Obama taking aim at carbon dioxide emissions

The gigantic Prairie State power plant in the southern Illinois village of Marissa was erected in 2012 at the mouth of a coal mine by a consortium of municipal utilities from several states. (E. Jason Wambsgans, Chicago Tribune / August 8, 2013)

CHICAGO — On Monday, President Obama plans to unveil what is likely to be the most significant initiative of his presidency to combat climate change: a new rule to cut carbon dioxide emissions from existing power plants, the country's single greatest source of the heat-trapping gas.

In Washington, the announcement, which would bypass Congress and use Obama's authority under the Clean Air Act to achieve greenhouse gas reductions, will stir threats of lawsuits, claims of job losses and charges that the president has revived his "war on coal."

By contrast, in some coal-reliant states, power companies and regulators are talking of a more pragmatic approach, planning for a future they assume will include carbon dioxide limits.

"Carbon policy is going to impact our business, and we have to be prepared for that," said Robert C. Flexon, chief executive of Houston-based Dynegy. "It can be a threat or an opportunity. I'd rather make it an opportunity. You can sit and whine about it or find innovative ways to deal with it."

Which approach prevails — an all-out political and legal fight or a compromise — will help determine how quickly the U.S. will begin to reduce its greenhouse gas emissions.

Cutting carbon dioxide from power plants involves enormous stakes. Power generation accounts for roughly 40% of U.S. greenhouse-gas emissions. But while seeking to reduce pollution, the administration must ensure that electricity supply remains reliable and consumer rates reasonable.

The problems involved in achieving both those goals — as well as some potential approaches — are on display in Illinois, which gets just over 40% of its power from coal, including nine plants operated by Dynegy. Of the rest, most comes from nuclear plants and about 8% of the state's overall power is from renewable sources, much of it wind.

Although some older coal-fired power plants in the state already have closed, power executives, regulators and some environmentalists here acknowledge that many will need to keep running for some time, although at less capacity. The reduced output could be made up through energy efficiency and renewable power, they say.

"We're pretty consistent with what you're hearing from other states, that you can't have a one-size-fits-all approach but a suite of tools instead to use to cut emissions," said Lisa Bonnett, director of the Illinois Environmental Protection Agency. "We're really hearing that the EPA will provide that flexibility."

Much of the wrangling over the rule probably will center on its stringency: What baseline will be used to determine how much states have to reduce their emissions? Will states have different standards to meet depending on how much coal generation they have? Will states get credit for cuts they already have made to emissions?

The Obama administration wants the rule in place by the end of 2016, just before the president's term is up, but given the likelihood of legal challenges, it is unclear when the pollution cuts might take effect.

In the past, the federal Environmental Protection Agency has ordered individual power plants to cut specific pollutants by set amounts. But that approach doesn't work for carbon dioxide because technology that would allow coal plants to cut those emissions is not currently cost effective.

Instead, the EPA is expected to propose a rule that sets overall pollution-reduction targets for states and gives them considerable flexibility on how to meet those goals.

In effect, the new rule would enact some features of the so-called "cap and trade" plan that passed the House early in Obama's tenure but died in the Senate. States would have an overall ceiling on the amount of greenhouse gases their power plants could emit — the cap. They could allow utility companies to trade in the hope of finding efficient, low-cost ways to achieve those goals.

Many energy companies have a mix of plants that use different fuels, and some could run cleaner units powered by natural gas or wind and reduce the use of coal-fired generators.

For the gigantic Prairie State plant in the southern Illinois village of Marissa, however, coal is all there is.

The largest coal plant built in the United States in the last three decades, Prairie State was erected in 2012 at the mouth of a coal mine by a consortium of municipal utilities from several states. Its 14-story generation complex can produce 1,600 megawatts of power to serve about 2.5 million customers.

Thanks to $1 billion in the latest pollution-control technology, it emits less pollution, including mercury and sulfur dioxide, than other coal plants. Still, Prairie State's carbon dioxide output is greater than 90% of the country's power plants, according to EPA data, and it cannot cut emissions enough to rival cleaner electricity generation. Already, the power it generates is more expensive than electricity from some natural gas plants, a gap that has generated complaints from communities that buy its output.

The plant's executives have met with EPA officials on several occasions to make the case for more time, said Ashlie Kuehn, Prairie State's general counsel. The company has considered several options to offset the plant's emissions.

"Do we install solar panels in our parking lot? Plant trees? Do we partner with a renewables company?" Kuehn said. "I'm confident EPA heard our concerns. But we're on pins and needles."