« Off The Charts | Main | Another Political Football »



Matthew Thomas Howell

This article was mentioned in class recently. The article discusses the closing of 3 coal-burning power plants by a large electric utility company, American Electric Power. Many aging coal-burning plants are beginning to be shut down, 142 since 2010 in the USA, and are being replaced in part by less polluting sources of energy such as wind, solar, and natural gas. For this specific project, 2 new plants in Indiana and Michigan are already planned to be built and generate energy through solar and wind power. Companies need to begin making these types of actions that retire old polluting plants in exchange for cleaner energy sources. The technology is available, although most companies shy away from it due to the higher costs associated with such 'green' sources. For this reason, a tax or even less efficient cap-trade system would incentivize the companies to switch toward the cleaner energy options. Other actions taken by American Electric Power to decrease its pollution levels include a $5 billion project to install pollution control technologies and an agreement to cut sulfur dioxide emissions from 828,000 tons to 174,000 tons by 2015.
To me the most astounding part of the article is the last sentence that references the averted health complications. Displaying these numbers helps to make readers qualify the actual damages done by such pollutants, rather than envision the pollution as an abstract danger.

Doug Poetzsch

In class we recently spoke about how the EPA recently revised its emission standards for power plants, so that traditional "dirty coal" plants no longer meet emission requirements requirements. It is my understanding that this new regulation did not make use of taxes if power plants did not meet emissions targets. The regulation was more of a command and control measure saying plants have to meet this target (correct me if I am wrong). It was not a complete command and control regulation however because the EPA did not specify to firms that they have to build coal gasification or natural gas plants, they let the market choose where to go after meeting the target.

Nonetheless, this new regulation has led to the closure of 142 coal-burning plants since 2010, with more likely to come. This regulation, as I understand it is a good example of a successful command and control policy. The regulation has contributed to more natural gas plants coming on line and has acted as an incentive for firms to move to natural gas. Still, I wonder if it would have been more effective and efficient if the EPA simply but a tax on emissions still under the target level. Perhaps this would have led to more coal plants shutting down quicker and in turn less emissions being produced today. After all only 142 coal plants have shut down and there are many more still online in this country.

David Fishman

American Electric Power’s updated version of its 2007 settlement (originally filed in 1999) continues the trend away from coal powered utilities toward natural gas and other renewable based energy sources. The underlying reason for the litigation highlights the benefits of an ambient cap-and-trade system. The three coal plants based in the Midwest—Ohio, Indiana, and Kentucky—were inadvertently deteriorating the standard of living for people residing east of the power plants. The jet stream would carry the sulfur dioxide, mercury, and carbon dioxide emissions to the east inducing asthma and other respiratory illnesses, often leading to premature death and diminished quality of life. An ambient based system of permits considers the influence that emissions in one region have on other regions. By accounting for the regional effects, this type of cap-and-trade system more efficiently internalizes social costs to individual’s health.

Whether litigation such as this AEP example, a pigovian tax on carbon, or a cap-and-trade system become increasingly intertwined into our energy markets, this article also serves to illuminate the trade-off between marginal abatement costs and marginal damages that factor into these sort of policies. Coal plants supply 32 percent of the nation’s electricity, and these coal based utilities are subsequently the largest source of emissions. The emissions are directly linked to heart and respiratory illness along with an acceleration of climate change. The article begins to account for the marginal damages, which drive the lawsuit, by explaining that the termination of these three plants will “prevent 203 early deaths, 310 heart attacks, 3,160 asthma attacks.” Still, the abatement costs need to be considered as well. The article highlights that the Ohio plant will spend $5 billion in capital expenditures and other expenses to comply with pollution control standards as well as eliminating approximately 2,011 megawatts of coal-burning capacity. Although the health, climate, and abatement costs are not entirely quantified, the article still serves as a good reminder of the balance in producing the optimal equilibrium when considering an externality.

