by Jon Sanders
Director of the Center for Food, Power, and Life, Research Editor, John Locke Foundation
A column this week in The News & Observer argues for the North Carolina Senate to reject a measure that would direct environmental officials to develop a state implementation plan with pending U.S. Environmental Protection Agency regulations.
The column by Charlie Carter, an environmental attorney and former EPA assistant general counsel who is a member of the state Environmental Management Commission and chairs its Air Quality Committee, discusses several concerns with House Bill 571.
EPA’s forthcoming "Clean Power Plan" (CPP) is not even in its final form. The CPP would amount to a "federal takeover" of electricity systems and include especially "shutting down most coal-fired units and forcing many conversions to natural gas." It would also overturn long-established procedures under the Administrative Procedure Act and, in final, would not even be necessary since state environmental agencies could act without legislation if necessary.
According to the U.S. House Energy & Commerce Committee,
In the rule, EPA interprets a rarely invoked provision of the Clean Air Act, section 111(d), to allow the agency to set mandatory carbon dioxide (CO2) "goals" for each state’s electricity system. In the rule, EPA seeks to fundamentally change how electricity is generated, distributed, and consumed in the United States.
Under EPA’s unprecedented proposal, states would be required to submit complex state plans to EPA in 2016, and to begin to meet interim goals in 2020 and a final goal in 2030. For states that do not submit a satisfactory plan, EPA would impose a Federal Plan, a model of which has not yet been proposed by the agency.
State governors, regulators, and electric reliability organizations have filed extensive comments raising a wide range of concerns, from issues concerning the legality of the rule to how it would be implemented, the significantly higher electricity costs, and the risks to electric reliability. There are threshold questions about whether EPA has authority to proceed with the rule, and legal challenges have already been brought by at least 12 states. EPA plans to finalize the rule this summer.
The CPP would be, if implemented, an inordinately expensive set of regulations. A study by NERA Economic Consulting estimated staggering costs to comply with this massive regulatory takeover:
A study by NERA Economic Consulting estimates that the Environmental Protection Agency’s (EPA) carbon rule for existing power plants could cost at least $366 billion and that residents in 43 states would see double-digit percentage increases on average in their electricity bills over the 15-year period from 2017 to 2031. Consumers and businesses would pay $41 billion or more a year, which is nearly five times the cost of all Clean Air Act rules for power plants prior to 2010. The proposed rule would prematurely shutter 45,000 megawatts of coal-fired power generation capacity — more than New England’s entire electric generating capacity — and as much as 169,000 megawatts if EPA cannot legally allow all options it specified for compliance.
But, the benefits of complying with the rule and expending these high costs on American consumers would be miniscule — only limiting global warming by 0.02 degrees and sea level rises by 0.01 inch, according to the EPA’s models. The administration’s "Clean Power Plan" proposal would result in higher prices for consumers, reduced electric reliability, and would pose a serious threat to America’s economic competiveness.
An expose in U.S. News & World Report was quite alarming:
Consumers stand to lose the most. According to a study by the economic consulting firm NERA, the Clean Power Plan would be the most expensive regulation ever imposed on the power sector, costing between $41 billion and $73 billion per year.
It will hit Americans’ gas bills, too. An analysis by Energy Ventures Analysis estimates that the EPA’s suite of energy regulations, including the Clean Power Plan, cumulatively would increase the cost of electricity and natural gas by nearly $300 billion in 2020 compared with 2012.
The rule also poses a threat to electric reliability. By the EPA’s own estimates, it would shutter 68,000 megawatts of fossil fuel electric generating capacity.
Federal, regional, and state experts have warned that the Clean Power Plan threatens to turn out the lights in much of the country. Federal Energy Regulatory Commission member Philip Moeller warned that the Clean Power Plan could lead to "widespread rotating blackouts" in parts of the country.
With respect to H 571, the proposed legislative response to this great uncertainty, Carter writes,
The bill does not require the agencies to assess the draconian effects of the CPP on our electricity supply. Will a sufficient electricity-generating reserve remain after plant closures imposed by the CPP? How drastically will electricity rates increase? Studies conclude nationwide costs will be nearly $400 billion.
Given the CPP’s massive, massive costs, what must be the offsetting — and surely great, great — benefit?
The EPA’s climate rule would fail to impact the climate in any meaningful fashion, since the vast majority of global emissions originate outside the United States. According to the Cato Institute’s Patrick Michaels and Chip Knappenberger, who modeled the climate impact of the rule, the Clean Power Plan would only reduce temperatures by 0.018 degrees Celsius by 2100.
Roy Cordato has written about those infinitesimally small, imperceptible "benefits" in his Economics & Environment Update.
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