My grandfather was a coal miner. His family immigrated to Kansas from Slovenia and settled in southern Kansas in a little town called Croweburg (seen in photo below from the 1920s) where he mined coal up until the Great Depression. After that, my family moved to Chicago, but my grandparents always loved Kansas and later retired to the former mining town of Arma. In part because of his days mining coal, my grandfather suffered from lung problems, as did many miners of the period. In addition, the region around Arma and Croweburg is still littered with old surface – or strip – mines, most of which are now filled with water and used for bass fishing.
(Photo credit: Charles Dugone)
All that said, it is probably a good thing that many health, safety and environmental regulations are now imposed on coal mining operations. But that does not mean that this industry, or any industry for that matter, should be burdened with regulations that have huge costs and provide little in the way of benefits.
One of these regulations is the US Environmental Protection Agency (EPA) rule on National Emission Standards for Hazardous Air Pollutants (NESHAPs) from coal- and oil-fired steam electric generating units (EGUs). This regulation was finalized in February 2012 and forces utilities to reduce mercury emissions as well as other air pollutants. While reducing pollution is generally a good idea, there are substantial costs involved that will dramatically increase electricity costs across the country.
No matter what the government requires from business, there will always be some pollution, and pollution is necessary for humans to live in civilized society.
The balance between clean air and heating and electric light is the real issue, and in this case, the EPA did not seem to consider humanity in its regulations.
Federal Restrictions on Specific Air Pollutants Can Cost America 1,666 Times More Than the Benefits
Americans used about 3.7 billion megawatts of electricity in 2012 according to the US Department of Energy. Of this, about 29 percent came from coal fired power plants. This is down significantly from 10 years ago, when 35 percent of electricity came from coal. Overall, about 161.85 million tons of coal has been displaced in energy production over these 10 years. There are a number of reasons why coal has become less important, namely the rise of natural gas production in the United States. In fact, the growth in the usage of natural gas basically accounts for the decline in coal use.
That said, the Federal government, through the Environmental Protection Agency (EPA) has targeted coal fired power plants for more and more stringent pollution controls over the past few years. One such rule National Emission Standards for Hazardous Air Pollutants From Coal and Oil-Fired Electric Utility Steam Generating Units and Standards of Performance for Fossil-Fuel-Fired Electric Utility, Industrial-Commercial-Institutional, and Small Industrial-Commercial-Institutional Steam Generating Units (or the Regulation for short) requires utilities to reduce emissions of so called HAPs (hazardous air pollutants) through the use of expensive scrubber technologies or by shifting from coal to more expensive sources of fuel. According to an analysis of the EPA’s Regulatory Impact Analysis by Dr. Anne E. Smith, of NERA Economic Consulting, the actual benefits of reducing mercury and other hazardous air pollutants that would result from the rule is at most $6 million annually. This compares to the costs calculated by the EPA itself of about $10 billion per year. The EPA’s own estimates suggest that the regulation has a cost/benefit ratio of 1,667. In other words, it would cost electricity customers over $10 billion a year to reduce the cost of pollution by about $6 million.
Since agencies need to justify their regulations based on some sort of expected benefits, the EPA simply added in benefits from what they call “co-benefits.” In its RIA, the EPA adds in between $50 and $100 billion in estimated benefits from coincidental reductions of fine particulate matter, a pollutant that is separately and independently regulated under the Clean Air Act of 1970. In other words, they are double counting a benefit from the Clean Air Act as a benefit from the new regulation.
Every President since Ronald Reagan has signed an Executive Order requiring that agencies conduct benefit-costs analysis as part of their rule making process. There are good reasons for this. In some cases, where agencies are co-opted by the regulated industry, they propose rules that may benefit certain favored businesses at a cost to the environment, to taxpayers or to other firms. In other cases, over-zealous bureaucrats, or those compromised by association with anti-industry groups, propose draconian regulations in order to harm firms, their customers and their workers. A stringent and transparent cost-benefit analysis should help weed out these arbitrary or politically conceived regulations. In this case, the EPA has let its urge to regulate overtake basic economic and fiscal sanity, and it is the American consumer, worker and even the government who is paying for this hubris through higher energy costs.
Do you have a ridiculous regulation you want us to discuss? Send us an email.
 See: http://www.gpo.gov/fdsys/pkg/FR-2011-05-03/pdf/2011-7237.pdf