for coal globally and we've seen U.S. exports of coal rising to Asia and Europe, even, surprisingly, to Germany where the green movement is so powerful. So I think while we'll stop burning as much here because of environmental restraints we'll export it. The industry isn't going away and we have more than 25 percent of the world's coal resources locked up here in the United States." (Related: As U.S. Cleans Its Energy Mix, It Ships Coal Problems Abroad.)

Obama also addressed what has been perhaps the biggest issue of contention between his administration and climate activists: The pending decision whether to permit construction of the Keystone XL pipeline to transport larger volumes of oil from Canada's tar sands to the refining centers of Texas. He said that the U.S. State Department is finishing its analysis of whether the pipeline is in the national interest, but that climate change would be a key consideration. "Our nation's interest will only be served if it doesn't exacerbate" carbon emissions' net effects, he said. "The pipeline's impact on the climate will be absolutely critical to the decision allowing the project to go forward." (See related "Interactive: Mapping The Flow of Tar Sands Oil" and "Keystone Pipeline Path Marks New Battle Line in Oklahoma.")

This story is part of a special series that explores energy issues. For more, visit The Great Energy Challenge.