Federal regulations forcing coal-fired power plants to retire could present a huge business opportunity for the wind power industry, according to a government report.
The Energy Department reported that despite the expiration of tax credits for wind power at the beginning of this year, Environmental Protection Agency carbon dioxide rules could benefit wind power companies — a power source that produces no carbon dioxide when generating electricity.
“[A]lthough the lack of long-term federal incentives for wind energy has been a drag on the industry, the prospective impacts of more-stringent EPA environmental regulations on fossil plant retirements and energy costs may create new markets for wind energy,” the DOE reported. “Of special note are the actions to address carbon emissions that have been initiated at the EPA.”
The loosening of federal tax credit rules to provide a decade of subsidies to wind farms “under construction” by the end of 2013 should help the industry to grow through 2015, the DOE notes, but growth after 2015 is uncertain due to the lack of long-term federal subsidy programs.
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The DOE’s report comes after EPA chief Administrator Gina McCarthy sold the carbon dioxide regulations as a “business opportunity” for companies with low-carbon energy sources, like wind.
“The great thing about this proposal is that it really is an investment opportunity. This is not about pollution control,” McCarthy told the Senate Environment and Public Works Committee in July.
“It’s about increased efficiency at our plants. It’s about investment in renewables and clean energy,” she added. “It’s about investments in people’s ability to lower their electricity bills by getting good, clean, efficient appliances, homes, rental units.”
McCarthy’s comments were slammed by conservatives who said her comments show the EPA rules are about benefitting green energy producers while punishing less politically favored energy companies.
“Other countries have seized the ‘investment opportunities’ McCarthy claims this regulation creates,” said Dan Simmons, senior vice president for policy at the Institute for Energy Research.
“Spain heavily ‘invested’ in wind and solar in the form of taxpayer subsidies and preferential treatment and subsequently lost 2.2 jobs for each green job created,” Simmons said. “The UK similarly ‘invested’ in wind and solar and lost 3.7 jobs for each green job created. Those were remarkably bad investments.”
EPA rules governing carbon dioxide emissions from new and existing power plants will force utilities to close coal plants or shelve plans to build up coal capacity. Government data shows that 60 gigawatts of coal-fired power is slated to shut down due to EPA rules, especially one governing mercury emissions.
The EPA’s newest carbon rule limiting emissions from existing power plants is expected to shutter “approximately 46 to 49 GW of additional coal-fired generation (about 19% of all coal-fired capacity and 4.6% of total generation capacity in 2020) may be removed from operation by 2020.” The agency says coal production is expected to fall by up to 28 percent.
The DOE report also noted that state green energy mandates, along with financial incentives for green power, will help spur the growth of wind power in the absence of federal tax credits. State-level cap-and-trade regimes will also grow wind power use, says the DOE.
“[C]oncerns about the possible impacts of global climate change continue to fuel interest in some states and regions to implement and enforce carbon-reduction policies,” the DOE reports. “The Northeast’s Regional Greenhouse Gas Initiative (RGGI) cap-and-trade policy, for example, has been operational for several years, and California’s greenhouse gas cap-and-trade program commenced operation in 2012, although carbon pricing seen to date has been too low to drive significant wind energy growth.”
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