Tyler Voorhees

This article shows how the EPA emission standards that we recently talked about in class are starting to have an impact. I thought the last sentence in the article was most startlingly- just the closure of three plants can prevent 203 early deaths, 310 heart attacks and 3160 asthma attacks. These types of medical afflictions are easily quantifiable, and clearly just in those terms these new regulations are having a large impact already, and probably a much larger impact when you consider the other 142 coal-burning plants the article mentions. Even beyond those easily quantifiable statistics, I’m sure this decision is having a much larger effect on overall wellbeing east of Ohio where the pollution would have been gone that can’t be quantified without more studies.
I’m a little curious though about how this outcome would have been affected if there were a carbon tax in place. The article mentions that American Electric Power was forced to act in response to a lawsuit. Assuming there was a carbon tax that theoretically internalized the cost of carbon, would lawsuits such as this be allowed? They could probably never have carry the same power to force a firm to change, and though environmental law is far from perfect, it offers a path of recourse for people unfairly affected by pollution, like those living east of AEP’s coal fired plant. In class we always talk about how great a carbon tax is but we should still leave room for recourse in cases of severe localized pollution.

Tim Werner

I find it interesting that AEP’s action to shut down these 3 coal-burning plants was in response to a lawsuit in 1999, and as Tyler stated, if a carbon tax had been in place instead of the lawsuit, how would the outcome have changed. Moreover, the article states that the original lawsuit filed in 1999 was concerned for the environmental costs of pollution caused by these coal-burning plants drifting east. I’m interested to know if a carbon tax or cap and trade had been previously passed if the outcome would be different.
If these coal-burning plants were on the east coast, would a lawsuit ever have been filed and would these plants continue to operate in the future? In this case, the environmental costs of pollution drifting eastward would occur off the coast, and perhaps less people would be immediately affected by the early deaths, heart attacks or asthma attacks caused by their pollution. The lawsuit in 1999 was successful in shutting down these harmful, coal-burning plants. However, if AEP strategically located the plants to prevent such a lawsuit, I question if they would have addressed this pollution by shutting down these 3 plants or if it would take a future carbon tax or cap and trade to achieve the same outcome.

Nick Bell

In this article, what first stood out to me was that the AEP’s decision to close 3 coal-burning plants was in response to a lawsuit in 1999. 1999 was 14 years ago. To me this just represents the overall attitude that Americans have towards our environment and pollution. A law suit was made 14 years ago which means people knew very well the negative environmental effects that these plants were having on the east coast and still nothing got done for 14 years. I feel that most Americans either are not smart enough to realize how badly we are ruining our environment or they simply don't care. I am glad that the plants are finally closing and I feel that it is a step in the right direction, even though it took so long. I just hope America can continue to focus on our environmental issues and figure out some solutions because we cannot afford to stay idle for another 14 years.


The move by AEP is small in terms of actual reform, but symbolically is crucial in the process of incrementally transitioning away from externality-creating methods of power generation. Since these emissions drift east, those benefiting from the existence of those three soon to be defunct plants have not been incurring the full costs. The incorporation or renewable sources also carries the plus of not only significantly lower input costs, but also minimal operational costs. While solar and wind power installations’ production is at the mercy of the weather, they do not require fuel and even more importantly, maintaining such is especially cheap. With 142 plants closed down since 2010, progress is tangible, however in this instance it has taken fourteen years to finally put this lawsuit to rest—blatantly and unfortunately epitomizing the stasis engulfing the movement to responsibly, ethically, and environmentally switch more optimal energy resources. In all likelihood, I imagine that the rate of transition will increase, albeit there is much more work to be done. The future is optimistic and progress is evident. Hopefully, healthier days await those who have been ailing from these emissions

Marissa Gubler

The closing of coal plants has huge environmental and health benefits, but also there is a negative consequence that needs to be addressed. While it is great that with two years three coal-burning plants will be shut down and replaced with wind and solar plants, the generally impoverished communities employed at those three plants will become unemployed and will likely struggle just to stay on top of expenses. A solution to this consequence of closing plants could be to build the wind and solar plants where the coal plants currently are instead of building them in a different state. Perhaps, the workers can be employed at least in part to construct the new plants, but until the plant is built AEP should make sure their laid-off workers find another job, perhaps at another location, or compensate them until they can get a job at the newly built plants. On the bright side, it is great that AEP is recognizing the need and opportunity to switch to fuels that have a lesser impact on climate change, environmental health, and human health. Additionally, the installation of pollution scrubbers is a good way to reduce the impact of coal burning plants until they can be converted into plants that burn less impactful fuels, like natural gas. It is amazing how many death, infarctions, and asthma attacks can be prevented by closing these 3 coal plants , and hopefully this data along with the emission data will aid other power companies in seeing that coal burning plants carry along severe consequences and need to be converted to burning alternative, less harmful fuels.

