Research & Commentary: Study Shows How ‘Zombie Regulations’ Are Closing Perfectly Good Coal Plants

Published April 25, 2018

A new Policy Study authored by Isaac Orr, Heartland research fellow for energy policy, and Frederick D. Palmer, The Heartland Institute’s senior fellow for energy and climate, argue the “zombie regulations” of the Obama administration, which find their origin in the Environmental Protection Agency’s (EPA) 2009 “Endangerment Finding,” are prematurely closing coal-fired power plants that otherwise would have remained open.

In “How Obama-Era Regulations Are Shutting Down Perfectly Good Power Plants,” the second in a series of four policy papers by Orr and Palmer, the authors detail how the Endangerment Finding asserted increasing concentrations of carbon dioxide and other greenhouse gases threatened “the public health and welfare of current and future generations” and should necessarily be regulated as such under the Clean Air Act. The Obama administration also increased the stringency of regulations on traditional, non-carbon-based pollutants. This led directly to the retirement of more than 250 coal-fired power plants, with more than 34,000 megawatts of power generation capacity, between 2010 and 2017. During Barack Obama’s tenure, coal’s share of total U.S. electricity generation fell from 51 percent to 38 percent.

The never-implemented Clean Power Plan (CPP), which would have reduced carbon dioxide emissions to 32 percent below 2005 levels by 2030, still did significant damage to the energy sector, as the prospects of complying with it caused utility companies and Public Utility Commissions to close coal plants, which emit roughly twice as much carbon dioxide as do natural gas electricity generators. EPA’s own estimate of the compliance costs of CPP were $5.1 billion to $8.4 billion, making it one of those most expensive regulations in the history of the United States.

Another EPA regulation, the New Source Performance Standards (NSPS), the authors note, “effectively imposed a moratorium on the construction of new coal-fired power plants.” NSPS “also made it nearly impossible to retrofit existing facilities, because the rules stipulated plants can emit no more than 1,400 pounds of carbon dioxide per megawatt hour of electricity generated, a standard coal plants cannot meet without costly carbon capture and storage [CCS] technology. … In fact, EPA’s requirement that CCS technology be installed was designed to make coal uncompetitive with other sources of electricity generation. U.S. coal-fired facilities investing in CCS could not be competitive in current wholesale power markets already badly skewed by regulations and subsidies to renewable power. CCS technologies would increase the cost of electricity by an estimated 80 percent for a new pulverized coal plant.”

Orr and Palmer note other non-carbon dioxide based “zombie” regulations – the Mercury and Air Toxics Standards, New Source Review Standards, Cross-State Air Pollution Rule, Coal Combustion Residuals Rule, Effluent Limitations Guidelines, National Ambient Air Quality Standards for Ozone, and the Stream Protection Rule—are also playing a significant role in shuttering plants, even though they have been repealed or in the process of being repealed by the Trump administration.

“The expense of installing pollution control equipment such as sulfur dioxide scrubbers [to comply with these regulations] can cripple small power plants,” the authors write. “Pollution control equipment requires electricity to operate, referred to as ‘auxiliary load’ or ‘parasitic load’ because it reduces the amount of electricity the plant has available for sale to the grid. Reducing sales to the grid means lower revenues. Small power generators operate on very tight margins; unlike larger generators, they often can’t bear the burden of reduced revenues.

“Retiring the nation’s coal-fired power plants increases electricity prices because on average, existing coal plants generate electricity more affordably than the new plants that replace them,” Orr and Palmer conclude. “Additionally, retiring the coal-fired power fleet puts the reliability of the grid at greater risk.” While the Trump administration has done a thorough job dismantling Barack Obama’s war-on-coal initiatives, all will come to naught if the Endangerment Finding stays in place. “Ultimately, the administration will need to attack the Endangerment Finding, the underlying foundation of regulations built up during the Obama years, if Trump is to succeed with his energy plan and prevent activist groups or future administrations from undoing his work.”

The following documents provide more information about premature coal plant closures.

How Obama-Era Regulations Are Shutting Down Perfectly Good Power Plants
In this Policy Study – the second in a series of four – Center of the American Experiment Policy Fellow Isaac Orr and Heartland Institute Senior Fellow Fred Palmer offer a brief overview of the “war on coal” and the damage done by the Obama-era zombie regulations. They then discuss two of those regulations more in depth: the Clean Power Plan and the addition of carbon dioxide to New Source Performance Standards for new power plants. Orr and Palmer also explain why the Endangerment Finding should be rescinded and address seven zombie regulations unrelated to carbon dioxide that are adversely affecting coal-fired plants. Lastly, they describe how the Trump administration has begun the process of replacing Obama-era zombie regulations with policies based on real science and sound economics. 

