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EPA Emissions Rules: Business as Usual

Issue 4 and Volume 119.

When the Environmental Protection Agency announced new emissions guidelines last summer, the hearts of utility executives across America skipped a beat. Few industries are as fraught with uncertainty as power generation. Volatility in fuel prices and potential interruptions to supplies already keep power professionals up at night, and the threat of new regulations was just one more cause for concern.

But what did the EPA’s new guidelines really mean for the power production industry? At first glance, the call for a 30 percent reduction in carbon emissions by 2030 seemed vigorous. How could power producers cut their emissions by one-third in so short a period of time?

Fortunately, the new guidelines aren’t as onerous as they first appeared. The target reductions are based on 2005 emission levels, which were higher than usual. And America’s power producers were already well on their way to meeting those targets before the EPA issued its new guidelines. So, while these new goals are indeed aggressive, they merely reinforce a trend that was already underway, and which was started by the nation’s power producers.

Low natural gas prices and plentiful supplies have led the nation’s power producers to begin converting their operations to natural gas from dirtier-burning fuels like oil and coal.

Rather than being a game changing push towards cleaner power production, the EPA’s new guidelines are more of an acknowledgement of the direction in which power producers are already moving. They recognize the initiative of power producers and offer an incentive for slower-acting power suppliers to follow suit.

That’s not to say that the move to natural gas isn’t creating challenges for power producers and distributors. While it’s true that the unprecedented availability of natural gas offers both economic and environmental benefits, those benefits are not being felt everywhere. A paucity of natural gas infrastructure in some parts of the country is leading to higher prices and slowing the move to natural gas. For instance in the Northeast, which suffers from severe natural gas shortages in high-use winter months, utilities are warning of price increases of up to 50 percent this winter. This poses a severe hardship to local residents and businesses, and it is the result of inadequate access to the gas that’s being produced just a few hundred miles away in Pennsylvania and New York.

Investors and utilities are working to overcome this challenge through the development of the Northeast Natural Gas Pipeline, which would run from Pennsylvania, through New York, and and provide natural gas throughout northern New England. In addition to providing access to more fuel, the pipeline would also promote sustainability by facilitating the continued transition from coal to cleaner burning natural gas. Ultimately, natural gas will serve as a vital bridge fuel until renewable technologies are sufficiently developed to provide the power we need.

And as far as energy policy and use goes, an investment in pipeline infrastructure would pay immediate and significant dividends. By providing greater access to natural gas, it would help keep energy costs low and assure that American industry would have to access to the fuel they need to meet their power and thermal needs. Of course, such a program would also create valuable design and construction jobs. Clearly, natural gas infrastructure projects like the Northeast Natural Gas Pipeline would provide significant benefits to both the economy and the environment.

And, of course, as useful as natural gas is as a bridge to a renewable energy future, it is still a fossil fuel. While it is much cleaner burning than oil and gas, it is not emission-free. Presumably, these new EPA regulations are merely a starting point and the federal government will continue to mandate ever lower emissions in the future. Power producers can’t afford to become complacent once they’ve reached these emission goals. Instead, as they plan for the future, they should be looking for ways to apply clean renewable technologies to generate power. Many utilities and manufacturers are already turning to solar, wind, and other renewable technologies, and they must maintain this commitment to renewables going forward. Renewable energy won’t just be good for the environment; it will be good business for power providers.

The EPA’s new emissions guidelines are neither groundbreaking nor burdensome. They are merely a reflection of the journey that power providers were already on to transition to cleaner energy sources. When it comes to sustainability, it’s the power producers who are leading the way.