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U.S. Carbon Emission Rules Could Ultimately 'Send The Message That Coal Is Dead'

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* Proposed rules on new plants expected this month
* Could push carbon capture, other ways to cut emissions

By Timothy Gardner and Valerie Volcovici
WASHINGTON, Feb 13 (Reuters) - The Obama
administration is expected soon to unveil long-delayed rules
limiting carbon emissions from new coal-fired power stations,
possibly helping to slam the door shut well into the future on
building plants that run on the fuel.
The Environmental Protection Agency has dragged its feet on
proposing the new standards on carbon emissions that would hit
new coal plants or facilities undergoing expansion.
The short-term impact of the rules, the first to limit U.S.
carbon emissions from new power stations, is expected to be
symbolic -- the rules will not tackle existing plants, which
would have been far more disruptive to the industry.
But in the long run it could set the stage for rules that
take on such cuts.
"The proposed rule is certainly expected to send the message
that coal is dead," said Christine Tezak, an energy policy
analyst at wealth management company Robert W. Baird & Co.
Republicans sharply oppose a raft of clean-air initiatives
from the EPA and are keen to take the argument on the campaign
trail for this year's presidential election that the initiatives
kill jobs and saddle businesses with onerous costs.
The longer the administration delays, the less likely the
rules will be finalized before November's vote and the greater
the chances they could be overturned if President Barack Obama
loses.
But EPA chief Lisa Jackson, whose mantra is smart rules can
protect the environment, human health and the economy, says the
carbon plan will be out early this year.
The delay on the carbon rules is simply to work out the
kinks so they are not too costly on power companies, said
administration sources, who asked not to be identified.
U.S. states and environmentalists who have sued the EPA in
the past to speed up the carbon rules also expect to see the
proposal soon. "It's our expectation that the rules for
greenhouse gas emissions from new power plants will be issued
this month," said Mike Myers, a New York state government lawyer
involved in talks with the EPA.


BETTER SAFE THAN SORRY
After delaying the carbon rules in June and again in
September last year, the EPA finally submitted them in November
to the White House's Office of Management and Budget, where they
were being reviewed before going back to the agency.
The OMB has already held the rules for 90 days, which is
normally the length of time the White House would review
proposals such as these.
The environmental groups that sued the EPA on the carbon
plan would consider going back to court if the White House
continued to delay the rules, according to sources in the
organizations.
A ruling favorable to the environmental groups could result
in the courts laying down a hard date for the release of the
rules.
Obama delayed a major smog rule last fall, leading some
environmental groups outside the talks on the carbon regulations
to worry a precedent had been set for axing clean-air
initiatives.
Still, officials from states and environmental groups in the
talks said the administration would move forward. The agency has
created a public database of the country's top emitters and is
requiring the biggest emitters to hold permits for releasing
greenhouse gases.
"The administration is working on getting it right," said
Jeff Tittel, head of the New Jersey chapter of the Sierra Club,
one of the groups that have sued the EPA over carbon. "It's
better to be safe than sorry, because they don't want to rush a
rule that can't be implemented."

WHAT IF GAS RUSH SLOWS?
The outlook for new coal plants has been darkened by the
EPA's host of clean-air rules and as electricity companies dash
to build plants to burn much cheaper natural gas.
The EPA rules have pushed utilities to close more than 30
coal-fired plants, and companies have announced plans to shut at
least 130 more through 2020. No new coal-fired plants were
started in 2011, but more may be needed in the future if the
economy recovers and natural gas prices rebound.
The carbon rules could require new coal-fired power plants
to capture a portion, up to 60 percent, of their carbon
emissions and bury them permanently underground, or take other
measures to reduce emissions.
The EPA's overall clean-air efforts have divided the power
industry between companies that have moved toward cleaner
energy, including Exelon and NextEra, and those
that generate most of the power from coal, including Southern Co
and American Electric Power.
Southern, which owns the three largest carbon-polluting
power plants in the country, would not comment on the carbon
rules, but has said EPA air rules taken together will force it
to shut 40 percent of its coal-fired generation.
Melissa McHenry, a spokeswoman for American Electric Power,
said the United States needed to worry about the long-term
implications of the carbon rules.
"Near-term it's not an issue, but what are the implications
of the rules longer-term if the shale gas business doesn't pan
out the way people expect it to?," she said. "It's a concern for
long-term reliability" of the electric grid.

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