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Energy Law 2 – Coal

Energy Law 2 – Coal. Fall 2013 Sep 10, 2013 Alan Palmiter Brian Bowman. Topic roadmap. 1. Coal in energy mix Compared to other sources (including natural gas) History of coal as energy source 2. How coal mining / transportation / combustion works Underground and surface mining

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Energy Law 2 – Coal

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  1. Energy Law 2 – Coal Fall 2013 Sep 10, 2013 Alan Palmiter Brian Bowman Not for distribution- for study purposes only

  2. Topic roadmap 1. Coal in energy mix • Compared to other sources (including natural gas) • History of coal as energy source 2. How coal mining / transportation / combustion works • Underground and surface mining • Transportation: rail, truck, slurry • Coal-fired power plants 3. Regulation of coal • Mining: federal vs. non-federal lands • Transportation: railroad regulation • Emissions: CAA and EPA 4. Future of coal • EPA proposals to regulate GHG • Carbon capture and storage • Coal: global future?

  3. Energy Flow, 2011 (Quadrillion Btu) 2 http://www.eia.gov/totalenergy/data/annual/diagram1.cfm

  4. Energy Sources  Uses Coal mostly used power generation Coal is 42-46% of electric power sector http://www.eia.gov/totalenergy/data/annual/pecss_diagram.cfm

  5. CO2 Power Plant Emissions (2004) ANDRA GOODMAN & MICHAEL WALKER, E3 VENTURES, BENCHMARKING AIR EMISSIONS http://www.nrdc.org/air/pollution/benchmarking/2004/benchmark2004.pdf

  6. Introduction to coal … Click for video (about 12 min. – stop at 6:48)

  7. 2a. Coal mining Powder River Basin Source: EIA, Quarterly Coal Report (Oct-Dec 2011 (Apr 2012)

  8. 204,412 tons 581,615 tons 26.0% 74.0%

  9. Underground coal mining Surface coal mining Click for video (about 5 min.) Click for video (about 4 min.)

  10. Mountaintop removal

  11. 2b. Coal transportation Source: Wild Earth Guardians (Mar 2011)

  12. 2c. Coal-fired power plant Click for video (about 9 min.)

  13. Coal as CO2 Source Source: EIA, “Coal Explained”

  14. True or false? Coal is now mined in 25 states. Wyoming mines the most coal, followed by West Virginia, Kentucky, Pennsylvania, and Texas. Which is false – Eastern coal has higher heat + sulfur than Western coal Most coal used in the US is transported by railroads (around 2/3 of total) Trucks transport 1/3 of coal consumed in US Coal is transported in pipelines Which statement is true about electric power production from coal -- Coal combustion produces fly ash, which can be safely buried Smoke stacks (using limestone) remove all SO2 emission A byproduct of coal combustion is gypsum used in making drywalls 4. True or false? Surface coal mining can only be used when the coal seam is less than 200 feet underground. Pop Quiz Coal Mining, Transportation, Combustion Answers: 1-T / 2-C (only 1/6) / 3-C / 4-T

  15. 3a. Regulation of Coal Mining State: • State property law: Ownership of subsurface mineral, which can be leased • Lease interpretation: subsurface lease (typically) does not include surface mining rights • State mining permits: non-federal lands (eg – Ohio Department of Natural Resources) • State surface mining permits: Colorado Surface Coal Mining Reclamation Act of 1979 / must meet federal minima (and be approved by BLM) Federal: • Federal Coal Mine Health and Safety Act of 1969 / enforcement Dept of Labor, MSHA • Black Lung Benefits Act of 1972: mining companies pay to health care funds for miners • Surface Mining Control and Reclamation Act of 1977 (SMCRA) / administered Dept of Interior, OSM • Federal mining permits: federal lands / Bureau of Land Management issues leases and licenses

  16. 3b. Regulation of Coal Transportation State: • -- Federal: • Surface Transportation Board (STB), within the Department of Transportation (DOT), has regulatory oversight over railroads • STB: approves rates, service, and construction of rail lines • Courts: give STB broad deference

  17. 3c. Regulation of Coal Combustion State: • -- Federal: • Clean Air Act (1971): “new source” permits • EPA administers CAA • “New source” NSPS apply to modified or reconstructed power plants • SCOTUS: EPA can define “modification” differently for NSPS / PSD

