KET Legislative Coverage

What the Proposed EPA Rule Could Mean for Kentucky

by John Gregory | 06/03/14 2:09 PM

To help curb greenhouse gas emissions, the Obama administration Monday proposed a major new rule to reduce the amount of carbon dioxide released from American power plants.

What will that action mean for Kentucky, where coal is a significant source of jobs and electric power? That was the topic of discussion on Monday's edition of Kentucky Tonight.

The draft rule proposed by the Environmental Protection Agency calls for a 30 percent reduction in CO2 emissions by 2030. The cut applies to existing power plants using fossil fuels, and the reduction would be measured against a 2005 baseline, not current emission levels.

Instead of setting specific limits for each generating station, the EPA gives states about two years to devise a plan to meet the overall 30 percent goal. State can employ a mix of strategies to achieve this goal: technical upgrades to power plants, switching coal plants to cleaner-burning natural gas, investments in renewable energy, or initiatives to make homes and businesses more energy efficient.

Unique Challenges for the Commonwealth
Kentucky Energy and Environment Cabinet Secretary Len Peters praises the flexibility EPA is offering states to develop the reduction plans. "Each state is a little bit different; in some cases we're a lot different," Peters says. "So they're looking at the unique features of each state, which is important."

About 93 percent of Kentucky electricity comes from the burning of coal. The state's economy depends on heavy manufacturing, which employs about 220,000 people and consumes significant amounts of power.

"Fifty percent of our electricity use-nearly twice the national average-goes in for industrial use," Peters explains. "That is where much of our electricity is going, into those companies that are making the aluminum, making the stainless steel, making the cars."

Peters says it’s essential to maintain those manufacturing jobs while keeping coal a part of Kentucky's energy mix. According to state figures, about 12,500 Kentuckians were employed in the coal industry in 2013. While that's significantly fewer miners than in past years, mining jobs remain important to the economies of coal-producing counties.

Potential Impacts for Utility Customers
Much of the initial reaction to EPA's proposal focused on how the new rule would affect electricity prices.

"We serve some of the poorest people in the state of Kentucky," says Tony Campbell of the East Kentucky Power Cooperative (EKPC), which has customers in 87 central and eastern Kentucky counties. "We're concerned that a lot of our people are distressed, a lot of coal miners are out of work, and we don't feel they can afford a lot more in their energy bill.”

Campbell says EKPC rates have doubled in the past 12 years because of tighter pollution controls mandated by the EPA. He contends Congress should set these guidelines, rather than environmental officials appointed by President Obama.

Kentucky Resources Council Director Tom FitzGerald says electric rates are an important issue given the poverty in the commonwealth. He says most people spend about 2-5 percent of their income on utilities. "For the poorest of the poor, it's 25-30 percent of their disposable income just to keep the lights on at night, and to stay warm in the winter and cool in the summer."

FitzGerald argues that the way to offset higher electric rates is to help residential and commercial customers reduce their energy use through better insulation and other efficiency efforts.

There are programs that provide some of those services to utility clients, and new initiatives are in development. Heather Warman, executive director of the Kentucky Environmental Foundation, notes efforts sponsored by EKPC, as well as the Mountain Association for Community Economic Development, to provide customers with energy audits and financial assistance to retrofit homes and upgrade appliances to improve energy efficiency.

"If we just insulated properly all the homes in our state, we would save 35 percent of the current utility use that we have," Warman says.

Health Benefits of Cutting Emissions
Warman contends the new rule would save money in other areas such as medical expenses. "The true cost of fossil fuel production in the state of Kentucky, from our standpoint, has never really been calculated because we have the health impacts that come from all of this fossil fuel burning," Warman says.

EPA estimates that cutting CO2 emissions would save at least $55 billion in health care costs by avoiding as many as 6,600 premature deaths and preventing as many as 150,000 asthma attacks each year.

"Real costs have been off budget for a lot of years and we are reaping the somewhat bitter harvest of having put all of our eggs in coal-fired power," Tom FitzGerald says. He contends Kentuckians benefit from tougher laws on the burning of coal that limit CO2 emissions, particulate matter, and even mercury.

"These are all rules that have an appreciable impact on people in terms of their health, their productivity, [and] the cost to the public."

Future Technology and Alternatives
As utilities face replacing aging coal-fired power plants, many are switching to burning natural gas since it's a cheaper and relatively cleaner fuel source. EKPC’s Tony Campbell says utilities want to employ a greater diversity of fuel sources in the future.

"We think we need natural gas," he explains, “but we need some coal, some nuclear, some energy efficiency, too." His utility has even experimented with burning Kentucky-grown switchgrass as fuel source. "We're all about doing renewables; we just don't want to cost our end consumers a lot more money," Campbell says.

Another idea popular in recent years is carbon sequestration, or capturing CO2 before it leaves a utility smokestack and storing the gas underground. Both Energy Secretary Len Peters and environmental attorney Tom FitzGerald agree that technology simply hasn't proven successful yet and likely won’t be viable in the near future.

Peters argues that state officials, legislators, and the coal and utility industries will have to embrace as much flexibility as possible to develop a plan to meet the proposed EPA rule. If Kentucky doesn’t present an approvable plan, Peters says the federal government would step in and mandate an implementation plan for the commonwealth.

Watch the full Kentucky Tonight program.