How the Premature Retirement of Coal-Fired Power Plants Affects Energy Reliability, Affordability
In this Policy Study—the first in a series of four—Heartland Research Fellow Isaac Orr and Heartland Senior Fellow Fred Palmer discuss Australia’s experience with policies that forced coal-fired power plants into premature retirement, making large parts of the country dependent on unreliable and high-priced renewable energy, particularly wind power, examine the parallels between the United States and Australia and discuss problems faced by states that have aggressively promoted renewable energy, examine the importance of “prudence” and diversified energy portfolios, and evaluate a U.S. Department of Energy study that correctly identifies natural gas-fired power generators as a reason for coal plant retirements but fails to describe accurately the role played by renewable energy subsidies in those retirement decisions.

Public Policy and Coal-Fired Power Plants
In this Policy Study – the third in a series of four – Heartland Research Fellow Isaac Orr and Heartland Senior Fellow Fred Palmer discuss how the premature retirement of coal-fired power plants will cost consumers billions of dollars in the form of higher electricity prices and regulatory compliance costs, subsidies for renewable generation technologies, construction of unneeded electricity generation capacity and transmission lines, and lost economic opportunities, especially in energy-intensive industries such as manufacturing. They also discuss how state renewable energy mandates and federal subsidies given to renewable energy sources, primarily wind and solar, distort wholesale power markets to the detriment of coal-fired power plants and the real-life impact these policies have on families, businesses, manufacturers, and coal mining communities.

How to Prevent the Premature Retirement of Coal-Fired Power Plants
In this Policy Study – the fourth in a series of four – Heartland Research Fellow Isaac Orr and Heartland Senior Fellow Fred Palmer offer a brief history of electric utilities and describe how efforts to deregulate them in the 1990s led to more, not less, regulation. There is no “free market” in electricity today. They describe the four Obama-era zombie regulations on coal and the six subsidies and mandates favoring renewable energy (primarily wind and solar) that must be eliminated to restore a free market for energy.

Video: Tenth International Conference on Climate Change, Panel 10, ‘The Impact of Coal Restrictions on the Navajo Nation,’ Featuring Carlyle Begay
State Sen. Carlyle Begay of Arizona presents “The Impact of Coal Restrictions on the Navajo Nation” at the Tenth International Conference on Climate Change in Washington, DC on July 12, 2015.

Video: America First Energy Conference, Panel 4A, ‘The Future of Coal,’ Featuring Heath Lovell
Heath Lovell, vice president for public affairs at Alliance Coal, delivers a presentation titled “Where Does Coal Go From Here?” at the America First Energy Conference in Houston, Texas on November 9, 2017.

Video: America First Energy Conference, Panel 4A, ‘The Future of Coal,’ Featuring Fred Palmer
Fred Palmer, senior fellow for energy and climate policy at The Heartland Institute, delivers a presentation titled “Coal Is Life” at the America First Energy Conference in Houston, Texas on November 9, 2017.

Podcast: Dr. Alan Moran: Australia, From Coal Power to Blackouts
In this edition of the Heartland Daily Podcast, Alan Moran of the Australian think tank Regulation Economics discusses how shuttering coal-fired power plants in Australia and attempting to replace them with wind has caused electricity prices to spike and has made the grid more vulnerable to blackouts. After a severe blackout plunged much of Australia into darkness, Elon Musk made headlines when he announced he would install a 100-megawatt battery system in Australia within 100 days, or the system would be free. Moran discusses the battery bet and more.

Podcast: Fred Palmer: Australia, a Cautionary Tale
Fred Palmer, senior fellow for energy and climate at The Heartland Institute, joins Jim Lakely, director of communications, to discuss his new paper Australia, A Cautionary Tale. Palmer co-wrote the paper with Heartland Research Fellow Isaac Orr. Palmer speaks about how Australia has caused electricity prices to rise by instituting a carbon tax and mandating a shift away from coal. In the summer of 2017, the City of Adelaide had a brownout because its renewable system failed to deliver enough energy to power its citizens’ needs.


Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit Environment & Climate News, The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database.

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