Over the weekend, EPA Administrator Gina McCarthy yucked it up on HBO's Real Time with Bill Maher about her agency’s proposed carbon regulations. Although she won applause from the comedian and his California-based studio audience, a group of governors representing states not on the West Coast expressed their disapproval with EPA's agenda:
[Louisiana Gov. Bobby] Jindal and Texas Gov. Rick Perry were flanked by the governors of North Dakota and Wyoming in a brief press conference aimed at blasting the EPA’s proposed rule to cut carbon emissions by 30 percent from 2005 levels over the next 15 years.
The rule is expected to gut the coal power industry across the United States. Coal plants have already fallen out of favor with utilities as cheap, low-carbon emitting natural gas surges. It’s expected to pave the way for more natural gas power plants.
When asked whether Texas will benefit from the EPA’s proposed policy, as it promotes natural gas development, Perry said it’s not up to the federal government to decide which energy sources are winners and losers. He said 37.6 percent of the energy produced in Texas is by coal power plants.
“The idea that we should be picking and choosing – particularly Washington picking and choosing – is just outside of the realm of thoughtfulness from my perspective and certainly outside the realm of economic viability,” Perry said.
After the press conference, nine Republican governors, including Perry and Jindal, sent a letter to President Obama urging “a pragmatic energy policy that balances our nation’s economic needs, energy security, and environmental quality objectives.”
The letter said the carbon emissions rule would “largely dictate to the states the type of electricity they could build and operate” and cut out coal from the nation’s energy mix.
California barely relies on coal for electricity, unlike Indiana, Ohio, Wyoming, and other states. That makes it easy for both Maher and his audience to cheer since they won’t feel as much pain from the proposed carbon regulations. In fact, Bloomberg New Energy Finance projects that California will be able to increase its emissions under EPA’s rule, while other populous states such as Texas, Pennsylvania, and Florida all take it on the chin.
But let’s get into the substance of what Administrator McCarthy said in her conversation with Maher. She tried to make the case that the proposed carbon regulations are critical to “show domestic leadership” in international climate negotiations:
"This is about leadership. This about US being a leader on this issue and we believe and we already know it's going to leverage a much better opportunity for a global solution," she added Friday night.
McCarthy was responding to assertions by opponents of the new rules, who say the U.S. should not act on climate change policies when other countries such as China and India are continuing to build coal-fired power plants.
McCarthy argued: "But if the US doesn't act what voice do we bring to the table to drive that larger solution."
McCarthy was taking her cues from President Obama, who recently said, "We cannot exempt ourselves from the rules that apply to everyone else."
But both the President and McCarthy have built a strawman that actually distorts concerns about upcoming international negotiations, which are not that the U.S. will not show leadership, but that EPA is moving ahead with its rules regardless of whether they apply to anyone else.
Further, McCarthy's assertion ignores the fact that other nations’ hunger for energy to fuel economic growth will trump any symbolic act by the United States, as Marketplace reports:
BP’s annual world energy report is out, and it turns out coal has its largest share of the global energy market since 1970.
Just because coal use is going down in the U.S. doesn’t mean it’s not popular in other parts of the world.
“Coal is still a fairly fast growing fuel globally," says James Stevenson, director of North American coal at IHS Energy, a global research and consulting firm. “We have fairly strong growth in countries like China.”
The use of coal is also expanding in Latin America, parts of the Mediterranean, and Africa, though more slowly. Even Germany is burning more coal, partly because it’s shutting down its nuclear power plants.
Kristoffer Inton, an equity analyst with Morningstar, says coal is easy to come by.
“That’s the main advantage of coal," he says, "that it’s cheap and it’s available.”
EPA’s proposed carbon regulations will push a useful energy source—coal—out of America’s energy mix. The result will be higher electricity costs and a less-reliable electrical grid. And since under the proposed regulations, 2030 global carbon emissions will be 29% higher than in 2011, the joke will end up being on us.
It should be expected that people living in states that rely on coal for jobs and to keep the lights on wouldn't like EPA’s proposed carbon regulations. A poll for the National Mining Association gives us some data backing up that intuition.
Magellan Strategies polled eight states that are either significant producers or consumers of coal: Arkansas; Colorado; Georgia; Kentucky; Louisiana; Michigan; Montana; and North Carolina. Three charts sum up Magellan’s findings:1. More People Oppose the Proposed Carbon Rules than Support Them Poll on support/opposition of EPA carbon regulationsSource: Magellan Strategies
2. When Told Regulations Will Mean Higher Electricity Costs, Opposition Grows
In the aggregate, 47% oppose the proposed rules, while only 37% support it. Only one state, Michigan, did support top opposition.
Poll on support/opposition of EPA carbon regulations knowing there will be an increase in electricity ratesSource: Magellan Strategies
3. Senate Candidates that Support Carbon Regulations Will Be Hurt
Poll on support/opposition to Senate candidates who support/oppose EPA carbon regulationsSource: Magellan Strategies
When those surveyed were told that EPA Administrator Gina McCarthy admitted the proposed regulations would result in a “short –term hit” to electricity cost (meaning increases), 59% said they were more likely to oppose it, while only 18% said they’d be more likely to support it.
The states that Magellan Strategies polled also have competitive U.S. Senate races. How will the proposed carbon regulations play out in the fall? Those surveyed are more likely to oppose a candidate who supports the proposed carbon regulations. Even in Michigan, where support for the proposed carbon rules tops opposition, nearly half of respondents said they’re more likely to oppose a candidate who supports them.
