EPA’s Clean Power Plan and Europe’s folly

The Environmental Protection Agency’s (EPA) final Clean Power Plan (CPP) to reduce carbon dioxide pulls a colossally damaging and futile national energy plan out of a bureaucrat’s hat. Who needs congressional authorization by law to dismember the engineering marvel that is our national electric power system? The EPA “architects” may have lots of letters behind their names, but their federal plan to overhaul the U.S. electric “machine,” as the agency now calls it, belies fundamental physical and economic energy realities.

{mosads}The EPA substantially upped the ante of the CPP in the final rule. The plan now aims for the full monty of green orthodoxy: a mandatory path toward a zero-carbon electric sector. At the proposal stage, the rule envisioned that more natural gas-fueled electric generation would replace most coal-generated electricity. The plan finalized in early August assumes static or declining use of natural gas. This major change from the initial proposal carries far higher risks and costs. The agency apparently has concluded that building new natural gas plants will delay achieving the ultimate goal of decarbonization, an objective casually asserted by President Obama.

Thus, the EPA now looks to supposed zero-carbon renewable energy sources to the fill the huge gap created by an EPA-induced retreat from natural gas. According to the rule language: “Emission reductions achieved through the use of new Natural Gas Combined Cycle Capacity (NGCC) require construction of additional [carbon dioxide] emitting generation capacity, a consequence that is inconsistent with the long term need to continue reducing [carbon dioxide] emissions beyond those achieved in this rule.”

The role of natural gas as the “bridge” fuel to the future — long understood as the only viable lower-carbon alternative — may be quite short. To compensate for less natural gas in the generating mix, the EPA assumes that renewable electric generation in the U.S. will more than triple within the next 15 years. The EPA calculates renewable generation in 2012 — an anomalously high year because the federal subsidy was soon to expire — at approximately 218 million megawatt hours (MWh). By 2030, when the CPP is in full effect, the EPA expects renewables will generate 706 million MWh — an uncanny growth rate of 314 percent in just 15 years.

This wildly optimistic assumption may trump Germany’s “Energy Revolution,” considered the most radical rush to renewable energy in the world. The EPA’s ambitious plans for renewable energy — predominantly through onshore wind facilities — would force the U.S. on a path similar to that legislated several years ago in Germany and Britain. The European schemes may have put lots of renewable energy on their electric grids but with grave, counterproductive impacts. Major European and U.S. media report on the European rush to renewables as “environmental lunacy” (The Economist) that has become a “fatal blunder with ugly consequences” (Die Zeit). With retail electric rates three times higher than the average U.S. rate, Germany’s Der Spiegel writes that electricity has become a “luxury good” for low- and middle-income families. Yet, the European energy debacle is never meaningfully raised in discussions about renewables.

U.S. policymakers must scrutinize the results of Europe’s misinformed gamble that intermittent renewable energy can handily replace coal and natural gas as mainstay fuels for electricity. Now that the EPA would force dependence on wind and solar generation at a massive scale, we need to absorb the lessons of Europe.

Germany, with Britain close behind, made gross miscalculations about the cost of renewable subsidies, the engineering complexity of integrating large volumes of uncontrollable renewable power, and the widening financial losses in renewable industries, conventional electrical utilities, key energy intensive industries, related investors, shareholders and consumers. As a result, everybody has lost.

Germany has learned that when the renewable share of total generation approaches a certain percentage, the risk of grid instability soars and necessitates completely redundant backup power. Furthermore, generation from coal or natural gas — the carbon sources — are capable of ramping up and down in an instant when wind speeds and cloud cover fluctuate. A German transmission operator reported that interventions to stabilize transmission rose from two in 2002 to more than 1,200 in 2013!

In the ultimate green irony, Germany is now subsidizing construction of 10 new (lignite) coal-fired power plants to ensure enough backup power. Wood has returned to the power scene because at least it is reliable, now accounting for around 40 percent of Germany’s renewable portfolio. Yes, Germany is using more and more renewable energy, but the country’s carbon dioxide emissions are rising and subsidies are ballooning. Former minister of the environment, Peter Altmaier, estimates the subsidies will approach a $1 trillion by 2022.

Modern systems of electric power have achieved phenomenal precision, efficiency and reliability through the integrated operations of conventional power plants, electric grids and transmission networks. Supply, affordability, reliability and safety have long been the controlling priorities. The carbon content of generating fuels, however, has now become the overarching priority for dispatch to the grid — a criterion at odds with previous priorities.

An accessible, affordable, reliable and versatile electric power system is a sine qua non of healthy, prosperous societies. Now that the EPA has marshalled coercive federal power to weaken our electric power supply, a candid review of Europe’s folly is crucial.

White is distinguished senior fellow for energy and environment at the Texas Public Policy Foundation and former chairman of the Texas Commission on Environmental Quality.