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Sean Hackbarth Power line over gravel.

EPA’s proposed carbon regulations would mean the most radical restructuring of America’s power grid ever. A major effect of the regulations will be to dramatically restrict the usage of affordable, reliable coal, which is now the most significant part of the power grid’s fuel mix. (And soon enough, natural gas, also a carbon-producing fossil fuel, will be targeted.)

Coal fuels 40% of America’s electricity production. Removing a major energy source like that is like removing a major organ in a person’s body. No doctor, if she can help it, would rush into surgery without making sure that the procedure is needed and what the side effects could be.

In the same vein, we need second, third, and fourth opinions that evaluate the efficacy and consequences of the Clean Power Plan. Plenty of review and analysis needs to be done before taking such drastic actions (which by the way will have a miniscule impact on global carbon levels). Planning to reconstruct the power grid—which won’t be as reliable--to compensate for the loss of coal is an enormous project. While the reliability and affordability of electricity have been the cornerstones of the industry since the time of Thomas Edison, the EPA now proposes to re-make the grid without an emphasis on either.

EPA claims that it wants to work with states and that its public outreach has been “unprecedented.” However, its track record is more puffery than anything.

Prior to the Clean Power Plan being released, EPA Administrator Gina McCarthy promised that the rulemaking process would be “an absolute collaboration between the federal and state government…a partnership if there ever was one.” At the event hosted by the Bipartisan Policy Center, she also stated, “My goal is not to supplant what the states are doing, but to support it." "The only thing I really hope when this proposal goes out is that people look at it and say 'EPA listened,'” McCarthy added.

While those were good intentions, EPA hasn’t yet lived up to them.  

On collaborating with states, yesterday, my colleague Dan Byers shared a letter from 15 governors who stated that the Clean Power Plan isn’t practical and that EPA has moved ahead “without considering or understanding—among other crucial matters—our state energy markets and infrastructure needs.” In his post are additional links to letters from state officials “pleading with EPA to extend its rushed and arbitrary deadline for public comment, so sufficient time is provided to review and assess the agency’s complex and far-reaching rule.”

As for EPA’s “unprecedented” outreach, it included a series of public hearings, none of which were held in the ten states most reliant on coal for electricity.

But an EPA official was so proud that she patted her agency on the back, calling the hearings a “great success.”

There’s talk, and then there’s action. EPA says it wants to listen. Well, here is its chance. EPA can live up to its stated intentions and extend the comment period by 60 days.

Right now, the public has until October 16 to submit their comments on EPA’s plan. That’s not enough time for stakeholders to analyze these exceptionally complicated carbon regulations and give EPA a thoughtful response.

In a letter to EPA, 53 Senators asked for an extension to the comment period:

While we appreciate EPA granting an initial 120 day comment period, the complexity and magnitude of the proposed rule necessitates an extension. This extension is critical to ensure that state regulatory agencies and other stakeholders have adequate time to fully analyze and comment on the proposal. It is also important to note that the challenge is not only one of commenting on the complexity and sweeping scope of the rule, but also providing an opportunity to digest more than 600 supporting documents released by EPA in support of this proposal.

 The proposed rule regulates or affects the generation, transmission, and use of electricity in every corner of this country.  States and stakeholders must have time to fully analyze and assess the sweeping impacts that the proposal will have on our nation’s energy system, including dispatch of generation and end-use energy efficiency. In light of the broad energy impacts of the proposed rule, state environmental agencies must coordinate their comments across multiple state agencies and stakeholders, including public utility commissions, regional transmission organizations, and transmission and reliability experts, just to name a few.   The proposed rule requires a thorough evaluation of intra- and inter-state, regional, and in some cases international energy generation and transmission so that states and utilities can provide the most detailed assessments on how to meet the targets while maintaining reliability in the grid.   This level of coordination to comment on an EPA rule is unprecedented, extraordinary, and extremely time consuming.

With the Senate in gridlock, so many Senators in agreement is significant.

To sum it all up, much more time and study is needed on EPA’s proposed carbon regulations. Given the scale of what the agency is proposing, 120 days is not enough time to sufficiently analyze a complex, Rube Goldberg plan to transform how America produces electricity. 

Follow Sean Hackbarth on Twitter at @seanhackbarth and the U.S. Chamber at @uschamber.

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Sean Hackbarth Keystone XL Lost Opportunities Tour

Six years ago next week, the first federal permit application for the Keystone XL pipeline was submitted. What should have been a calm, mundane discussion about a piece of energy infrastructure has fueled controversy and one embarrassing delay after another.

After reading an NBC News story earlier this year on rural towns in Montana anxiously waiting for pipeline construction to start, I wanted to see for myself what the pipeline will mean to people along the route.

It’s one thing to list the benefits of what pipeline will mean economically:

42,100 new jobs. $2 billion in earnings. $3.4 billion added to U.S. GDP.