Curtis Jay Correll

This article is interesting, but I would like to see some more information about a few aspects of it. The lawsuit referenced in the article is particularly interesting to me. I would be curious to know who was suing AEP, on what grounds specifically and what the settlement was. Successful litigation over abstract damages like those caused by AEP is encouraging, but it makes one wonder how much companies are allowed to get away with before they have to pay retributory fees. I was also left wondering how they had such specific numbers on lives, heart attacks and asthma attacks spared. If these numbers are truly accurate, can we calculate these for smaller scale damages by smaller firms? Could we calculate similar numbers for pollution from one country to another? If these numbers are available and somewhat accurate, then this may mark a step forward in environmental accountability within the USA.

Rachel Samuels

While there may be some concern about filling the deficit in coal production due to the removal of three large plants, AEP's decision is most likely due mostly to decreased demand for coal in light of the substitute of natural gas, not due to environmental pressure. As can be seen in this article, http://www.energyandcapital.com/articles/war-coal/2149 , coal use in the US has been on the decline since 2010 at the latest. If you think about the progression of fossil fuel use as a cycle, we have already crested the peak of our coal use, and are starting to decline. As can be seen in the other article "The environmental equivalent of giving 110%" from Environmental Economics, it appears that China is still on the lefthand side of a circular cycle, still increasing their use. I must express satisfaction that AEP is not purely investing in natural gas plants to replace the abandoned coal plants, and instead working in solar and wind energy as well. This means that investing in renewable energy is being recognized as profitable by, granted, the companies with the greatest economies and scale and the R&D to invest in new technologies. Hopefully this will lead to continuing similar shifts across the board as other companies follow the leader. I would also be interested in exploring how much of the environmental practices being installed on the still-existing plants are due to eventual profit, fear of regulation/continued lawsuit, or press coverage/public relations. Regardless, this move is consistent with the US's decreased dependence on coal to mirror the increased efficiency of renewables and natural gas wells.

Chris Nault

This article is a good representation of the overall trend occurring in US energy policy in which the country is shifting away from coal and moving towards both natural gas and renewable sources of energy. I think that the importance of this shift is that the country is beginning to take environmental costs into account more when making energy decisions, and choosing sources of energy that may be more costly currently, but have less environmental and health effects than coal. As we briefly discussed in class, what will be interesting to see is how coal is integrated into the future. The current shift is away from coal, with coal plants being shut down, but since the US has a lot of coal reserves, will coal be used again in the future after technology continues to develop and coal can be burned cleaner?

Emily Zankman

I find it very encouraging that environmental ethics appears to be shifting from a theoretical to more of an applied ethic. One can see in biomedical ethics principles of beneficence, non-maleficence, respect for autonomy, and justice. This article gives me hope that these same principles are starting to be applied to environmental policy decisions. The fact that “the retirement of the three AEP plants will prevent 203 early deaths, 310 heart attacks, 3,160 asthma attacks” shows the ethical directive to do no harm. Granted, there is an economic element to this as well so ethics is not the sole (and perhaps not the main) motivator. Furthermore, we still have a long ways to go in formulating environmental policies in a way that promotes human and ecosystem health. However, this is a positive indication of a shift to cleaner energy sources.

Dylan Florig

After clicking the link to the original Washington Post article, I was shocked at the costs of pollution control and modifying power plants to make them more efficient. The article said it will cost $5 billion to "install pollution controls" and reduce emissions on its East Coast plants. This cost, when actually quantified like this and not just spoken vaguely about, shows just how costly "going green" can be for power companies (at least in the short term - there may be long-term savings). This cost makes me think that we need some forms of government intervention to encourage firms to change their behavior. Market forces and "doing the right thing" probably will not be enough to encourage firms to make changes. This is where I believe the "carbon tax" could be used most effectively. If a tax on carbon were in place, AEP would save dramatically on its tax bill, since it could lower its carbon emissions by over 600,000 tons in the next decade. The carbon tax might encourage other firms to become more efficient as well. As we've talked about in class, maybe lowering income tax while implementing a carbon tax would make our tax system more efficient, as it would incentivize and disincentivize the right things.

Gyung Jeong

As the article suggests, it shows the transition from using coal to using natural gas and renewable energy. This also means that they will invest more on solar and wind power systems. This is the most interesting part of the article to me. United States declined to join Kyoto Protocol due to economic reasons and was reluctant to take any actions to save the environment. However, just like China decided to put tax on carbon emission, United States is also learning that the problem is getting worse and that they have to do something about it. It is also impressive that there are companies that spend their own money to build emission control and reduce the level of emission. I hope this is a beginning of new era. This transition might be costly in the beginning but once we have the solar and wind power generations ready, it will be cheaper and better for the environment.

