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.
EPA argues that its proposed carbon regulations on existing power plants will offer $30 billion in climate benefits by 2030 with only $7.3 billion in costs. Sounds like a great deal, right? Not so fast.
A Brookings Institution white paper finds that EPA pumped up that number by including global climate benefits. If the agency took the standard approach and only examined the costs and benefits to those in the United States—who will feel its full brunt —then the climate benefits from the proposed rule would fall to as little as 7% of what EPA estimates, much less than the proposed regulation’s costs.
Authors Ted Gayer, Vice President and Director, Economic Studies at the Brookings Institution and Kip Viscusi, law professor at Vanderbilt University, explain that a basic component to cost-benefit analysis is looking at the appropriate population:
The pertinent populations that are attributed standing in a benefit-cost analysis should correspond to the political jurisdiction that is bearing the cost.
For example, when analyzing a new Wisconsin milk regulation, one should include the regulation’s effects on Wisconsin farmers and milk drinkers and not on those living in Florida.
Likewise, the cost-benefit analysis of EPA’s proposed carbon should be limited to the United States, but that’s not what EPA is doing. Gayer and Viscusi write [emphasis mine]:
The recent governmental analyses of the benefits associated with reduction of [greenhouse gas] emissions represent a rare instance in which U.S. regulatory impact analyses have used a worldwide benefits reference point rather than a U.S. reference point.
The only other time the authors could find an instance of this was in 1980 involving a uranium regulation.
Why is EPA doing this? Because it'll make the proposed rule more politically palatable, write Gayer and Viscusi:
[I]mposing a global perspective on benefits will increase the apparent desirability of the policy but will overstate the actual benefits to the American people.
However, EPA's use of global benefits as the justification for the proposed carbon rule crosses Presidential Executive Orders that state that cost-benefit analyses should be limited to the effects on the American public. For instance, President Clinton’s Executive Order 12866 reads: [emphasis mine]
The American people deserve a regulatory system that works for them, not against them: a regulatory system that protects and improves their health, safety, environment, and well-being and improves the performance of the economy without imposing unacceptable or unreasonable costs on society…
President Obama’s Executive Order 13563 is along those same lines: [emphasis mine]:
Federal agencies should promulgate only such regulations as are required by law, are necessary to interpret the law, or are made necessary by compelling public need, such as material failures of private markets to protect or improve the health and safety of the public, the environment, or the well-being of the American people.
In addition, guidance from the Office of Management and Budget (OMB) advises regulators that
Your analysis should focus on benefits and costs that accrue to citizens and residents of the United States. Where you choose to evaluate a regulation that is likely to have effects beyond the borders of the United States, these effects should be reported separately.
The U.S. Chamber and several other trade associations have been arguing this exact point. "Consistent with OMB guidance, the costs of a rule for entities in the United States should be presented in comparison with the benefits occurring in the United States," states a comment to OMB on the administration's social cost of carbon estimates.
Gayer and Viscusi go on to write, “If one were to focus on the domestic benefits rather than the worldwide benefits, the [greenhouse gas] benefit component would sometimes be extremely small.”
How small? The Obama Administration estimates that most of the climate benefits of reducing carbon emissions would be outside the United States. “Only 7 to 23 percent of these benefits would be domestic benefits,” write Gayer and Viscusi. This means that “the domestic benefits amount [of the proposed carbon rule] is only $2.1 billion-$6.9 billion, which is less than the estimated compliance costs for the rule of $7.3 billion.”
EPA should be honest with the American people. Based on its own estimates, the costs of the proposed carbon rule--job losses, higher electricity costs, and a less-reliable electrical grid--outweigh its domestic climate benefits. The proposed rule is bad enough, but the misleading way EPA is justifying it is just as bad.