Power Plant Rule Would Threaten Economy With No Climate Benefit, Industry Says

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By Andrew Childers  

July 29 — An Environmental Protection Agency proposal to regulate carbon dioxide emissions from existing power plants would drive up electricity costs and cause significant job losses without providing a tangible climate benefit, coal-reliant states and industry groups said at a public hearing July 29.

“The U.S. cannot go it alone and expect that our actions will have a meaningful climate impact in a world economy that is using more coal and more fossil fuels every day,” Paul Cicio, president of Industrial Energy Consumers of America, said a hearing in Washington.

Utilities and industry groups called on the EPA to conduct further economic analysis of its proposal before issuing a final rule. Environmental groups largely supported the proposal but pushed the EPA to seek greater emissions reductions from the power sector through increased investments in renewable generation and demand reduction programs.

“Protecting our children from carbon pollution is your legal duty and our moral obligation,” Greg Dotson, vice president for energy policy at the Center for American Progress, said.

The EPA's proposed standards would set a unique carbon dioxide emissions rate for the power sector in each state (RIN 2060-AR33). The states would administer the standards under Section 111(d) of the Clean Air Act. The EPA anticipates its proposal could reduce carbon dioxide emissions from the existing fleet of power plants by 30 percent from 2005 levels by 2030 at a cost to the power industry of $5.4 billion to $8.8 billion in 2030 (79 Fed. Reg. 34,959).

Job Losses Feared

Rep. Shelley Moore Capito (R-W.Va.) pledged to continue to oppose the EPA's proposed rule in Congress and criticized the agency's failure to hold public listening sessions on the rule in coal-producing states.

“By not coming to West Virginia, to Kentucky, to the coal-producing and coal-consuming states, you send a message that our views and our experiences don't matter,” she said. “To have the federal government refuse to listen to that segment is frustrating and demoralizing for us.”

The EPA also accepted public comments at hearings in Atlanta and Denver July 29.

It will continue to accept comments July 30 during public hearings in Atlanta, Denver and Washington, D.C., and July 31 and Aug. 1 in Pittsburgh.

Coal proponents said the emissions rates the EPA has proposed would largely preclude states from relying on coal-fired generation. EPA Administrator Gina McCarthy has said the proposal would allow coal-dependent states to continue to rely on coal-fired generation.

Capito predicted the EPA's proposed rule could increase electricity prices and cause significant job losses in West Virginia, which produces 95 percent of its electricity from coal.

Unions also were concerned about potential job losses as coal-fired power plants retire in response to the EPA's proposed carbon dioxide standards as well as other emissions limits for power plants.

Bruce Burton, representing the International Brotherhood of Electrical Workers, said 40 percent of the existing coal power plant fleet is expected to retire as result of the EPA's carbon dioxide proposal and existing mercury and air toxics standards (MATS). That equates to 400,000 lost jobs, he said.

“Given the IBEW's experience with MATS, those numbers could be much worse,” Burton said.

Additional Analysis Needed

Shifting electricity generation from coal to natural gas presents reliability concerns because natural gas cannot be stockpiled, Cicio said. Rising electricity prices could cause more manufacturers to offshore their operations, which could actually increase emissions, he said. Cicio said the EPA needs to consider this “carbon leakage” when it tallies the benefits of its proposal.

“We need to be honest with each other. There will be jobs created in the renewable energy sector and other sectors, but there will be job losses in other sectors,” Jeffrey Holmstead, a partner at Bracewell & Giuliani LLP who represents the power industry, said on behalf of the Electric Reliability Coordinating Council.

Mary Martin, of the U.S. Chamber of Commerce, said the EPA has not sufficiently evaluated what impacts its proposal would have on small businesses. She called on the EPA to convene a small business review panel under the Regulatory Flexibility Act and further evaluate the impact its regulations have on employment as required by Section 321 of the Clean Air Act.

Environmental Groups Want Stronger Rule

Environmental groups supported the EPA's proposal but argued the agency could do more to encourage the use of renewable energy and energy efficiency measures. Industry groups historically have overestimated the cost of complying with air pollution regulations, environmental groups said.

