US Chamber of Commerce Blog
There’s a chasm between the rarified world of international climate negotiators—who will gather in Paris in December—and the people who will have to cope with the policy edicts established by them.
Christine Figures the United Nations’ top climate change official, told Reddit not to expect anything historic. Paris is only a next step toward even more draconian carbon emissions reduction goals [emphasis mine]:
I have been pellucidly clear that the agreement in Paris is not going to reach a 2 degree limit on temperature rise as though that were something we can take off a magical shelf and put on the table. I have been equally clear that getting us on to the 2 degree pathway is entirely possible. This is why the Paris agreement will have two very important components with regard to emission reductions: First, it will harness all the national climate change plans which as a group, if fully implemented, already substantially reduce the BAU growth in emissions. Second, in recognition that this first set of INDCs is a departure point and not a destination, the Paris agreement will construct a path of ever-increasing emission reductions with periodic checkpoints of progress until we get to the 2 degree pathway.
Carbon restrictions might be fine for globe-trotting bureaucrats like Figures, who can afford to buy credit offsets to compensate for all the carbon produced hopping from one climate conference to the next. But what about villagers in India who desire the convenience of light produced by reliable electricity generated from coal instead of less-reliable, “fake electricity” from solar?
Or coming closer to home, what about rural utilities and their customers in America? As a recent Washington Post story shows, they’ll be the ones—not climate negotiators—who have to live with the consequences from EPA’s stringent carbon regulations the Obama administration is using as the foundation for the United States’ contribution to reducing global carbon emissions:
Some, such as the Tampa-based Seminole Electric Cooperative, went deeply into debt to build the coal-fired power plants U.S. officials demanded years ago, and now they are stuck with facilities that can’t meet the new standards and can’t be easily upgraded or replaced.
“We can’t just run out and invest in some new technology,” said Seminole General Manager Lisa Johnson, who oversees an electric grid that supplies dozens of small towns and farming communities across north-central Florida. “We don’t have multiple plants.”
But rural electric cooperatives — mostly small nonprofit groups owned by the customers themselves — have fewer options. Some, such as Seminole, rely on a single coal-burning plant for most of the electricity they provide. Seminole’s customers will be paying down the debt for the company’s existing generating plant until 2042, and officials with the nonprofit utility say they can’t afford to replace it.
“If we have to close it down, it becomes a stranded asset that we still have to pay for,” said Brenda Atkins, the manager of Seminole’s coal-fired generating station. “We would have to pay to provide electricity to our customers from another source. And meanwhile, the debt service continues on the old one.”
Under EPA's Clean Power Plan—mostly full of tricks with few treats--states must submit plans for restructuring their power systems by 2016. Avoiding the types of disruptions we’ll see in Florida is why a stay is needed to delay implementation of EPA’s regulations. Implementing the carbon rule will mean “immediate and permanent injury,” The Wall Street Journal’s editorial board writes [subscription required]:
The EPA’s own models show utilities will shed 233 coal-fired power plants in 2016 alone, or 20% of the grid’s remaining coal generation. Some marginal generators like rural electric nonprofit cooperatives may go under.
The plaintiffs are also likely to prevail on the legal merits, both statutory and constitutional. The 2,000-page CPP is conjured from a couple hundred words in a subsection of a 38-year-old statute about “best systems of emissions reduction.” Traditionally this has meant technology that can be installed on a given site, like scrubbers.
Now the EPA is rewriting the definition to direct states to regulate “outside the fence line” of power plants well beyond the best tech. They must not only decommission sources of carbon energy, but they must also run the green gamut from mandating a new fleet of wind and solar, building new transmission lines, creating more efficiency subsidy programs for consumers and much else. On a rewrite so grandiose, the EPA has earned a stay and deserves no administrative deference.
Such regulatory chaos, to what end? To put in some perspective how inconsequential U.S. efforts will be globally, Sam Batkins at the American Action Forum writes, “Combined, previous EPA action to limit climate change could avert just 0.0573 degrees by 2100.”
All pain for little gain: job losses; higher electricity prices; and continued sluggish economic growth. This might not mean much to those headed to Paris in December, but it will mean everything to people who lose their jobs or find an unpleasant surprise on their electricity bill.
CNBC’s GOP presidential debate focused on economic and fiscal issues. Now, two hours isn’t a lot of time for 10 candidates to talk substantially about anything, and while there was discussion about taxes, entitlement reform, and even fantasy football, the moderators missed three issues that have a big effect on businesses, workers, and the economy:Trade Infrastructure Energy
Earlier this month, Asia-Pacific nations concluded negotiations on the Trans-Pacific Partnership (TPP). This trade deal, covering 40% of the world’s economy, is a major opportunity for American companies. The U.S. Chamber’s John Murphy notes, “Over the last two decades, the region’s middle class grew by 2 billion people. That number is expected to rise by another 1.2 billion by 2020.”
