Legislation can have significant impacts on energy producers who rely on coal or natural gas as their primary sources of power. In May 2023, there were legislative changes that will significantly affect these producers and the rate payers they serve. Emissions guidelines, standards, and limits for greenhouse gasses and fossil fuel-fired power plants will have cascading economic impact..
New EPA Proposed Standards and Guidelines
On May 11, 2023, the U.S. Environmental Protection Agency (EPA) released new carbon pollution standards for coal and gas-fired power plants. These standards aim to protect public health, reduce harmful pollutants, and provide up to $85 billion in climate and public health benefits over the next two decades. The EPA’s approach to establishing pollution standards under the Clean Air Act involves setting ambitious limits and guidelines for carbon pollution based on proven and cost-effective control technologies that can be applied directly to power plants.
This proposal allows power plant owners and operators ample lead time and compliance flexibility to make long-term plans and investment decisions, supporting the power sector’s ability to continue providing reliable and affordable electricity. President Biden’s policy agenda has driven momentum in the power sector to reduce GHGs, bringing us closer to avoiding the worst effects of climate change. The proposed EPA rules and actions demonstrate the Administration’s commitment to reducing pollution from the power sector while providing long-term regulatory certainty and operational flexibility.
Urgency For Sustainable Resources Will Affect the Economy
The urgent need for sustainable sources is driven by the increasing energy demands and the growing pollution of nonrenewable resources such as fossil fuels. The transition to new methods of generating energy presents a significant challenge due to the existing infrastructure and regulatory approaches that were designed for a time when demand for power was rapidly increasing, and large fossil-fired power plants were the best way to meet that demand. This creates conflict and challenges as the U.S. seeks to increase capacity. The differing characteristics of utility-scale, community-sized, and customer-sited clean energy options need to be taken into account.
As oil and gas are priced globally, the nation’s economy is at risk of being affected by global shifts in supply and demand. Furthermore, the integration of fluctuating renewable energy sources like wind and solar power into power systems lead to new challenges for power system analysis and design. The societal energy system is evolving rapidly as the impacts of our existing energy system are better appreciated, and technological advances have decreased the cost of renewable resources. With all that being said, there are many obstacles along thepath to becoming carbon neutral. It is important to note that as renewable resources become a larger part of our energy system, energy storage will also play a crucial role in the gap between supply and demand.
Revolution in Clean Energy
The United States is poised for a new wave of industrialization as it prepares to scale up domestic semiconductor manufacturing and widely implement clean energy infrastructure. The good news is that the Infrastructure Investment and Jobs Act along with the Inflation Reduction Act could spark a revolution in clean energy in the United States. However, this will only be successful if technical challenges and infrastructure issues are addressed quickly enough to meet demand.
What does this mean for the Average American?
Everyday Americans have been given incentives to switch to cleaner technology, including tax credits for electric vehicles or sustainable home improvements. This is all possible from the Inflation Reduction Act of 2022, a significant climate bill. Tax credits will also help sustainable technologies be more affordable and accessible to the average American. But what does this mean for the future price of nonrenewable resources?
Although there are incentives in place for switching to cleaner energy, the consequences from shifts in supply and demand for nonrenewable sources will be drastic. The impact of a price increase for nonrenewable resources in the U.S. economy is complex and multifaceted, because nonrenewable resources such as oil, coal, and natural gas are currently a significant part of the U.S. economy. This price increase of nonrenewable resources will lead to an increase in production costs, which in turn will lead to a decrease in economic growth.