“Industry has certainly done their best to scare the public,” Fred Krupp, president of the Environmental Defense Fund, said. “They do it every time we try to make the air cleaner. Every time their predictions have been flat wrong.”

Despite their protests, environmental groups said power plants have been able to deliver cost-effective emissions reductions under EPA regulations in the past.

“Electric utilities are typically sophisticated entities that can innovate and respond to policy direction,” Dotson of the Center for American Progress said.

States Praise Outreach

State air pollution regulators also supported the EPA's proposal but asked the agency to extend the compliance deadline for states that may need to take legislative action to comply.

Additionally, state regulators said at the hearing in Atlanta July 29 that the EPA's proposed rule may not give states that already have taken steps to address greenhouse gas emissions enough credit for those measures.

At the hearing in Denver July 29, speakers also described the impacts climate change is having on the West, including reduced snowpack, hotter fires, bigger floods, and more prolonged droughts.

Praise for State Outreach

At the Washington hearing, Bill Becker, executive director of the National Association of Clean Air Agencies, praised the EPA for its outreach to states prior to proposing the rule. The rule will provide state air pollution regulators with the flexibility to develop the compliance plans that best suit their needs.

“EPA not only engaged in discussion, it also listened carefully to what was said,” Becker said.

Supreme Court Cited

Opponents of the EPA's proposed rule argued that the U.S. Supreme Court had recently cautioned the EPA about reading its ability to regulate greenhouse gases too broadly.

“When an agency claims to discover in a long-extant statute an unheralded power to regulate ‘a significant portion of the American economy,' Brown & Williamson, 529 U. S., at 159, we typically greet its announcement with a measure of skepticism,” Justice Antonin Scalia wrote in a recent opinion that limited the scope of the EPA's greenhouse gas permitting program (Util. Air Regulatory Grp. v. EPA, 2014 BL 172973, U.S., No. 12-1146, 6/23/14).

Matt Schlapp, chairman of American Conservative Union, argued the EPA's interpretation of its authority to regulate power plants under Section 111(d) of the Clean Air Act is overly broad. Instead, he said Congress should take action to address climate change.

“If the goal is to make sound policy, our democratic system is the right system to use, not bureaucratic fiat,” he said.

The EPA could actually delay taking action on climate change if its rule is too ambitious and is eventually struck down by the courts as unlawful, Holmstead said.

“The Supreme Court has not given EPA a roving mandate to do whatever it thinks is best,” he said.

Democrats Support Proposal

Sen. Ed Markey (D-Mass.), who authored a greenhouse gas cap and trade bill in 2009, said Massachusetts already has reduced carbon dioxide emissions from its power plants by 40 percent from 2005 levels as part of the Regional Greenhouse Gas Initiative, demonstrating the EPA's proposal is feasible.

“America must lead. History calls us to reduce greenhouse gases and unleash a clean energy revolution,” he said.

Delaware Gov. Jack Markell (D) argued that states can transition to a cleaner electricity generator sector without disrupting the economy, citing his own state's experience.

“We know this in Delaware where we've shifted from one of the dirtiest energy mixes in the nation to one of the cleanest,” he said.

Sen. Jeff Merkley (D-Ore.) called climate change “a direct assault on rural America” because warming temperatures already are impacting forestry and fishing jobs in his state.

“If you talk to foresters in Oregon, climate change is not some distant threat. It's happening now,” he said.

Other Democrats touted the EPA's estimate the proposal would provide between $55 billion and $93 billion in health benefits in 2030.

“The economic case, I think, is compelling,” Rep. Anna Eschoo (D-Calif.) said.

The EPA will accept written comment on the proposed rule until Oct. 16. Comment can be made at http://www.regulations.gov and should reference Docket No. EPA-HQ-OAR-2013-0602.

To contact the reporter on this story: Andrew Childers in Washington at achilders@bna.com

To contact the editor responsible for this story: Larry Pearl in Washington at lpearl@bna.com