  18. GAO study (2010) • Pre-1971 power plants • generated 45% of carbon-generated electricity • produced 75% of sulfur dioxide emissions • Produced 64% of nitrogen oxides emissions • Produced 54% of CO2 emissions • Pre-1971 power plants compared to new units (per unit of power) • emitted about 3.6 times more sulfur dioxide • Emitted 2.1 times more nitrogen oxides • Emitted 1.3 times more carbon dioxide • CAA grandfathering encourages maintaining old plants rather than building new ones

  19. Coal regulation - timeline Keystone Bituminous Coal Ass’nv. DeBenedictis (US 1987) Surface Mining Control and Reclamation Act (1977) Environ Defense Fund v. Duke Energy (US 2007) Federal Mine Safety and Health Act (1977) Clean Air Act (1971) Clean Water Act (1973) Federal Coal Mine Health and Safety Act (1969) Black Lung Benefits Act (1972) EPA - GHGs threaten US health/welfare (2009) EPA - Carbon Pollution Standard for New Power Plants (2012) Clean Energy & Security Act (2009) 1970 1980 1990 2000 2010 2020

  20. True or false? MSHA safety standards include preventing unsafe concentrations of methane in underground mines (but include no regulation of mine methane once it leaves the mine). Which is false – Bureau of Land Management (BLM) issues leases and licenses for coal mining on federal lands (initially 20 years) Subsidence is regulated only by state law, a power upheld by the Supreme Court Treatment of coal refuse is covered by the CWA and includes criminal penalties SMCRA duties of reclamation terminate after 5/10 years, despite performance bonds Which is false -- Pre-1971 power plants are not subject to PSD or NSPS pollution standards The Supreme Court said the EPA must define “modification” the same for PSD and NSPS Repairs that allow power plant to run longer (increasing net emissions) is a “modification” for PSD purposes 4. True or false? Rates for coal transportation are regulated mostly by STB, based on cost of service Pop Quiz Coal Regulation Answers: 1-T / 2-B (shared) / 3-C (Act) / 4-F

  21. Cap and tradeFirst SO2  Next Co2 Click for video (about 3:30 min.)

  22. 4. Future of coal … Click for video (re-start at 6:45)

  23. Presidential Memorandum(June 25, 2013) • Seeks new GHG rules • EPA to work ‘expeditiously’ • Finalize rules for carbon pollution standards for the power sector • Sets deadlines • New power plants: rule by September, 2013 • Existing power plants: rule proposal by June 2014 and new rules by June 2015 • Points EPA to authority under CAA § 111

  24. EPA Carbon Pollution Standards • Proposed Rule (March 2012) • Ensure new fossil-fuel fired facilities take advantage of clean technologies • Including carbon capture and sequestration (CCS). • CCS three-step process : • Capture of CO2 from power plants or industrial processes • Transport of the captured and compressed CO2 (usually pipelines) • Underground injection and geologic sequestration of the CO2 into deep underground rock formations

  25. EPA Carbon Pollution Standards • Most power plants can meet the EPA’s proposed CO2 emission rules using gas-fired generators -- though coal-fired generators would need CCS. • So the proposal is “an empty gesture.” • Low natural gas prices from fracking make coal plants uncompetitive. As EPA confesses the rule has no benefits and no costs. Richard L Gordon CATO Institute

