Southern Company’s Attack on the Clean Power Plan: Some Important Unanswered Questions

December 1, 2014 was the deadline for public comments on EPA’s proposed Clean Power Plan. EPA’s docket was flooded with hundreds of thousands of submissions. As expected, strong praise from some quarters was mixed with vocal criticism from others.

Prominent among the naysayers was the Southern Company, one of the largest US generators and distributors of electric power and a top emitter of greenhouse gases (GHGs). Through its subsidiaries, Southern has a dominant presence in electricity markets in Georgia, Alabama, Mississippi and the Florida Gulf Coast. This region is conservative politically and Southern has historically been skeptical of federal environmental regulation.

While Southern could not be expected to embrace EPA’s proposal, its strongly worded condemnation of the Clean Power Plan is striking and unusual even compared to other critical voices. Southern asserts that the Plan “extends beyond EPA’s authority under the Clean Air Act, is unworkable and would increase electricity prices to customers while jeopardizing reliability.” This will result, Southern says, in a “complete deconstruction of the nation’s electric sector and negatively impact America’s energy security.” Implementing the Plan, according to Southern, could cost $1 trillion.

Southern offers detailed legal arguments that demonstrate, in its view, that the proposal is a “fundamental violation of the Clean Air Act.” It rejects the four strategies, or “building blocks,” on which EPA bases its projected reductions in greenhouse gas emissions, claiming that each is “not feasible or adequately demonstrated.”  And it attacks EPA’s state goals as “error-laden,” “infeasible” and “overly stringent.”

The Southern comments do not mention climate change and its link to power plant carbon emissions except to argue that EPA has shown no “valid offsetting benefits” to justify the proposal’s costs and that “EPA never makes the case that the proposed rule would significantly mitigate climate change.” (That’s a remarkable statement given that power plants account for a third of US GHG emissions and the US is the world’s second-largest emitter.)  

Southern offers no recommendations to improve the Plan – for example, by redefining the four building blocks or adjusting the state goals or compliance schedule. Clearly, its goal is not to fix the proposal, but to stop it in its tracks.  

What Southern is Doing to Reduce Emissions

Southern Company’s adamant opposition to the Clean Power Plan is hard to square with its own substantial progress in reducing GHG emissions and the high likelihood that its emissions will continue to decline between now and the 2030 deadline for implementing the Plan. Disturbingly, the company’s emission reduction efforts are prominently discussed on its website and in other public materials but not in its comments to EPA.  

Southern’s large power plant fleet is in the middle of a dramatic transformation.  GHG emissions from power plants under its control declined by 33 percent (from roughly 150 to 100 million metric tons) between 2007 and 2012. While lower demand for electricity due to the recession played some role in this reduction, the dominant factor was Southern’s greatly increased reliance on natural gas and reduced combustion of coal. During this five year period, coal’s share of Southern’s power production declined from 70 percent to 38 percent, while gas’s share increased from 15 to 42 percent. It seems likely that a large portion of this shift was achieved by increased utilization of existing natural gas plants (EPA’s Building Block 2) as opposed to bringing new plants on line. And it appears that the steep reduction in Southern’s GHG emissions was not accompanied by electric reliability difficulties or large increases in electricity rates, notwithstanding the claim of Southern and others that mandates to reduce emissions under the Clean Power Plan will have these impacts going forward.

Finding “Real Solutions”

Southern has touted the “substantial financial and human resources” it has committed to researching, developing and deploying “low-emitting, cost-effective electricity generation and end-use technologies.” To its credit, this commitment is real. The work Southern has done on a proprietary advanced coal gasification technology, Transport Integrated Gasification (TRIG^TM), is cutting-edge and may lead the way to low-emitting coal generation in the US and abroad.  Southern has also highlighted its Georgia Power subsidiary’s Advanced Solar Initiative (GPSAI), slated to add 735 megawatts (MW) of utility-scale and distributed generation solar resources by 2016 in a state where demand for solar power is among the highest in the nation. And it is seriously researching the potential for wind power in the Southeast (an area with poor wind resources) and greatly increasing purchases of wind generation from other regions.

According to Southern’s Website, these and other efforts are producing “real solutions” to the challenge of lowering GHG emissions. But the message of its Clean Power Plan comments is a far different one —  that  the strategies identified by EPA as the “best system of emission reduction,” such as increased renewable generation and greater utilization of natural gas plants, have limited potential, face daunting obstacles and cannot be scaled-up successfully in the time-frame for implementing EPA’s rule.

Yet, looking forward, Southern has an ambitious program to continue realigning its generation fleet using some of the very strategies that it questions in its comments on the EPA Plan. Over the next ten years, it plans to retire 2700 MW of generation (presumably including several more coal plants) while adding 4000 MW. The new capacity will be predominantly low- or non-emitting. Southern is expanding its Vogtle nuclear plant to add 1000 MW of capacity; building the nation’s first commercial-scale carbon capture and sequestration (CCS) facility, the 500 MW coal gasification unit in Kemper, Mississippi;  adding 1300 MW of biomass, wind and solar generation; and converting 3000 MW from coal to gas as the primary fuel.

Southern hasn’t said what impact this shift to less carbon-intense generation will have on GHG emissions. But even allowing for some increase in electricity demand, it seems likely that the carbon footprint of Southern’s generation fleet will shrink significantly between now and 2030 and that, combined with  the cuts it has already made, Southern’s overall GHG reductions from 2005 levels will be well above the Clean Power Plan’s 30 percent national target. 

If Southern is on track to achieve GHG reductions of this magnitude, isn’t that evidence that EPA’s target is achievable by other large power generators despite Southern’s strenuous claims that the Plan is infeasible? Alternatively, if Southern is correct that the Plan will be difficult and costly to implement, is that because of how the Plan is designed and will be carried out, as opposed to its emission reduction goals, which are in fact achievable? And in that event, are there improvements in the Plan that would lower compliance costs and ease implementation without compromising emission reductions?   

These are vital questions, but Southern’s comments don’t answer them because the comments focus entirely on what’s wrong with EPA’s Plan, not on how GHG emissions can be reduced cost-effectively, drawing on Southern’s own experience.

A Missed Opportunity

Whether or not one believes the Clean Power Plan is within EPA’s legal authority or is the best vehicle for US climate policy, it raises legitimate issues about how quickly we can decarbonize the power sector, what strategies will achieve the best results, and the size of the emission reductions we can achieve. As one of the largest US power companies, Southern could make a positive contribution to the national debate by describing its own experience in reducing emissions and its plans for further reductions, putting its plans in the context of EPA’s goals and implementing strategies,  and offering suggestions on how to achieve EPA’s targets more cost-effectively. Its decision to instead mount a relentless, harshly critical attack on the proposal without mentioning its own emission reduction progress is a major missed opportunity.