It’s another to put flesh and bone on those numbers and find out for myself what opportunities have been lost by the pipeline’s delay, and how local communities have been affected.

So in the words of Horace Greeley it’s time to “Go west!”

Next week, some friends at the U.S. Chamber’s Institute for 21st Energy and I will go on the “Lost Opportunity Tour.” We will travel the 875 mile route of the proposed Keystone XL pipeline from the Montana/Canada border to Steele City, Nebraska. While passing through Montana, South Dakota, and Nebraska, we’ll talk to small business owners, farmers, ranchers, and local officials. They will tell us how the delay of the Keystone XL pipeline has been a lost opportunity for their communities.

“For six long years, the Obama administration has failed to make a decision on the Keystone XL pipeline,” said Karen Harbert, president and CEO of the U.S. Chamber’s Institute for 21st Century Energy. “Our tour will demonstrate that there are consequences for this inaction. Not only has America been forced to buy millions of barrels of oil from unfriendly sources, but Americans along the pipeline route and across the nation have been denied thousands of jobs, millions in revenue, and countless opportunities.”

What are some of those lost opportunities?

What kind of road and other local improvements could have been done already had counties been receiving additional property tax revenue from the pipeline? How busy would restaurants, hotels, and stores along the route be from serving the thousands of construction workers building the pipeline? How much income and added financial security would farmers and ranchers have by allowing the safest, most advanced pipeline in North America to run under their property?

We’ll answer these questions and let the people who will be most affected by the Keystone XL pipeline explain why it should be built.

Matt Koch, an Energy Institute vice president, who will be traveling with me said:

While for some, the Keystone XL pipeline has been a symbolic policy fight, it is important to remember that there are real people who have been waiting for six years for the opportunities that will come with the pipeline.  Our Tour will introduce those voices to the nation and help build even more support for the Keystone XL pipeline, which the vast majority of Americans want to see built.

This Tour will help you (and the Administration) better understand how the pipeline will improve these communities and why it’s in America’s national interest for it to be approved.

Join me—virtually on the Tour. Follow on social media with the #KXLtour hashtag, on Twitter (@energy21), on the Energy Institute’s Facebook page, and on the Energy Institute’s website next week. And check back to this blog where you’ll find my daily posts from the road. You can also follow me on Twitter (@seanhackbarth) and Instagram where I’ll be posting additional thoughts and observations.

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Dan Byers smoke stackA smoke stack of a coal-fired power plant in Winfield, WV. Photographer: Photographer: Luke Sharrett/Bloomberg.

When EPA announced new carbon regulations to restructure America’s electric system in June, it emphasized that public outreach associated with the rule would be “unprecedented,” and involve heavy cooperation with states.  Upon unveiling the rule, Administrator Gina McCarthy said the rulemaking process would be “an absolute collaboration between the federal and state government…a partnership if there ever was one.”

In the 90+ days since the announcement, however, that cooperative spirit seems to have gone into hiding.  States are weighing in with major concerns and requests regarding the substance of EPA’s rule and the process through which it is being developed, and EPA has gone quiet.  Yesterday, the governors of 15 states (AL, AK, AZ, ID, IN, NM, MS, NC, ND, OK, PA, SC, UT, WI, and WY) wrote President Obama stating:

[T]he rule poses numerous practical problems for state compliance. These problems reflect your Administration’s decision to move forward with the proposed regulation without considering or understanding—among other crucial matters—our state energy markets and infrastructure needs. We request that your Administration provides informed plans to address these significant obstacles to state compliance and that it does so well in advance of the proposal’s comment deadline of October 16. If you cannot fulfill this obligation in time for states to incorporate the new information into their comments, your Administration should withdraw the proposal until it gives due consideration to these critical concerns.

 As Indiana governor Mike Pence said in describing the letter:

“We knew these rules were bad when the EPA first released them, and they keep getting worse the more we learn. The proposal is ill-conceived, poorly constructed, and will cause significant harm in the states. We should be focused on an energy policy that pursues affordable and reliable energy, rather than a climate agenda that will drive up electricity prices without any discernible impact on global carbon dioxide emissions.”

Governors aren’t the only ones raising concerns. Attorneys General, air regulators, and utility commissioners are all calling on EPA to make major changes to its proposal. At a minimum, these state officials are pleading with EPA to extend its rushed and arbitrary deadline for public comment, so sufficient time is provided to review and assess the agency’s complex and far-reaching rule.  Below is just a sampling of those raising substantive concerns and requesting that EPA extend its public comment deadlines:

Alaska Department of Environmental Conservation Commissioner Larry Harrig Arkansas Attorney General Dustin McDaniel Indiana Department of Environmental Management Commissioner Thomas Easterly Kansas Department of Health and Environment Director John Mitchell Kentucky Attorney General Jack Conway Montana Public Service Commissioner Travis Kavulla Texas Public Utility Commissioner Kenneth Anderson

EPA asked the states for feedback, and promised “absolute collaboration” in return. It is clearly now the agency’s chance to live up to that commitment by addressing states’ substantive concerns, and extending the rapidly approaching October comment deadline.

