The Ongoing War on Coal
New EPA regulations will have negligible impact on global CO2 emissions.



Robert Bryce

Now let’s consider the EPA’s new regulations in light of surging global carbon dioxide emissions and increasing coal demand. The key section of the EPA’s new 645-page document appears on page 18: “This proposal would result in significant reductions of GHG emissions that cause harmful climate change.” The key question, of course, is this: What qualifies as “significant”? Let’s do the math.

Recall that the EPA wants the electricity-generation sector to cut its emissions by 30 percent from 2005 levels. That year, according to the Energy Information Administration, those emissions totaled 2.4 billion tons. Simple math (2.4B tons x 0.3) shows that the EPA’s proposed carbon dioxide reduction would total about 720 million tons.

That sounds significant until you consider that, since 1982, global carbon dioxide emissions have been rising by an average of about 500 million tons per year. In 2011 alone, according to the BP Statistical Review of World Energy, global carbon dioxide emissions rose by 723 million tons. Thus, in one twelve-month period, just the increase in global emissions was about the same as the decrease the Obama administration plans to make over the coming 16 years.

In China alone, between 2006 and 2012, carbon emissions increased by more than 3 billion tons. Thus, in a six-year period, China’s coal-related emissions increased by four times the size of the reduction that the EPA is seeking over 16 years.

Throughout the developing world, coal remains the fuel of choice for electricity generation because it is cheap and abundant, its deposits are geographically widespread, and the market for the fuel is not affected by any OPEC-like collusion. And while it’s true that developing countries such as China and India are increasing their consumption of coal, we are also seeing increased coal use in wealthy countries.

According to a recent report by Goldman Sachs, South Korea will add 14 gigawatts of new coal-fired capacity between now and 2018. Meanwhile, in Japan, the home of the vaunted Kyoto Protocol, coal consumption is at record levels. It’s up about 12 percent in the last year alone. And the Japanese government has announced plans to build about 6 gigawatts of new coal-fired capacity over the next 15 years or so. In Germany, where renewable-energy subsidies are now costing consumers about $32 billion per year, some 7 gigawatts of new coal plants will be brought online by next year.

On March 10, the same day that Senate Democrats ended their all-night talkathon in the Senate chamber on climate change, Maria van der Hoeven, the head of the International Energy Agency, said that coal use in Europe is rising because natural “gas prices are high” and “coal is cheap.”

That’s the essential point: Coal is cheap. While we remain obsessed with so-called clean energy here in the U.S., the rest of the world is rushing to produce electricity from the cheapest fuel they can find. They are doing so because cheap, abundant, reliable electricity is the commodity that separates the wealthy countries from the poor ones.

There’s no doubt that renewable and energy-storage technologies continue to improve. Solar, in particular, has seen dramatic reductions in cost over the past few years, and it will see big gains in the years ahead. But for rich and poor countries alike, when it comes to producing electricity, the fuel of choice continues to be coal. And unless or until someone can come up with a new source of energy that can compete with coal on the key issue of cost and scale, the black fuel will continue to dominate the electricity-generation business.

And that brings me to a final point: The U.S. — not renewable-energy-crazed Germany — is already leading the world in reducing its carbon dioxide emissions. The White House itself made that point last week. The U.S. is leading the world in that regard thanks to innovation in the Oil Patch. That innovation led to a surge in domestic natural-gas production (up 34 percent since 2005), which lowered the fuel’s cost, which allowed it to steal market share away from coal in the electricity-generation sector, which, in turn, resulted in lower carbon dioxide emissions.

But rather than let the market work, the Obama administration has chosen to repeat the policy mistakes of the past. In short, the EPA’s new Clean Power Plan is just a retread of the Powerplant and Industrial Fuel Use Act of 1978: an overly complicated policy designed to address an issue that would have been better solved by the market.

— Robert Bryce is a senior fellow at the Manhattan Institute. His fifth book, Smaller Faster Lighter Denser Cheaper: How Innovation Keeps Proving the Catastrophists Wrong, was published May 13.