When private enterprise built the first railroad in China in the 19th century, the Chinese mandarinate sent out work crews to tear up the tracks.
So things went in the Middle Kingdom for approximately 1500 years. Emperors and dynasties came and went but the day-to-day affairs were administered by a self-perpetuating class of intellectuals intent on stopping anything that might resemble economic progress.
It might be worth studying a little Chinese history these days because American affairs are now being run by a Washington mandarinate that dances to its own tune and has very fixed ideas of what the world should be like — namely that industrial activity is something toward which we should be very suspicious if not downright hostile.
The latest directive from this mandarinate is the Environmental Protection Agency’s new regulatory rulemaking on coal plants. Now I know that the EPA hates coal and is doing everything it can to wipe it off the face of the earth. That much is given. What is remarkable is how the agency’s latest salvo erases all the progress that has been made in improving government regulations over the last thirty years.
The EPA directive set a standard of 1,100 pounds per megawatt-hour for emissions of carbon dioxide for coal plants and 1,000 pounds for natural gas. Gas burners will be able to meet the standard but as everyone acknowledges, coal will find it impossible without implementing “carbon capture and storage,” the process of diverting staggering amounts of carbon dioxide into huge underground reservoirs where it will remain forever. The regulations apply only to newly constructed plants.
The immediate effect of this is to take us back to 1970 when the EPA was newly formed and fumbling to find its way. The Clean Air Act of 1970 specified that all new coal plants must install the “best available technology.” At the time, this meant expensive sulfur scrubbers. Because they were so expensive, very few new plants were built. Meanwhile, all the existing plants were “grandfathered” in and allowed to keep polluting. As a result, very little improvement was made and the EPA spent most of its time in court.
After a decade of this, Milton Friedman and other economists began pointing out that, if anything, the Clean Air Act was actually hampering improvements in air pollution. New construction was discouraged while the dirty old burners were allowed to keep chugging along without any pollution controls. Companies were discouraged from inventing new technologies because it meant they would have to be implemented no matter what the cost. Even today, more than half our coal plants were built before 1980 and some still survive from the 1930s.
Friedman and others suggested market mechanisms that would give utilities credit for incremental reductions and reward them for making improvements beyond the standards. Some of these strategies were eventually adopted in the Clean Air Act Amendments of 1992. The result was a vast improvement in the nation’s air quality. When was the last time you heard someone talking about “acid rain?”
Now the new EPA has taken us right back to 1970. As Kevin Bullis, MIT Technology Review’s energy commentator, writes: “The problem is that no one is going to build a coal power plant with CCS. The EPA limits can be met by ordinary natural gas plants. As long as they build natural gas plants and not coal plants, utilities don’t need to use any new technology.” So new coal plants are effectively wiped off the map and the old ones are unlikely to be replaced. The EPA thinks it will remedy the situation next year by issuing the same standards for existing coal plants, but this will entail shutting down 40 percent of the nation’s electricity. At this point someone other than Republicans and coal state Democrats is likely to rebel. So the practical outcome of EPA’s effort will be to freeze current technology and stick us with a bunch of aging, highly polluting plants.
That no one will build new plants with carbon capture-and-storage is assured because the technology is still completely hypothetical. There has never been a full-fledged CCS coal plant built anywhere in the world and there have been several notable failures.
In her congressional testimony, EPA Administrator Gina McCarthy cited the CCS plant in Kemper, Mississippi, as proof that the technology has arrived. Fat chance. The Kemper project is still not complete and its costs have has climbed from $2.7 billion to $4.9 billion. There has been a ratepayer revolt and a utility downgrade. Bloomberg says Kemper “may be one of the most expensive power plants ever built for the amount of energy it will generate.” Yet the plant is being built under ideal conditions. It is right next to a lignite coal deposit and will sell its carbon dioxide to neighboring oil wells, which will use it to pump more oil from declining reservoirs. Other power plants will not have these advantages. Last week Southern Company, which is building the plant, issued a statement saying that Kemper “cannot be consistently replicated on a national level [and] should not serve as a primacy basis for new emissions standards impacting all new coal-fired power plants.”
As it that were not enough, during the very week that EPA announced its new requirements, Norway gave up on a carbon capture-and-storage plant it has been trying to build since 2006. The plan has been to capture carbon emissions from a natural gas plant and pipe them to an underground storage site on the continental shelf. Government officials had compared the project to a moon landing. “After careful consideration, the government has concluded the risks are too high,” said Energy Minister Ola Borten Moe in canceling the effort. “This is one of the ugliest crash landings we have ever seen,” lamented Frederic Hauge, of Bellona, a Norwegian environmental group.
Carbon capture is still a highly speculative technology. Where oil fields are not available, staggering amounts of carbon dioxide will have to be pumped deep underground and stored there forever. The practice is fraught with risks. Any escape of gas would be dangerous. Carbon dioxide is heavier than air and would collect on the ground, suffocating anyone in the vicinity. In an often cited incident, carbon dioxide that regularly seeps from an extinct volcano and collects at the bottom of volcanic Lake Nyos in the Cameroon suddenly “flipped” in 1986, releasing 200,000 tons of CO2 into the atmosphere. The lethal bubble settled into a neighboring valley, killing 1,700 people and thousands of livestock. Any accidental release at a CCS site would have a similar effect.
Although the public is generally unaware of these dangers, when they do become known the reaction is inevitably violent. In 2011, Vattenfall, the Swedish utility, was forced to give up plans to sequester carbon dioxide at a coal plant in Germany in the face of public opposition. Although the facility was already capturing 95 percent of its carbon dioxide exhausts, public fears blocked it from storing anything underground. As a result, the carbon is now vented into the atmosphere. A similar plant in the United Kingdom was also abandoned due to public opposition.
And this is the technology that the EPA is now about to force upon the American coal industry because, as Gina McCarthy told Congress, “on the basis of information that we see out in the market, CCS is feasible and available.” The result is easy to predict — further depression of the already moribund American economy.
By the way, during those 15 centuries of mandarinate rule in China, the Middle Kingdom became famous as one of the most perpetually stagnant economies in world history.