Even though we’re all (including the U.S. Chamber) learning about the agreement’s details, it’s important to know candidates’ views on international trade and investment.Do the candidates understand the extent and complexity of global supply chains and what they mean to American competitiveness? If elected, what will be their strategy in lowering tariff and non-tariff barriers to ensure American companies can compete and American consumers have access to a wider variety of goods and services? Infrastructure
A well-functioning economy needs good roads and bridges for the safe transport of people and goods. But our infrastructure is crumbling, costing businesses and families billions. The Highway Trust Fund will soon run out of money, and Congress will likely kick the can down the road and only pass a short-term measure. What long-term solution should be put in place to have the necessary funds to rebuild our aging roads and highways?Energy
The moderators failed to start a discussion on how to support and nurture U.S. domestic energy production. Following the Great Recession, the shale boom has been an economic bright spot.With domestic oil producers enduring a low-price market, how about lifting the 40-year-old oil export ban? In light of the Obama administration’s overregulation--offshore in Alaska and the Gulf of Mexico as well as onshore--what should be done to support domestic oil and natural gas production? And the biggest energy issue right now: How will they stop EPA from forcing the restructuring of America’s power system to pursue a questionable goal of reducing carbon emissions?
Trade, infrastructure, and energy: These three are basic concerns for businesses and workers. It’s unfortunate that none of these were given the in-depth discussion they deserve. Hopefully they’re covered in future debates.
This post originally appeared on U.S. Chamber 's Institute for 21st Century Energy.
In keeping with this season of ghosts and witchcraft, we are shedding some additional light on the menu of tricks and treats that are being handed out by the Environmental Protection Agency (EPA) through the carbon rules for existing electric power plants that the EPA finalized in August, and which just set off a firestorm of litigation this past Friday. Unlike most households’ plans for the upcoming Halloween festivities, it appears as if the EPA is rather stingy with the provision of “treats” to the states that might come knocking at its door. Instead, the EPA is much more likely to force states into higher electricity prices, diminished electric reliability, and reduced economic competitiveness.
The haunting graphic above summarizes the chilling economic impact of the thousands of pages of regulatory text issued by the EPA to set forth and support its carbon regulations that seek to turn many of our nation’s electric power plants into industrial graveyards. While we have asserted that the EPA’s recently finalized carbon rules will make affordable electricity prices an apparition of the past, our new graphic clearly illustrates the wrath that EPA’s tricks will have upon businesses and consumers. Quite simply, the EPA’s mandates should instill significant fright in the regulators, legislators, businesses, and residents of the states that are positioned to be eternally haunted by the EPA’s carbon regulations.
Putting EPA’s mysterious projections aside, we referenced the Agency’s own state-specific fact sheets accompanying its carbon regulations to shine a full moon’s worth of light upon which states get the equivalent of a full size candy bar, and which states get the lame candy nobody wants. We did so by tracking the emissions rate reductions that would be necessary under the EPA’s plan in each state from 2020 through 2030. Our analysis – without reliance upon any witchcraft or magic potions – found many more tricks than treats.
Based on EPA’s own projections, the nine “treated” states are actually permitted to increase their emissions rates from 2020 to 2030 while still achieving compliance with the agency’s startling carbon mandate. Meanwhile, the remainder of the states that are subjected to the EPA’s hair-raising carbon reduction plan will have to implement a dramatic reconfiguration of their electricity system at the frightful cost of increased electricity costs and diminished economic opportunity. To place your eyeballs upon the details of the pumpkin carving behind our predictions, check here.
Interestingly, the states lucky enough to receive a treat from the EPA’s carbon regulations have already been scaring consumers with some of the highest electricity prices in the country. Unfortunately, the EPA’s new rule will impose dreadful electricity rate increases and cap-and-trade economies upon poor souls everywhere.
This graphic provides a ghostly indication that EPA’s carbon regulations do not merely seek to reduce carbon dioxide emissions. Instead, the EPA is dishing out tricks and treats by imposing a cap-and-trade regime that will drive up prices in low-cost electricity states and redistribute the revenues associated with those higher prices to select West Coast and Northeast states. Whether merely an apparition or an intended enchantment of the EPA’s regulation, the disparities between the ‘tricked’ and ‘treated’ states shines a light on the inherent unfairness of the EPA’s scheme.