Katja Kleine

I would be really interested to know more about the methodology behind the claim that the closure of these plants will result in preventing "203 early deaths, 310 heart attacks, 3,160 asthma attacks". This seems to be the hardest part of addressing environmental issues so I was happy to see some calculation. Likewise, I think this rhetoric could be used for a strong moral-suasion. For example, maybe targeting specific companies in specific communities and articulating the lives that WILL most likely be lost if things don't change could be powerful.

Wen Xiang Chuah

Although this isn't as large of a step as say, China's shift to a carbon tax, it seems to at least represent a cautious step towards a more environmentally sustainable future. However, there is room for little more than cautious optimism, with the initial impetus for the shift originating from a 1999 lawsuit. The fact that it has taken approximately 13 years for the legal process and settlement to get to this point is inherently disappointing. Furthermore, the lack of governmental involvement in this shift is further cause for concern: although its inaction has defending the United States' laissez faire economic policy, it fails to represent any sort of concerted recognition of the impeding climate disaster by the government.

Will Andrews

It is good to see that transitional steps are being made to protect the health of people as well as the climate by energy companies. I found the article posted informing but lacking information in areas I believe to be of interest. I would like to see data relating to the amount of alternative energy infrastructure that would need to be built to cover the energy loss from the termination of coal burning plants. Another set of data that I would have liked to supplement the article is the cost associated with creating and running plants given to other sources of energy in comparison to the costs given to the coal burning plants.

Juan Manuel Polanco

Correct me if I am wrong but I believe that in 2009 there were around 1500 coal-powered units in the United States. I have not been able to find more recent data but I doubt that the number has changed much in the past years. I don't believe that closing 3 plants will make much of a difference. It is true that the people living near those plants will greatly benefit from this, but will it be enough to positively affect the environment? I don't want to sound pessimistic but this looks to me more like a publicity stunt than a true proactive campaign. The cuts in sulfur dioxide emissions seems promising; however, the numbers showing the reduction of health issues seem too low. Around 20 million Americans have experienced asthma attacks with around 2 million visits to emergency rooms annually*. Fine particle pollution causes around 30,000 early deaths every year. Reducing asthma attacks by only 3,160 and premature deaths by 203 doesn't seem enough. Don't get me wrong, I think that those 203 saved lives are something to be happy about but more should be done to make that number much larger. I think it is great that energy companies are being held responsible for their damages to the environment and that they are finally being forced to do something about it. This is a good start but there is much more work needed.


Brett Murray

The ultimate shift from coal to natural gas in the electric utility industry seems to be increasingly inevitable. In a Black and Veatch survey of various electric utility providers, there was a sharp decline in respondents answering "yes" to there being a future for coal in the U.S. (81% in 2011 declined to 58% in 2012 alone), and this current trend of digressing from coal as a primary fuel source is only expected to continue. As a result of the sharp decline in the price of natural gas from $13 in 2008 to current prices of less than $2 per MMBtu, the only factors limiting this industry's switch to natural gas have been the uncertainty surrounding future policies as well as the extremely low price of natural gas. Therefore, in order to increase the demand for natural gas, a direct price on carbon could lead to a substantial increase in demand, which would then be followed by the rapid expansion and development of the necessary plants and infrastructure to support this conversion.

In other words, if natural gas has proven unsuccessful in displacing coal as the primary source for electricity production in the U.S., then perhaps it is time for environmental and natural gas advocates to join forces in order to effectively foster the transformation of the industry from coal to natural gas and other renewable alternatives. Evidence shows that solar-combined natural gas combustion cycles are more cost-effective and efficient than stand alone PVCs and solar thermal technologies.

As inertia continues to build in the global economic system, immediate action will be necessary if we are going to successfully meet the energy demands of the future without doubling the CO2 levels that existed prior to the industrial revolution. As the majority of growth in energy demanded will occur in developing nations, it is vital for the developed countries (especially the U.S. who is largely responsible for climate change) to lead the global economy to a low-carbon future and protect the rights of future generations to exist and prosper on this earth.