  26. Hypothetical CAA 111 (42 USC 7411) – Standards of performance for new stationary sources (b) List of categories of stationary sources; standards of performance; information on pollution control techniques; sources owned or operated by United States; particular systems; revised standards(1)(A) The Administrator shall, within 90 days after December 31, 1970, publish (and from time to time thereafter shall revise) a list of categories of stationary sources. He shall include a category of sources in such list if in his judgment it causes, or contributes significantly to, air pollution which may reasonably be anticipated to endanger public health or welfare.(B) Within one year after the inclusion of a category of stationary sources in a list under subparagraph (A), the Administrator shall publish proposed regulations, establishing Federal standards of performance for new sources within such category. The Administrator shall afford interested persons an opportunity for written comment on such proposed regulations. After considering such comments, he shall promulgate, within one year after such publication, such standards with such modifications as he deems appropriate. The Administrator shall, at least every 8 years, review and, if appropriate, revise such standards following the procedure required by this subsection for promulgation of such standards. Notwithstanding the requirements of the previous sentence, the Administrator need not review any such standard if the Administrator determines that such review is not appropriate in light of readily available information on the efficacy of such standard. Standards of performance or revisions thereof shall become effective upon promulgation. When implementation and enforcement of any requirement of this chapter indicate that emission limitations and percent reductions beyond those required by the standards promulgated under this section are achieved in practice, the Administrator shall, when revising standards promulgated under this section, consider the emission limitations and percent reductions achieved in practice.(2) The Administrator may distinguish among classes, types, and sizes within categories of new sources for the purpose of establishing such standards.(3) The Administrator shall, from time to time, issue information on pollution control techniques for categories of new sources and air pollutants subject to the provisions of this section.(4) The provisions of this section shall apply to any new source owned or operated by the United States.(5) Except as otherwise authorized under subsection (h) of this section, nothing in this section shall be construed to require, or to authorize the Administrator to require, any new or modified source to install and operate any particular technological system of continuous emission reduction to comply with any new source standard of performance.(6) The revised standards of performance required by enactment of subsection (a)(1)(A)(i) and (ii)  [1] of this section shall be promulgated not later than one year after August 7, 1977. Any new or modified fossil fuel fired stationary source which commences construction prior to the date of publication of the proposed revised standards shall not be required to comply with such revised standards.  (d) Standards of performance for existing sources; remaining useful life of source(1) The Administrator shall prescribe regulations which shall establish a procedure similar to that provided by section 7410 of this title under which each State shall submit to the Administrator a plan which(A) establishes standards of performance for any existing source for any air pollutant(i) for which air quality criteria have not been issued or which is not included on a list published under section 7408 (a) of this title or emitted from a source category which is regulated under section 7412 of this title but(ii) to which a standard of performance under this section would apply if such existing source were a new source, and(B) provides for the implementation and enforcement of such standards of performance. Regulations of the Administrator under this paragraph shall permit the State in applying a standard of performance to any particular source under a plan submitted under this paragraph to take into consideration, among other factors, the remaining useful life of the existing source to which such standard applies.(2) The Administrator shall have the same authority—(A) to prescribe a plan for a State in cases where the State fails to submit a satisfactory plan as he would have under section 7410 (c) of this title in the case of failure to submit an implementation plan, and(B) to enforce the provisions of such plan in cases where the State fails to enforce them as he would have under sections 7413 and 7414 of this title with respect to an implementation plan.In promulgating a standard of performance under a plan prescribed under this paragraph, the Administrator shall take into consideration, among other factors, remaining useful lives of the sources in the category of sources to which such standard applies. The EPA is planning to regulate emissions of CO2 in pre-1971 power plants. Group #1: You represent the American Coalition for Clean Coal Electricity Group #2: You represent the Union of Concerned Scientists Group #3: You represent the Association of Coal State Governors Make your arguments …

  27. Hypothetical CAA S 111 (42 USC S 7411) – Standards of performance for new stationary sources (b) List of categories of stationary sources… The Administrator shall [establish] a list of categories of stationary sources [and] publish … Federal standards of performance for new sources within such category. The Administrator shall, at least every 8 years, review and, if appropriate, revise such standards …..... (d) Standards of performance for existing sources. … (1) The Administrator shall prescribe regulations … under which each State shall submit to the Administrator a plan which (A) establishes standards of performance for any existing source for any air pollutant (i) for which air quality criteria have not been issued … but (ii) to which a standard of performance under this section would apply if such existing source were a new source, and (B) provides for the implementation and enforcement of such standards of performance.   (2) The Administrator shall have the … authority—(A) to prescribe a plan for a State in cases where the State fails to submit a satisfactory plan  …. and (B) to enforce the provisions of such plan in cases where the State fails to enforce them …. The EPA is planning to regulate emissions of CO2 in pre-1971 power plants. Group #1: You represent the American Coalition for Clean Coal Electricity Group #2: You represent the Union of Concerned Scientists Group #3: You represent the Association of Coal State Governors Make your arguments …

  28. International Future for Coal • Coal’s share of the global energy mix • will continue to rise • By 2017 coal: may surpass oil • Reasons • abundant supplies and demand for power in emerging markets • China and India lead the growth next five years • Forecast • China will surpass rest of the world in coal demand next 5 years • India will become largest seaborne coal importer, second-largest consumer (surpassing the U.S.). • Assume carbon capture/sequestration not available next 5 years

  29. Sign of things to come? EIA, Quarterly Report (July 2013)

  30. The end

  31. http://www.epa.gov/captrade/captrade-101.html

  32. Carbon Capture

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