EPA Finally Catches Up With America’s Electricity Needs

The U.S. Environmental Protection Agency (EPA) announced Monday that it would repeal the Biden administration’s carbon emission rule on coal- and gas-fired power plants. Had the rule remained, it would have forced reliable coal plants off the grid and hobbled their natural-gas replacements, as American electricity demand soars after 15 years of little growth.

The Biden Administration’s rule, finalized in 2024, would have forced coal and new natural gas plants to install costly and commercially unproven carbon capture and sequestration technology to capture 90% of their emissions or shut down by 2039. Faced with complying in only six years, almost all coal plants would shutter rather than incur such high costs. Remaining coal plants and new natural gas plants would be saddled with new costs, which land ultimately on American families and businesses already facing steep electricity price increases.

The Biden EPA underestimated the rule’s compliance costs. Our research modeled its effects on the Southwest Power Pool, the grid operator spanning 13 states at the time, or about 6% of the U.S. population. Under the rule, building a portfolio of wind, solar, and battery storage to replace retiring coal, natural gas, and nuclear would cost $65.6 billion more than operating the current grid. That’s three-and-a-half times what the Biden EPA estimated compliance would cost for the entire U.S. through 2047.

EPA never even bothered to test whether its projected generation mix could keep the lights on every hour, despite claiming that the “benefits of this rule substantially outweigh the compliance costs.” We did. Tested against historical 2021 conditions, our model found 13 separate blackout events across 12 days in February 2040, one lasting 41 straight hours. Overall, our analysis found thousands of hours of blackouts across the EPA model years. This is why compliance costs were so understated in the Biden EPA’s original analysis—it did not include enough power plants to maintain reliability, reducing its estimate by hundreds of billions.

While the Biden EPA was careful to estimate the externalities associated with emissions, it didn’t calculate the negative economic, human health, and environmental costs of power outages resulting from its regulation. When we quantified the social cost of blackouts using existing federal tools and data, outages in the Southwest Power Pool alone would cost $106 billion to $402 billion — against the $370 billion in net benefits EPA claimed for the entire country.

When the Biden EPA finalized the rule in 2024, few anticipated the scale of today’s data center boom. Rescinding the rule is not only necessary to keep existing coal plants online for reliability, but also to facilitate the buildout of new natural gas power plants desperately needed to meet growing electricity demand.

Demand forecasts are always speculative. A 2023 McKinsey & Company report projected U.S. data centers would need 35 gigawatts (GW) of capacity by 2030, up from 17 GW in 2022. This year, McKinsey revised its forecast to 121 GW of demand by 2030.

The Biden Administration could not have accounted for this explosion in data center demand — but the Trump Administration is doing so by rescinding the power plant rule. The Biden rule would have forced new gas turbines running more than 40% of the time to capture 90% of their emissions, adding costs, hampering the ability of the fleet to meet demand, and delaying the firm capacity data centers need. Almost two-thirds of data center developers planning on-site generation expect to rely on natural gas, and Global Energy Monitor expects between 55% and 81% more gas capacity on the grid than exists today in the coming decades.

Rescinding the rule is an ambitious first step, and the right one. The administration should now correct the underlying flaws in how these rules are written that allowed the EPA to severely underestimate compliance costs. Regulators count as benefits the avoided cost of carbon but neglect to account for the real human and economic costs of blackouts.

Half the country is facing a high risk of rolling blackouts by 2030, as demand climbs and dispatchable plants retire. The federal government’s decision-making should reflect the costs of its choices.

Mr. Rolling is director of research, and Ms. Montalbano energy policy analyst, at Always On Energy Research, a nonprofit modeling firm.

The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.

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