Austin Pierce

I believe Chel nailed it on the head when she said that the decision was more economic and fiscal in nature than environmental. The price of natural gas has plummeted, and the cost of lawsuits paired with their probability is substantial to push the company's view towards a more natural gas/RE approach. On the China issue she mentions, we have discussed how they are shutting down a fair number of Beijing plants and implementing some form of carbon tax, but the trend is still more than likely on the rise, especially for inner China, where development has only recently began.

Daniel Molon

The news reported in this article is very promising in terms of limiting pollution in the United States. If American Electric Power can shift from coal-fired power plants to natural gas, and improve their profit margin from it, then other large electric utility companies will most likely follow suit. The health benefits from reducing pollution by the amount expected from this switchover would reduce healthcare costs greatly, and would hopefully help prevent the predicted spike in healthcare costs. Also, the pollution-control technologies they plan to install that will decrease sulfur dioxide emission by over 75% will also be helpful in reducing pollution. These technologies exist, but have not been implemented on a wide-scale, but if AEP can prove that it is more economically efficient to invest in the starting cost of these technologies, then other businesses should follow their example.

Kate LeMasters

After reading other student’s comments, I would agree that this is a step in the right direction, but it must be compared to other potential methods to fully assess the efficiency of this approach. If a carbon tax were implemented, would that have a larger effect on the number of coal plant shut-downs? If the EPA focused in on big-companies with low MAC and high emissions, would they get a bigger bang for their buck? In addition to questions of economic philosophy, I wonder how large of an impact this will have on both the greater US and the world climate. Because this effort was organized by the eastern states, does this mean that only the eastern US is benefiting from reduced carbon emissions from coal?
Also, is this even economically and environmentally the most feasible option if there are other industries with lower MAC’s? For instance, agriculture has a lower MAC and accounts for 14% of CO2 emissions. An EPA regulation on agriculture would also promote sustainable agriculture throughout the country rather than in localized geographical areas. This would also be more easily transferrable to the international sphere than would be command and control on coal plants because it is applicable to more nations.
This being said, these EPA actions are a step in the right direction, and we should consider them the first step on a trajectory, not an end in themselves. We cannot stop research and development now that we are switching to more natural gas; we cannot become complacent.

Nick Cianciolo

It is very good to see the transition to more environmentally friendly power sources being built in my backyard, the good old rust belt. The levels of smog in Cincinnati during the summers is not fun and is particularly overbearing during the major outdoor sports weeks of early August. For this reason I am happy to read this. However, I am also concerned. Although Ohio and Indiana weathered the recession better than many other states, this will still reduce the number of decent blue collar jobs in the region. One of the pains associated with the transition to renewable energy such as wind and solar is that it is much less labor intensive than other energy sources such as coal or natural gas. Our economy is going to go through a tough transition as our energy sector switches from providing many decent blue collar jobs to much fewer white collar jobs. The emphasis will grow even further on the need for education increases across the population for science and technology.

Avery Gant

I find Dylan's comment insightful as he looked at the individual firm's cost to accept higher standards regarding carbon emissions. A $5 billion fee for mining upgrades would pack a more solid blow to smaller coal firms than that sustained by the AEP. If all coal fire plants were required to meet these same emissions standards, it may be economically efficient for a particular firm to stop production and close the plant. With declining output in the coal energy sector there will be room for emergent wind and solar farms and lower emission natural gas drilling sites/refineries. APE's acceptance of closing outdated plants strengthens the movement toward more environmentally friendly energy methods. While it has been stated that this is only a minor victory for this movement, I believe it extends a little more. With AEP accepting this proposal, they have set a precedent for a reasonable meeting ground for existing coal firms. This could also act as the blueprint for new legislation tightening the regulations on carbon efficiency placed on them. The AEP may have just placed a lot of pressure on smaller coal firms.

Scott Diamond

As I was reading many of the previous comments, I was struck by how many people seemed to view these plant closures as benevolent acts made by utility companies when this is not entirely true. It is important to remember that these firms are still profit maximizers and will respond to changes to in the external environment/incentives/legislation in a manner that preserves their financial interests. According to a recent article by Bloomberg news, coal-fired power plants are likely to close not because of environmental concerns but instead due to higher costs associated with operating these plants. Technological advances have made natural gas and wind power more cost effective, thus prompting a shift away from coal. Additionally, most plants are built with a 30-year lifespan and many of the closings that we have seen/will experience are the result of these plants coming to the end of their useful life. More plants will be closed only if Congress enacts a tax on carbon or if natural gas prices remain low.

The comments to this entry are closed.