Here’s one last data point. Seventy-six percent of respondents said they would prefer that President Obama focus more on creating jobs and growing the economy than imposing new regulations on power plants.
This survey tells us that voters aren’t happy with EPA’s attempt to push coal out of the energy picture, and there are serious political risks for politicians who support the agency’s efforts.
Energy development is driving above-average economic growth, according to Bureau of Economic Analysis (BEA) data of 2013 state GDP. The mining industry (which includes oil and natural gas development):
was a large contributor in five of the fastest growing states: North Dakota, Wyoming, West Virginia, Oklahoma, and Colorado. In North Dakota, the fastest growing state in 2013, mining contributed 3.61 percentage points to the state's 9.7 percent growth in real GDP.
The benefits of increasing energy development go beyond the energy sector. Public radio show Marketplace interviewed Austin Golding, co-owner of a Mississippi barge company. The energy boom—especially hydraulic fracturing--is putting more money in his pocket:
We’ve really benefited from becoming a true source of quick transportation for anything fracked in this country. The domestic crude oil, the natural gas, the natural gasoline is all being moved by barge now and kind of a new wave of product we’ll be moving soon is the actual fracking water. They’ve been really trying to find a safe way to move it in bulk, so right now we’re working with the coast guard to determine what form of regulation will be placed upon that cargo. But we’re excited because we feel like we’re a great option to move that throughout the country in a safe and efficient manner.
Golding added that with 3 to 4 years of experience a worker could make as much as $140,000 a year as a barge pilot.
A 2013 U.S. Chamber Institute for 21st Century Energy study found that shale oil and natural gas development supports 2.1 million jobs. That number is expected to grow to 3.9 million by 2025.
With America’s energy abundance, energy can and should play an important role in helping to create jobs and grow our economy.
The Obama White House may think coal isn’t good enough to power our economy, but it must think it’s good enough to add some Christmas cheer.
While the Obama administration gave coal producers and electricity generators an early lump of coal after EPA released proposed carbon regulations, a coal-fired train is the star of the 2014 White House Christmas ornament.2014 White House Christmas Ornament Features a Coal-Fired Train
As the White House Historical Association explains, the ornament is the first to be composed of two pieces [emphasis mine]:
The locomotive is a detailed miniature replica of one of several steam-powered locomotives that pulled the Presidential Special; it is attached to the coal car that held its fuel. The other miniature car is the Superb, the president’s private heavyweight Pullman car. The last car on the Special, the Superb was outfitted with a public address system. President Harding made appearances and delivered speeches at stops across the country from a platform at the back of the car.
President Warren Harding’s transcontinental speaking and sightseeing tour inspired the design.
The ornament reminds us that just as it powered the trains that tied America together into an economic powerhouse, coal still plays a critical role in fueling America’s economy. According to the Energy Information Agency, more electricity is produced by coal (37%) than any other energy source. It’s the backbone of affordable, reliable electricity.Electricity generation by energy source.Source: Energy Information Administration
The United States possesses coal reserves that can last for nearly three centuries. The attacks on this abundant energy source by regulators will mean lost jobs, slower economic growth, higher electricity costs, and a less reliable electrical grid.
President Obama said in 2008 while campaigning, “If somebody wants to build a coal-fired power plant, they can. It’s just that it will bankrupt them.” However, trinkets depicting coal apparently are acceptable.
The ornament is a lovely decoration sure to add character to anyone’s Christmas tree, even of those whose jobs will be lost because of federal regulations pushing coal use out of the economy.
USA Today found that the planned retirements of coal-fired power plants over the next 10 years “will do almost nothing to reduce” carbon emissions. To meet EPA’s carbon dioxide “target by 2030 will probably require many more coal retirements and lock in the nation's energy shift toward natural gas and renewable power.”
Federal regulations are already pushing coal-fired power plants out of the energy mix. According to Energy Information Administration estimates, one rule, the Mercury and Air Toxics Standards (MATS) will force almost one-fifth of them to shut down by 2020. The proposed carbon regulations will make things worse.
Despite the talk from EPA that states will have “enormous flexibility to choose the fuel sources,” these regulations essentially pick energy winners and losers.
This will mean lost jobs—at least 75,000, according to the United Mine Workers of America and would be felt in states like Indiana, local television station WTHI reports [see the video above].
“This is essentially an attempt to eliminate one of our two most-abundant resources for producing electricity,” said Suzanne Jaworowski, spokewoman for Indiana’s Sunrise Coal. Tim Rushenberg of the Indiana Manufacturers Association estimates that the rules could add $600 million annually to the electric bills of the state’s factories.
Along with the fear of lost jobs and higher electricity costs, we should worry about the reliability of the electrical grid. Sen. Lisa Murkowski (R-AK) addressed this in a Senate floor speech, last week:
“It is uncertain if there will be enough time – to say nothing of sufficient capital available for investment – to build new facilities or other forms of generation needed to ensure the continued reliability of the grid,” Murkowski said.
“The Polar Vortex caused 50,000 megawatts of power plant outages,” Murkowski added. “For one key system, 89 percent of the coal capacity that is slated for retirement next year because of an EPA rule was called upon to meet rising demand. Think about that. We had a tough winter and coal facilities were able to step up.”
“The question we should be asking is, what happens when that capacity is gone? Hoping for a mild winter isn’t a viable strategy. We can’t have a-hope-and-a-prayer policy,” she said.
However you cut it, EPA’s proposed carbon regulations will be all pain with little gain.