The US Environmental Protection Agency (EPA) on Tuesday proposed a new rule that would weaken regulation of coal-fired power plants, a move that could prolong their operating lives but not change a nationwide trend toward adoption of cheaper and cleaner renewables for electric power generation.

The proposal, which has been anticipated since President Donald Trump took office in January 2017, would replace the Clean Power Plan (CPP), his predecessor’s signature effort to reduce CO2 emissions as a key part of US pledges made at the Paris climate agreement.

According to the Trump administration, the proposed Affordable Clean Energy (ACE) rule would cut CO2 emissions from 2005 levels between 0.7% and 1.5% by 2030, versus a business-as-usual approach. By contrast, the CPP, sought to reduce CO2 emissions 32%.

EPA says the ACE rule conforms to the 1970 Clean Air Act, which requires the federal government to devise ways to reduce CO2 emissions – a requirement upheld by the Supreme Court.

The agency estimates that the proposal will affect more than 300 power plants (including some older ones that utilise natural gas).

According to the environmental group Sierra Club, 270 of the nation's 523 coal plants it has pressured owners to close since 2010 either no longer operate or are due to be pulled from service.

The CPP was finalised by EPA but never went into effect after 29 states, the coal industry and others sued to halt the plan, successfully arguing that the federal government had exceeded its authority to regulate emissions. The Supreme Court stayed the rule, and it has remained frozen ever since.

Environmental groups are certain to challenge the ACE rule in the courts, potentially delaying its implementation, while seeking to reinstate the CPP.

The EPA in a statement says the ACE rule would replace the “overly prescriptive and burdensome” CPP, promote energy independence, and facilitate economic growth and job creation. It claims the proposed rule would cut the “compliance burden” by up to $400m per year when compared to CPP.

Significantly, the proposed rule would give each state the authority to determine coal plant emissions reductions, while limiting their options to promote greater efficiency and other changes at the facilities.

“The ACE Rule would restore the rule of law and empower states to reduce greenhouse gas emissions and provide modern, reliable, and affordable energy for all Americans,” says Andrew Wheeler, who replaced Scott Pruitt last month as acting administrator at EPA.

“Today’s proposal provides the states and regulated community the certainty they need to continue environmental progress while fulfilling President Trump’s goal of energy dominance,” he adds.

Wheeler, a former coal industry lobbyist, has denied that EPA wants to promulgate the new rule to save the coal industry, which Trump believes is a core element to ensure both reliable baseload electric power and US energy dominance.

Declining economics of coal (and nuclear) have prompted the US Department of Energy (DOE) to propose ways to keep those struggling plants online that the administration deems to be critical for national security. They are facing cheaper competition from natural gas and renewables.

In March, Ohio-based FirstEnergy Corp asked DOE to issue an emergency order to provide cost recovery for its coal and nuclear plants in the PJM Interconnection, a large grid operator in the US mid-Atlantic and midwest regions, asserting that "energy security and reliability" were under threat due to market conditions there.

DOE has not acted on the request.

The Bipartisan Policy Center, a Washington DC-based think tank, said it is not entirely clear how the new rule would affect coal-fired power plants.

It will depend in large part on what states decide to do with this new latitude, what types of investments might be needed to make improve plants' performance and how this might affect electricity prices—particularly wholesale power prices.

"So the rule isn’t necessarily a slam dunk for coal," the group said in a statement.

After a state presents a plan, EPA would have 12 months to approve it. The agency would also have legal authority to impose a federal plan should a state decline to submit one - something the CPP also allowed.

Environmental groups were sharply critical of the proposed rule.

"There is nothing clean or affordable about this rule," said Carter Roberts, chief executive of the World Wildlife Fund. "Coal plants emit more carbon pollution than all other sources. They're often more expensive than natural gas, solar or wind energy. And worst of all, they impose severe public health costs on us all."

Utility industry reaction

The utility industry had been divided over the CPP. Most large electric utilities accepted the likelihood of greater federal regulation of carbon emissions years ago and responded by closing older, uneconomic coal-fired plants or have plans to do so over the next five years or so.

MidAmerican Energy, Xcel Energy and various others also began aggressively adopting cheaper wind and solar energy and natural gas, in part because of growing demand for cleaner alternatives from their customers.

On 30 June, there was a record 19GW of wind capacity under construction in the US, while the total amount in the country’s late-stage pipeline has reached 37.8GW – up a stunning 46% from last year, according to the American Wind Energy Association’s latest figures.

As a result, coal’s share of total US electric power generation declined to 30% in 2017, the lowest level in decades. Natural gas has increased to 32% while renewables have doubled to 16% since 2005.

In contrast, smaller utilities and co-ops generally have opposed greater federal regulation, citing high costs for compliance and to replace existing plants.

“The proposed rule appears to provide electric cooperatives with a more achievable plan,” said Jim Matheson, chief executive of the National Rural Electric Cooperative Association, a trade group, whose members obtain more than 40% of their electricity from coal.

He did note that his member co-ops are transitioning from coal toward cheaper fuels. “The electric cooperative fuel mix for providing electricity is changing, with increased investments in natural gas and renewables,” he said in a statement.

After publication in the Federal Register, the official record of the US government, EPA will take comment on the proposed rule and hold a public hearing.

EPA data from 2016 shows that the electric power sector generated 28.4% of total US greenhouse gas emissions, slightly behind transportation at 28.5%.

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