New-look EPA shakes energy industry with coal power review

A newly-promised review by the US Environmental Protection Agency (EPA) into its policy governing greenhouse gases emissions from coal-fired electricity plants is quickly scaring the industry into what could prove a major retreat from its plans for coal.

Within hours of news of the review breaking earlier this week, a permit application for a massive new coal-fired plant in Oklahoma was withdrawn, without explanation.

Environmental lobby group The Sierra Club said the power sector – emboldened by the Bush Administration support – had filed permits for around 100 coal fired sites across the country with no restrictions on emissions. It added that news of the EPA action by the new Obama Administration appointed administrator, Linda Jackson, means those plants are now far less likely to be built.

Jackson announced the EPA will be specifically reviewing a memo issued in the waning days of the Bush Administration that said that carbon dioxide emissions need not be considered when approving applications for new power plants.

That memo, which one of several "midnight" rule changes the Bush Administration issued at the end of its term in an attempt to relax environmental rules, rejected a decision by the EPA's own appeals board and ignored a contrary ruling from the US Supreme Court.

Official procedures prevent Jackson from simply throwing out the Bush memo so the EPA has instigated a process to draft its own rules.

However, Jackson warned those issuing permits that the writing is on the wall and they "should not assume that the memorandum is the final word on the appropriate interpretation of Clean Air Act requirements".

In a clear hint that carbon emissions from new coal-fired plants would be considered when making future permit decisions, she added that "we are going to be making a fairly significant finding about what these gases mean for public health and the welfare of our country".

The EPA owes the country a ruling, she said, after what she termed the " deafening silence" of the Bush years.

If, as expected, the EPA falls into line with the Supreme Court ruling it is likely that only coal-fired power plants making use of the latest clean coal technology will be granted approval.

However, energy industry experts have argued that in the medium term emission standards for coal-fired power plants should be introduced by Congress, not the EPA. Politicians though are said to be wary in a recession of burdening consumers with the additional costs associated with controlling power plants greenhouse gases.