US Chamber of Commerce Blog
EPA's Clean Power Plan isn't so much a "War on Coal," as it is a war on coal workers.
Sam Batkins at the American Action Forum is doing a deep read on EPA's carbon regulations.
He points out that EPA expects electricity generated by coal to drop by nearly half--48%--from 336 gigawatts in 2012 to 174 GW in 2030. Because of this, as many as 34,000 jobs will be lost by 2030.
At the same time, EPA claims the regulations will create jobs. However, in comparing EPA's proposed rule released in 2014 to the final one, Batkins noticed something odd about EPA's job estimates:
Incredibly, for the proposed rule, EPA claimed it would support 78,800 new jobs for "demand-side energy efficiency." The agency has now partially cut the building block that supported that demand side growth, yet EPA still projects 83,300 more energy efficiency jobs because of the rule.
Because of previous EPA regulation states in the Midwest and Mid-Atlantic have already witnessed thousands of coal-realted jobs cut. "Combine coal extraction losses with coal generation declines nationwide and the coal industry has lost more than 47,500 jobs already, with the promise of more to come by 2030," Batkins writes.
In Kentucky 37% of coal mining jobs have vanished since 2008.aaf_ky_mining_jobs.png Chart: Kentucky coal mining jobsSource: American Action Forum.
In Ohio, 1,395 coal power jobs have been lost since 2008.aaf_oh_coal_jobs.png Chart: Ohio coal power jobs.Source: American Action Forum.
If EPA's carbon regulations are fully implemented, it will be tough for anyone whose job revolves around coal.
EPA opens up the possibility of higher taxes as a way for states to cut carbon emissions in its Clean Power Plan, Ben Geman in National Journal reports:
In a change from the draft plan, the final EPA rule now explicitly says states can use "fees" (i.e., taxes) as a tool for meeting their emissions-cutting requirements. That's on page 899 of the massive 1,560-page rule. Plans that states craft to comply with the mandate, the rule states, "could accommodate imposition by a state of a fee for CO2 emissions from affected [electric generating units], an approach suggested by a number of commenters."
Reading a little further in the document, you find that such a tax could apply to more than power producers--EGUs [emphasis mine]:
The state measures under this plan type could be measures involving entities other than affected EGUs, or a combination of such measures with emission standards for affected EGUs, so long as the state demonstrates that such measures will result in achievement of a state's mass-based CO2 goal (or mass-based CO2 goal plus new source complement), as discussed below.
For instance, states could tax factories and cars, since carbon emissions come from more than just power plants.
The Wall Street Journal editorial board is spot-on when it declared EPA's scheme to be "essentially a tax on the livelihood of every American."
Even if a state takes the new tax route--it's not mandated--that won't be sufficient for EPA. A state "must also include a backstop of federally enforceable emission standards." Some states could experience both a new tax plus stringent power plant regulations. Talk about hurting a state's business climate.
EPA gets the final say on all state plans. If they don't meet its muster--i.e. achieve the required carbon emission cuts--then it will send states back to the drawing board. States that don't have their plans finalized by 2018 will have EPA impose a federal plan on them.
It's a no-win situation for states, as Hal Quinn, president and CEO of the National Mining Association, and attorney Peter Glaser wrote in The Wall Street Journal [subscription required]:
Governors thus face a dilemma: Accept the EPA's invitation by developing a state plan and open their states to lawsuits for any perceived breach, or decline to cooperate and take their chances with a federal plan.
More taxes, more regulations, or both. However it plays out, consumers will be forced to pay up.Obama’s Plan to Combat Climate Change, Explained in Under 90 Seconds
President Obama Keeps His Promise: Electricity Rates Will Skyrocket Because of Carbon Rules | Aug 3 2015
In January 2008 when he was running for President, then-Senator Obama, said, "[E]lectricity rates would necessarily skyrocket.... [W]hatever the plants were, whatever the industry was, they would have to retrofit their operations. That will cost money. They will pass that money onto consumers."Obama: My Plan Makes Electricity Rates Skyrocket
Unfortunately for every American who uses electricity, President Obama is keeping this promise.
