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Obama’s green gamble

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This Oct. 23, 2009, file photo shows coal trucks leaving the coal-fired Hunter Power Plant just south of Castle Dale, Utah after making a delivery.


This Oct. 23, 2009, file photo shows coal trucks leaving the coal-fired Hunter Power Plant just south of Castle Dale, Utah after making a delivery.

With a metallic gasp, the chute opens its metal jaws and deposits precisely 230,000 pounds of coal into the railway car. The pour is carefully calibrated to create an aerodynamically efficient heap. Sealant is sprayed evenly across the coal’s surface to limit dust release. Fully loaded, the car moves along to be replaced by another. It takes two-and-a-half hours to load the two-mile-long train.

Four trains, each carrying 15,000 tons of coal, leave the Spring Creek mine in Decker, Mont., every day, often destined for midwestern power plants, where the fuel is burned to light the homes and heat the kettles of Minnesotans and Michiganders. Some goes elsewhere, including to a Canadian port, bound for China or South Korea.

Coal mining in the Powder River Basin, which straddles Montana and Wyoming, has been economical only since the Environmental Protection Agency began regulating sulfur dioxide in 1990. Coal from eastern states is far more sulfurous. A new rule from the E.P.A. may be less well received here, however: On June 2 it unveiled a proposal to cut emissions of carbon dioxide from power plants, which account for 39 per cent of overall emissions, by 30 per cent from their 2005 level by 2030.

To reach that goal, each state — except Vermont, which has no fossil-fuel plants and therefore is exempt — has been handed its own target. These vary widely: Washington must cut the carbon intensity of its energy production by 72 per cent, North Dakota by only 11 percent. Comments will be solicited before the rule is finalized next year. Lawsuits are inevitable.

A national carbon price would have been the cheapest way for America to meet its goals. That would require action from Congress, however, which has looked impossible since a Democratic-backed cap-and-trade bill died in the Senate in 2010. The E.P.A.’s approach, although it involves dictating terms to states, probably provides the next-best level of flexibility.

Acting under an obscure provision of the Clean Air Act, signed by President Richard Nixon in 1970, long before politicians recognized a threat from carbon dioxide, the E.P.A. has told the 49 states to produce plans to meet their respective targets. The agency proposes four "building blocks" that the states may — but are not obliged to — choose to reduce emissions: make fossil-fuel plants more efficient, shift to power sources that emit less, such as natural gas, boost zero-emission sources such as renewables and nuclear, and reduce electricity demand by, for example, insulating buildings.

States are encouraged to team up to find efficiencies and economies of scale. The rule may thus goose sleepy regional carbon markets in California and the northeast, or spur the creation of others. Plans must be submitted by 2016, though those involving more than one state have two more years. Some Republican-ruled states already have pledged not to cooperate, and the E.P.A. will create its own plans for them.

Advocates and industry groups attached wildly varying price tags to the rule, some before it had been issued. The E.P.A. admits that electricity bills will rise, but projects net benefits worth between $48 billion and $82 billion by 2030, thanks to better health and slightly less global warming. In calculating the benefits of curbing climate change, the E.P.A. applied a novel methodology: It included the benefits to foreigners. That is unusual, and dramatically changes the results, unless other big emitters follow America’s example.

All long-term forecasts about energy involve guesswork, but one thing is clear: America’s 500-odd coal-fired power plants, which produce 39 percent of its electricity and 74 per cent of its plant emissions, will be hardest hit. Some, particularly older ones, will close earlier than they otherwise would have. The average plant is 42 years old.

More detailed predictions are hard, however. Estimates of state-level production under the rule, according to David Hawkins of the Natural Resources Defense Council, a lobbying group, are like "consulting the Ouija board."

Still, the burden may not be equally shared. The old, inefficient, underground mines of states such as Kentucky and West Virginia may, for example, lose out to the more productive surface mines of the Powder River Basin. Cloud Peak Energy, which operates Spring Creek and two mines in Wyoming, says that it does not expect domestic demand for its coal to decline, but acknowledges that the sources of that demand may change. Powder River already is America’s coal heartland, mining 40 per cent of the national total. Nonetheless Cloud Peak and other local producers hope to boost exports to Asia, if they can convince Oregon and Washington to allow export terminals to be built along their coastlines.

The E.P.A. reckons that coal will still account for around 31 percent of electricity production by 2030, far more than renewables’ nine per cent. Previous forecasts often have been wrong, however. In 2007 39 percent of America’s electricity came from coal. Since then it has been squeezed by pollution rules and by the growth of natural gas. The Energy Information Administration reckons that 60 gigawatts of coal-fired capacity will be retired by 2020. Still, says Richard Morse of Supercritical Capital, a consultancy, it is hard to see coal’s share of the mix dropping below one-quarter by 2030.

Environmentalists used to fret that President Barack Obama had let climate policy slip behind other priorities, such as health care. The president repeatedly has signaled his intention to act, however. In 2009 he pledged to cut greenhouse-gas emissions by 17 per cent by 2020 from their 2005 level. More recently, in successive State of the Union addresses he first threatened, then promised, to use his executive authority to meet that goal if Congress would not act.

Emissions from power plants were notably high in 2005. By 2012 they had fallen by around 16 percent, thanks largely to the recession and the fracking revolution, which has hugely increased the share of relatively clean natural gas in the energy mix. America is therefore already halfway to meeting the E.P.A.’s stated goal. Indeed, the decision to use 2005 as a baseline year smells political, allowing the administration to trumpet a dramatic-sounding 30 per cent cut.

This week’s ruling is not Obama’s first big effort to curb climate change, however. In 2011 he announced strict fuel-efficiency standards for new vehicles. Together with the new E.P.A. rule, that should get the country close to his 2020 goal. Last year the E.P.A. declared that new coal-fired plants may not emit more than 1,100 pounds of carbon dioxide per megawatt-hour generated, which in effect bars their construction, unless it becomes far cheaper to capture and store carbon emissions.

Such new rules have revived accusations that Obama is waging a "war on coal," which in fact he is. It is not only Republicans who are upset. Several members of Obama’s own party facing tight elections in coal states surely will be regretting the president’s timing. Alison Lundergan Grimes, a Democrat seeking a Senate seat in Kentucky, ran ads showing a miner holding up a lump of coal and griping that "President Obama (doesn’t) get it." Rep. Nick Rahall (D.-W.Va.) joined forces with a Republican to craft a bill that would overturn the E.P.A. rule.

As his presidency enters its twilight, however, Obama may be more concerned with China and India than with the fortunes of his party. America cannot halt climate change alone. At best the E.P.A. rule will reduce global emissions by one per cent to two per cent.

Climate diplomats hope to forge an agreement on global emissions, to be signed in Paris in late 2015. Last week Obama said that America should lead by example. On June 3 it did the opposite, slapping tariffs on Chinese solar panels.

Still, on the same day an adviser to the Chinese government said that China may place a cap on carbon emissions as of 2016. That would be a start.

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