Reducing carbon emissions at power plants
The Obama Administration's Environmental Protection Agency in June proposed new regulations aimed at reducing by 30 percent greenhouse gas emissions, mainly carbon dioxide, from existing U.S. power plants by the year 2030. The EPA plans to finalize the rules by June 2015, and by June 2016 each state is required to submit its plan for reducing CO2 emissions. At present, North Carolina's mandate is to achieve a 39 percent reduction by 2030.
What does this mean for your electric cooperative and your electricity costs?
In short, it means that your cooperative likely will pay more for the wholesale power it buys from utilities, such as Duke Energy, that generate electricity at coal-burning plants. If your cooperative pays more for the electricity it delivers to you, you will pay more to use it. Some coal plants may be shut down, others may undergo expensive retrofitting, while utilities turn to other fuels, including renewable sources, that may be more expensive than coal to run their plants.
When the U.S. faced an energy shortage in the 1970s, as Middle Eastern oil supplies were disrupted, President Jimmy Carter called for a "shift to plentiful coal" to meet our growing energy needs. In 1978, Congress passed the Powerplant and Industrial Fuel Use Act to block the use of natural gas or oil to generate electricity. Electric utilities began using more coal. Today, about 37 percent of the nation's electricity comes from coal-burning plants.
North Carolina's electric cooperatives meantime developed the diverse power supply portfolio they maintain today. More than 50 percent of your co-op's power is generated at emissions-free nuclear and renewable facilities. While the state's cooperatives do not own coal-fueled power plants, coal is part of our fuel mix via purchased-power agreements. Co-ops are affected by the rising costs associated with coal.
The EPA proposal calls for reducing CO2 emissions by 30 percent in 15 years, using 2005 levels as the benchmark. According to the U.S. Energy Information Administration, the power industry as a whole already has reduced emissions by 15 percent since 2005. That improvement came about not because of a government order, but because of industry and market management, combined with political will.
The EPA cited four ways the industry can reduce emissions:
- Invest in more efficient coal-fired power plants.
- Increase the use of natural gas-fueled power plants.
- Increase the use of renewable resources.
- Increase the amount of consumer energy efficiency programs.
Again, the electricity industry, including cooperatives, for years has invested in all four of these means to achieving a cleaner and more efficient power supply system. While cooperatives have approached these investments cautiously and prudently, all of them carry costs that eventually are borne by consumers.
North Carolina's electric cooperatives will be involved as the EPA regulations process continues. Comments on the proposed rules are due by October 16. And North Carolina is expected to submit a compliance plan by June 2016. Cooperatives will participate, and will continue discussing the issues with state and federal policymakers.
As local, not-for-profit utilities owned by their members, cooperatives are less concerned about making money than they are about increasing costs for their members. The new mandate comes at a time when co-ops also are making other investments — modernizing and securing infrastructure, expanding efficiency and communications, investing in renewable energy.
And cooperatives typically serve areas where households and businesses are less able to afford higher rates than their counterparts in urban and more affluent regions of the country. While they always have protected the integrity of the environment where they do business and where their members live and work, electric cooperatives are equally focused on what their actions will cost their members.