After failing to get legislation passed through a Congress controlled entirely by his own party, President Obama turned to EPA to impose carbon regulations. Based on some creative reading of the Clean Air Act, it came up with the Clean Power Plan.
The final version calls for a 32% cut in carbon emissions from power plants by 2030. This is more drastic than the 30% cuts found in the draft released in 2014.
Under the plan, EPA will set carbon emissions goals for each state. By 2018 states must submit plans on how each will cut carbon emissions to EPA and meet their first targets by 2022. Should states refuse to submit plans--Indiana's Mike Pence and Oklahoma's Mary Fallin have announced their state won't--or miss the deadline, EPA will impose a plan on them.
What should we expect from EPA's power grab? To get a sense, look at California, the Northeast, and Germany.California
To reduce carbon emissions, California state policy mandates that by 2020, one-third of its electricity must come from renewables. The result has been higher electricity costs, Jonathan Lesser of Continental Economics explains:
Despite projections of imminent cost-competitiveness with fossil fuels, renewable generation continues to be considerably more expensive. During 2003-2013, overall average cost of renewable generation acquired by the aforementioned utilities rose by 55 percent, from $54/MWh to $84/MWh. In contrast, in 2013, the average wholesale market price of generation was slightly more than $46/MWh.
And it's making it harder for many California residents to pay their energy bills:
In 2012, nearly 1 million households spent more than 10 percent of their income on energy bills. In hotter, less affluent inland counties, the rate of energy poverty was as high as 15 percent of households.Northeast
Moving east, we see that the New England states and New York are part of a carbon emission cap-and-trading scheme that squeezed out cheaper coal-generated electricity. It's not surprising that these states have some of the highest electricity prices in the U.S., as this Institute for 21st Century Energy map shows.022116_energy_ei21_electricretail_map_800x533.png Facebook Tweet Germany
Let's cross the Atlantic to Europe. Germany has been undergoing the Energiewende, a nationwide policy of embracing solar and wind, while shunning coal power, and abandoning nuclear power.
This has been a costly transition. As the chart below shows, Germany's electricity rates, already double that of the U.S. in 2008, have continued to rise.forbes-craig-percy-us-germany-industrial-electricity-costs.jpg Facebook TweetChart: Average industrial electricity costs per kilowatt-hour for the United States and Germany.
Higher energy costs are one reason why German companies are looking to build production in the U.S. The New York Times reported in 2014 on German chemical giant BASF choosing to invest in the U.S. because of higher local energy prices:
Already, BASF has doubled its annual investment in the United States to about $1 billion a year. With its French partner Total, it recently completed an estimated $400 million expansion and upgrade of their petrochemical plant in Port Arthur, Tex., which employs about 250 people.
"We shift investment money from Europe into the U.S. as a consequence of the less competitive environment in Europe," Harald Schwager, a senior member of BASF's executive board, said in an interview here.
Over the next five years, BASF plans to pump a quarter of its planned EU20 billion in investments into North America. For the first time, the company plans to trim its spending in Germany from its traditional level of at least a third of investment to only a quarter.
Right now, low-cost electricity makes the U.S. more globally competitive. By raising electricity prices, EPA's carbon regulations will shrink this competitive advantage.
It's no surprise business groups condemned the carbon regulations. "It is a bad deal for America," said U.S. Chamber President and CEO Tom Donohue in a statement:
The EPA's effort to shut down existing power plants and thus drive up energy prices for businesses and consumers alike will inflict significant damage to our entire economy and reduce our nation's global competitiveness without any significant reduction in global greenhouse gas emissions. It is a bad deal for America, and we will pursue all available options, including litigation if necessary, to block EPA's regulatory power grab from taking effect.
As for President Obama, should the plan withstand an expected lengthy legal fight, he'll be out of office by the time higher electricity prices impose a heavy weight on the economy.
Further resources:The National Rural Electric Cooperative Association published a map showing all the power plants affected by EPA's carbon regulations. The Washington Post published a set of maps showing how the U.S. gets its electricity.