EPA: S.D. needs to cut emissions 35 percent by 2030

New rules proposed by the federal government Monday could force South Dakota utilities to shift away from coal-burning power plants and toward cleaner alternatives, including natural gas and wind power.

The proposed rules, unveiled by the Environmental Protection Agency, would require each state to cut its total emissions of carbon dioxide from power plants during the next 15 years. Carbon dioxide, or CO2, is a greenhouse gas that traps heat in the Earth’s atmosphere and contributes to climate change.

“This rule has the potential to significantly change how we produce and consume electricity,” said Laura McCarten, a regional vice president with Xcel.

Power companies could pass on rate increases to consumers to offset the cost of building or retrofitting power plants to comply with the regulations. South Dakotans whose power companies rely on carbon-intensive coal could see a bigger effect, experts said.

About one-third of South Dakota’s total power comes from coal plants. Some power companies have much higher percentages from coal and others are lower.

States would be allowed to craft their own plans to reduce CO2 levels, subject to approval from the EPA. South Dakota would have to reduce its CO2 emissions from power plants by about 35 percent by 2030 to comply with the rules.

“Whatever a state does, it’s got to be the best available system for emissions reduction,” said Joe Sullivan, regional policy manager for Wind on the Wires, a wind energy advocacy group.

“Part of that calculation is that it’s cost-effective. You’re not going to be forced to do something that’s not cost-effective.”

Wind on the Wires is happy about Monday’s announcement: Wind power doesn’t emit carbon dioxide, setting it up for a “huge expansion,” Sullivan said.

Of the major power sources used today, coal emits the most carbon dioxide by far — about twice as much as natural gas.

Coal reflects about 12 percent of power generating capacity in South Dakota — but 36 percent of the power consumed by South Dakota comes from coal.

That’s because of coal plants in North Dakota and Wyoming that power South Dakota homes and businesses, and because of electricity from Missouri River dams shipped to other states.

“Our customers in Sioux Falls and in South Dakota get an energy mix, the same as all of our other customers,” McCarten said.

“All of the electrons basically go into a big pool, and you really can’t separate them out.”

Gary Hanson, chairman of South Dakota’s Public Utilities Commission, agreed there would be “regional variance” in the influence of the rules.

“Black Hills Power gets most of its generation from coal plants,” Hanson said. “Although Xcel receives electricity generated from coal plants, they are not as dependent on coal ... I learned today from the governor of Indiana that Indiana receives 80 percent of its electricity from coal plants.”

At least in the short run, Hanson said, power companies that rely more on coal power are likely to be more profoundly affected by the EPA rule on CO2 emissions.

That means Otter Tail Power, which generates 66 percent of its energy from coal, releases more carbon dioxide per megawatt than Xcel Energy, which generates only 36 percent of its power from coal.

Some power companies have been preparing for years for new rules forcing them to cut emissions. Otter Tail reduced its CO2 emissions per megawatt-hour by “nearly 15 percent” from 2005 to 2013, while Xcel cut its CO2 emissions by 20 percent in that same time.

A big part of that reduction is adding more wind power, which has seen growth in South Dakota.

Xcel also cut its emissions by switching to less-polluting types of fossil fuels.

“We had a couple of very old coal plants we had to decide what to do with,” McCarten said. “We ended up replacing them with new natural gas-fueled power plants.”

But Hanson warned against natural gas as a cure-all to carbon emissions, because it still emits carbon dioxide. Future regulations could target natural gas, he predicted.

“It’s a mistake, in my opinion, to invest so heavily in one asset, such as moving from nuclear and coal and hydro into natural gas almost exclusively,” Hanson said.

Gov. Dennis Daugaard’s administration doesn’t yet know what approach it might recommend for meeting the new EPA rules, spokesman Tony Venhuizen said in an email.

It’s also almost certain that the new CO2 rule will be challenged in court.

“I know that it’s going to be challenged in court...” Hanson said, “because pretty much all of the EPA regulations have been challenged in court.”