Trump's ACE Plan Clashes with Market Realities

The Trump administration formally replaced the Clean Power Plan with the Affordable Clean Energy, or ACE, rule last week. The ACE plan is a poor substitute for the Clean Power Plan – assuming, of course, that you are an individual that is concerned about the health of our environment and not a coal industry executive.

If you chose to review the ACE plan on the Environmental Protection Agency (EPA) you would be forgiven for thinking that the agency was concealing information from the public about the plan. You would also be wrong. The EPA is not going out of its way to hide the numerical targets for emission reductions or xxx – there are no numerical standards, benchmarks to meet, or targets to strive for. The EPA is allowing states to set their own emission standards for individual power plants within their borders – or even opt out completely.

Another major blow to emission reductions comes from the new definition of the “best system of emissions reduction” (BSER) for greenhouse gas (GHG) emissions. The ACE plan proposes defining the BSER for GHG emissions from existing power plants as on-site, heat-rate efficiency improvements, which means that power plant performance standards would only reflect emission reductions from efficiency improvements at the power plant, not from improving efficiency on the demand-side or from switching to cleaner energy sources.

One of the most unforgivable parts of the EPA proposal is the recognition of the direct human cost of switching from the Clean Power Plan to the ACE plan will cause. The EPA estimates that switching to the ACE plan will cause an additional 470-1,400 premature deaths, 48,000 cases of exacerbated asthma, and 21,000 missed school days. These negative consequences are based on EPA projections that the Clean Power Plan would reduce CO2 emissions by about 415 million tons and the ACE plan would reduce CO2 emissions by 14-27 million tons, both relative to a no-action baseline.

The ACE plan was proposed to save the coal industry, but it’s likely to not be enough. The coal industry has been in decline in the United States for years and many believe that it is on its last breath. Ceres found that in 2006, coal accounted for 49% of U.S. electric power production and in 2016 only 34% of electricity generation came from coal. Natural gas electric power production also surpassed coal for the first time in 2016, with natural gas electricity amounting to 34% of production. So far in 2018, the Energy Information Administration (EIA) found that coal production has dropped to just 27% of U.S. electricity production. The EIA also found that natural gas has held about steady at 31% of electricity production while nuclear sources account for 20.3% of electricity generation and all renewable energy sources generated 19.5% of electricity.

The coal industry is also facing another slew of coal-fired power plant closures in 2018. Many of the coal plants that were retired under the Obama administration were old and small however, even under Trump coal plant closures have shown no sign of stopping and many of the plants that are slated to close in 2018 are relatively newer and have larger average capacities. Just last week on August 27th, the Colorado Public Utility Commission voted in favor of the utility company Xcel Energy's Clean Energy Plan, which included closing 660 MW of coal-fired generation a decade ahead of schedule. Xcel plans to invest $2.5 billion in renewable energy and battery storage to replace their coal-fired power and expects to save taxpayers $213 million through the plan.

Despite everything that the Trump campaign and administration promised to the coal industry, over half of the coal-fired power plant closures in 2018 were announced after Trump won in the 2016 presidential election. These closures have contributed to the sharp drop in coal industry jobs. In early 2018 the Bureau of Labor Statistics found that just 52,000 Americans are employed in coal mines, compared to the more than 170,000 Americans that were employed in mines in 1985. This is just another sign that no policy will keep a naturally dying industry alive.

Even though the federal government seems to be in denial about the future of the coal industry, many major utility companies are not. Many utilities have decided to decarbonize, including American Electric Power Company, Southern Company, DTE Energy Company, Consumers Energy, and Duke Energy Corp have all announced plans to decarbonize. This is significant – Duke Energy and Southern Co. are the second and third largest gas and electric utilities in the U.S. based on May 2018 market value, and American Electric and DTE are both within the top fifteen. The utility companies are motivated not by politics but by the market, and they have been transitioning towards the cheaper options of natural gas and renewable energy for several years now.

Even utilities in the South, where there is fierce political opposition towards environmental regulations, are decarbonizing. Southern Co., based in Atlanta, has decreased coal production dramatically over the last decade. In 2007, coal production made up 69% of its utility mix and that dropped to 28% in 2017. Southern Co. announced in early 2018 that they would transition to a mix of low to no carbon electricity generation fleet by 2050, and their CEO Tom Fanning has publicly stated that they will take their carbon emissions to zero.

It has been clear since the election of 2016 that environmental regulations focused on mitigating climate change were in danger at the federal level, and the ACE plan is just the latest setback. Fortunately, between the corporations following the market instead of politics and the states and cities that are continuing to become more sustainable despite lack of federal guidance, progress is not stalling. In fact, it seems more and more likely that the federal government is fighting a losing battle against the forces of common sense sustainability reform.

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