Abby L. Harvey
GHG Monitor
5/30/2014
With the Environmental Protection Agency set to announce early next week new emissions guidelines for existing coal-fired power plants, a set of interest groups have released conflicting reports as to what effect these and similar EPA guidelines for new-build coal plants may have on the economy, citizens’ pocketbooks and access to reliable energy. Some groups have suggested the new rules will have a significant negative impact on the economy, while others are claiming the opposite and saying that the new rules instead will create jobs in clean energy fields and decrease energy bills. While some argue that the emission targets presumed to be included in the standards will be unattainable, other have suggested that states will be able to make it work using their own unique resources.
For its part, though, the EPA has been tight-lipped on what it will announce next week, though the New York Times has reported the agency’s proposal is set to call for a 20 percent reduction in emissions and to encourage the use of state-level cap-and-trade systems. In response to a report released by the U.S. Chamber of Commerce that projects negative impacts from the soon-to-be-announced regulations, Tom Reynolds, EPA Associate Administrator in the Office of External Affairs and Environmental Education, said, “The Chamber’s report is nothing more than irresponsible speculation based on guesses of what our draft proposal will be. Just to be clear—it’s not out yet. I strongly suggest that folks read the proposal before they cry the sky is falling.”
Differing Views on Possible Economic Impacts
In its report, the Chamber of Commerce projects that through 2030 the combined regulations would lower U.S. GDP by $51 billion on average every year, lead to 224,000 fewer U.S. jobs on average every year, force U.S. consumers to pay $289 billion more for electricity and lower total disposable income for U.S. households by $586 billion. Some organizations, such as the American Coalition for Clean Coal Electricity (ACCCE), and several lawmakers rallied behind the Chamber. “The fact the U.S. Chamber of Commerce recognizes that Obama’s overreach will cost billions of dollars and cost hundreds of thousands of jobs shows how out of touch from reality the Obama administration is. There is no question EPA’s power plant rules will raise energy prices and put people out of work, but there are still several questions about the extent of the economic consequences, how these rules will change our climate, and how they will affect our energy reliability,” House Subcommittee on Energy and Power Chairman Ed Whitfield (R-Ky.) said in a release.
Some environmental groups, though, have questioned the validity of the Chamber of Commerce’s reports, describing it as a scare tactic. “It is disappointing to see the Chamber add to the long and unfortunate history of dire but groundless predictions from groups trying to stop EPA from protecting the public health,” said Elgie Holstein of Environmental Defense Fund (EDF). “Every time EPA takes a step to clean the air, opponents say the sky will fall. We need a calm discussion of the facts, not more distortions.”
The Chamber of Commerce said its report was based on a proposal the Natural Resources Defense Council (NRDC) has put forth for the planned EPA regulations, as well as the Obama Administration’s greenhouse gas reduction goals. The NRDC proposal was developed in 2012 and updated in March of this year and lays out a potential plan for the EPA’s regulations which NRDC states is flexible and effective in that it offers multiple compliance options. The NRDC proposal was used, the report says, due to “the widespread view that it incorporates many of the features that are likely to be adopted by the EPA in its regulatory regime applicable to existing power plants.” However, the NRDC was unhappy with the Chamber of Commerce’s analysis of its proposal. In a statement, NRDC Director of Climate Programs David Hawkins said the Chamber of Commerce’s analysis did not take into account important considerations including “jobs that would be created building wind turbines, solar panels, and other sources of renewable power; and the jobs to be created making our homes and businesses more efficient; and the jobs of cleaning up our dirty power plants.”
In response to the Chamber of Commerce report, the NRDC re-released and updated its own analysis of its proposal which states that if the EPA regulations are similar to those in the proposal, they will drive investments in energy efficiency leading to the creation of 274,000 jobs and $37.4 billion per year savings on electric bills. The benefits can be further broken down to a savings of $103 per household, per year or a total savings of $13 billion per year for all U.S. households as well as a savings of $24.3 billion per year for U.S. commercial and industrial customers according to the NRDC analysis.
Are Goals Attainable and Effective?
Another topic of debate in the reports issued this week is the effectiveness of the emissions targets set forth by the Obama Administration. Using 2005 as a baseline, the Obama Administration has committed to reducing emissions 17 percent by 2020, 42 percent by 2030 and 83 percent by 2050. Questions were raised about whether those emissions targets could feasibly be reached. The Chamber of Commerce said in its report that “NRDC’s proposed structure could not actually achieve the Administration’s carbon reduction goal.”
In its analysis, the NRDC said that “if the U.S. Environmental Protection Agency adopts a similar approach, the nation would slash carbon pollution by 531 million tons per year, nearly 25 percent by 2020 from 2012 levels (nearly 950 million tons and 35 percent below 2005 levels),” a fact it says would, “deliver more than $50 billion in health and environmental benefits.” This would meet the 2020 administration goal, but does not address the administration’s 2030 goal of 42 percent emissions reduction from the 2005 baseline, which the Chamber report focused on.
Some Agreement on Flexibility for States
Both the Chamber report and the NRDC report stress a need for flexibility with states to allow for the wide variety of resources available in each state. To address this issue the NRDC proposal “Allows states to tailor policies to meet the standards, choosing among such actions as cleaning up existing power plants, shifting power generation to plants with lower emissions or none at all, and improving the efficiency of electricity use.” The Chamber report however states that certain areas of the country will have a more difficult time meeting emissions targets regardless and may feel the immediate economic impact of the regulation harder. “The economic impact will not be shared equally across the nine U.S. Census Divisions,” the Chamber report says, “the South Atlantic Census Division will be hit the hardest in gross regional product and employment declines, followed by the four Mid-Continent Census Divisions (East North Central, East South Central, West North Central, and West South Central).”
The World Resources Institute released 10 state-specific fact sheets over the last several months presenting emission reduction action plans for each utilizing their resources to meet the 2020 goal set forth by the Administration. With the exception of Pennsylvania and Colorado, all the states researched were from census divisions mentioned in the Chamber report and all were found to be capable of meeting emissions goals. The fact sheets looked at opportunities available within each state both within their available energy mixes as well as their current regulatory environment. “For example, states could build off of existing initiatives like renewable portfolio standards, energy efficiency standards, and other policies as well as use tools like greater efficiency at coal plants, increased use of combined heat and power, and fuller utilization of unused capacity at natural gas plants. We show how emissions savings from these existing policies and infrastructure stack up against the reductions that could be required under forthcoming standards.”
