The Biden administration desires to accelerate our nation’s transition to green energy technologies. While our nation should be investing in renewable and other energy technologies, a complete shift is not feasible in the short term. It will take a deliberate, all-the-above energy approach to ensure that the energy transformation doesn’t jeopardize stability or drive-up costs for Americans.
The administration’s Environmental Protection Agency (EPA) recently proposed numerous rules to impose the energy transition via a government mandate. Two specific proposed rules from the EPA—one targeting fossil-fuel power plants and another focused on vehicle emissions—are intended to set the transition to renewables in motion, potentially disrupting the energy grid in the process. For states like Pennsylvania that rely on energy for steelmaking, electricity, and transportation, those rules would be devastating.
First, let’s examine the proposed rule for power plants. The 681-page plan would require most fossil fuel power plants to cut greenhouse gas emissions by 90 percent between 2035 and 2040. If those standards are not met, then the plants will be forced to shut down. According to the agency, about 120 natural-gas plants and 200 coal-fired plants would be impacted by the rule if it were to be implemented. If power plants are shut down prematurely without adequate replacements, it will hurt the pocketbooks of hard-working Americans nationwide. In fact, officials estimate that the proposed rule would raise average utility bills by 2 percent by 2030, declining to 1 percent through 2040.
Perhaps more concerning, power plant shutdowns due to the rule could mean electricity grid failures in cities and communities across the country. That could not come at a worse time, as our electrical grid is already strained with more electric household appliances and cars pulling power from it. In other words, if plants are forced to close prematurely, Americans will pay more for a less stable grid.
Simultaneously, the EPA also proposed stringent vehicle tailpipe emissions for light and medium-duty vehicles beginning with model year 2027. The proposed regulations vary for light and medium-duty vehicles but impose increasingly strict limitations on CO2 emissions. Tesla is the only company that already meets those standards. However, other EV models from companies like Ford are sure to follow. The EPA estimates two-thirds of the automobiles companies produce will have to be zero-emission vehicles by 2032 to comply with the proposed regulation.
As written, the emissions standards rule would artificially accelerate the adoption of electric vehicles in the U.S. That would limit consumer choice considerably, as the average price for a brand-new EV is about $61,500 compared to the average of $46,681 for a traditional gas-powered vehicle. That is not to say that more EVs on the road is a bad thing, but forcing this shift through government regulations could destabilize both the market and the energy grid. Should the emissions standards be finalized, the nation’s power grid will see an enormous uptick in usage as more and more Americans look to plug in their vehicles for a charge.
When you couple both of EPA’s proposed rules, it becomes quite clear that the energy grid’s security could become a victim of a rushed energy transition. This is no more apparent than in California, where a state agency is reversing course on closing three natural gas plants over fears of the inability to meet the electricity demand.
Regardless of these proposals, concerns about the grid’s current stability have already been raised. In its 2023 Summer Reliability Assessment, the North American Electric Reliability Corporation (NERC) stated most of the U.S. faces an elevated risk of blackouts if summer weather is severe. NERC’s Director of Reliability Assessment and Performance Analysis warned, “The system is close to its edge…managing the pace of retirements is critical.”
The EPA’s proposed rules advance the administration’s climate agenda at the expense of reliable electricity. As the analysis from NERC illustrates, the U.S. must carefully manage the retirement of power plants today—regardless of any more restrictive regulations that could come to fruition. In combination, these rules threaten to make NERC’s warning a reality.