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Energy & Climate: The regulatory climate is changing too!

by John Brian Shannon John Brian Shannon

For several decades, U.S. environmental regulators have been the tall, silent type.

These highly-educated people worked for the government, but alongside industry, to craft energy regulations reflecting the ecological notions of their particular era. For most of the 20th century politicians favoured regulations which worked to promote the rapid growth of the economy and to advance the use of energy – particularly fossil-fuel energy.

But now, a new generation of regulators are actively contributing to the debate and they are doing so in significant ways. So much has changed and with little media coverage considering the scope of the changes which are now becoming apparent.

Such are the recent regulatory changes in the U.S.A. that people are now openly wondering if another coal-fired powerplant will ever be built in the United States!

Coal, which produced a majority of America’s electrical energy in 1997,  has since dropped to 36% of total electrical energy production.

The average share of electricity generated from coal in the US has dropped from 52.8% in 1997 to 45.0% in 2009.[1] In the first quarter of 2012, the use of coal for electricity generation has declined substantially more, declining 21% from 2011 levels. According to the U.S. Energy Information Administration, 27 gigawatts of capacity from coal-fired generators [are] to be retired from 175 coal-fired power plants between 2012 and 2016.[8] Coal’s share of electricity generation dropped to just over 36%. – Wikipedia

The explanation for this sea-change is both simple and complicated. EPA regulators attempted to enforce the new for 2011 Cross-State Air Pollution Rule regulations (read other important CSAPR information here) due to go into effect on 7/7/11, but that act was struck down in appeals court on 21/8/12 for contravening another set of regulations called The Clean Air Act. Happily, another act (but with lower standards) called the Clean Air Interstate Rule automatically resumed as the prevailing regulatory framework until the CSAPR could be re-written so as not to contravene The Clean Air Act.

In the meantime, EPA bureaucrats set to work on changing the regulations for natural gas extraction, including fracking, which helped to make electricity produced by natural gas much cheaper than electricity produced by coal — and as a result, coal-fired plants are closing down far faster than if the CSAPR had been enacted and not struck down. (Moral: Never argue with the bureaucrats).

Yet more changes lay ahead due to upcoming proposed regulatory changes. A good example of this is Tina Casey’s post “Texas Wind Power Up, Nukes Down” which describes how the nuclear powerplant operator Exelon is shifting away from nuclear to wind energy.

In an interview with the Chicago Tribune last week, the CEO of energy giant Exelon, Christopher Crane predicted that the influx of low cost wind power would lead the company to start shuttering its nuclear plants.

Though wind and other renewables only account for about three percent of the company’s capacity now, that could change pretty fast.

Exelon’s first commercial wind farm only started operating in January 2012, and the company already has 44 wind projects operating in 10 different states. Tina Casey (Cleantechnica.com)

Coal is now being undercut by lower priced natural gas-fired electricity — and nuclear power is being undercut by lower priced wind-powered electricity, causing a historic shift in America’s energy makeup. We are just at the beginning of that road.

What happens if regulators decide to drop the huge subsidies the government pays to both the coal industry and the nuclear industry?

Even if regulators decided to bring subsidy levels for sustainable energy up to the same levels that coal and nuclear now enjoy – the changes we have seen thus far will seem microscopic.

fossil-fuel-subsidies

In the U.S.A., Oil and Gas receives 13 times more in historical subsidies than clean energy.

Over the first 15 years of these energy sources’ subsidies, oil and gas got 5 times what renewables got (in 2010 dollars) and nuclear energy got 10 times as much.

“Nuclear spent an average of about $3.3 billion a year, oil and gas about $1.8 billion, and renewable energy just under half a billion,” DBL Investors Managing Partner Nancy Pfund and Ben Healey recently wrote in “What would Jefferson do?” – Cleantechnica

energy-subsidies-percentages

The energy regulatory climate is changing in the U.S.A., and we have only seen the beginning of these changes. By 2020, America’s energy regulations will have changed significantly to reflect what a large percentage of voters want. Clean energy, delivered on a (subsidy) level playing field.

us_fuel_subsidies

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