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Sean Hackbarth  Donn R. Nottage/City Club of Cleveland.Karen Harbert, President & CEO, Institute for 21st Century Energy. Photographer: Donn R. Nottage/City Club of Cleveland.

EPA’s proposed carbon regulations will mean less energy diversity, Karen Harbert, president and CEO of the U.S. Chamber of Commerce's Institute for 21st Century Energy, told the City Club of Cleveland last Friday.

"We don't want to be a one-trick pony, and 10 years from now, it [EPA’s plan] starts to penalize natural gas," she explained. Instead, "we need to be looking at what is technologically achievable," she advised.

EPA’s carbon regulations are a continuation of the agency’s policy of increasing energy costs, Harbert told audience members:

The policy right now is let's make fossil fuels more expensive so the more expensive sources, renewables, can compete with them. Instead, why don't we make these things more competitive, the renewable side. And those (prices of renewable power) are starting to come down.

Research on energy storage technology can make renewable resources less intermittent, which will also help them to be more competitive.

To understand the adverse effects of top-down energy mandates and reduced energy diversity, look at the experiment going on in Germany. They previously embarked upon a quest to use less coal and nuclear power but more solar and wind. The results have been costly to its economy, the London Telegraph reported earlier this year:

Energy prices are 40% more expensive than in France and the Netherlands, and the bills are 15% higher than the EU average. Even though Germany’s energy-intensive manufacturing sector is given a break with reduced levies, industries such as chemicals and steel are among the hardest hit, with energiewende [energy revolution] costs of up to €740m a year.

The Wall Street Journal added that a PriceWaterhouseCoopers poll found that “nearly 75% of Germany’s small- and medium-size industrial businesses say rising energy costs are a major risk.” As a result, Germany has been turning back to coal as a reliable source of affordable electricity.

A recent study from IHS found that we could see something similar happen if we reduce our energy diversity. It found that less diversity would mean 75% higher electricity prices on the wholesale level and 25% higher prices on the retail level. What's more, our current mix of energy sources to produce electricity saves us $93 billion annually.

There’s plenty holding down our sluggish economy. It doesn’t need to deal with higher electricity costs from a self-imposed reduction of energy diversity. Instead, we should retain a benefitical variety of electricity sources while at the same time promoting investments in future energy sources that can serve to enhance that resource mix.

Follow Sean Hackbarth on Twitter at @seanhackbarth and the U.S. Chamber at @uschamber.

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Sean Hackbarth Nebraska State Supreme Court. Nebraska Supreme Court. Photographer: Dave Williss. Licensed under a Creative Commons Attribution 2.0 Generic license.

The Nebraska Supreme Court heard arguments over what state body has the authority to approve the proposed Keystone XL pipeline. In 2012, Nebraska’s legislature gave that power to the Governor. Opponents of the pipeline who sued the state argue that the state constitution leaves that authority to the Public Service Commission (PSC).

If the Supreme Court rules for the pipeline opponents, the PSC would evaluate that portion of the pipeline that will run through Nebraska and make a decision sometime next year. If the state wins, the focus goes back on the State Department which unwisely suspended its national interest determination pending the outcome of the Nebraska case.

In any case, this is about state permitting processes and not about the efficacy, safety, or value of the pipeline.

In fact, the Keystone XL pipeline will be a boon to the economy as Karen Harbert, president and CEO of the U.S. Chamber’s Institute for 21st Century Energy noted earlier this year in comments to Secretary of State John Kerry:

According to the FSEIS [the State Department’s environmental analysis], 42,100 Americans will be employed in direct, indirect, and induced jobs during construction of Keystone XL, generating $2.02 billion in earnings for workers.  In addition, the $3.3 billion project will generate $66 million in sales tax for goods and services during construction that will infuse economic vitality into local communities.  The FSEIS also states that $3.1 billion will be spent on construction contracts, materials, and other support for Keystone XL – much-needed revenue for companies still struggling to recover from a hard recession.  It will also provide $55.6 million in new property tax revenue in 17 counties with Keystone facilities…. Overall, the project will contribute $3.4 billion during construction to the U.S. Gross Domestic Product (GDP).

The Keystone XL pipeline has been analyzed for nearly six five years. Every time it’s been found to be good for jobs and the economy and safe for the environment. The State Department doesn’t have to wait for a ruling in the Nebraska case. It should approve the pipeline now.

A ruling is expected in October at the earliest.

Follow Sean Hackbarth on Twitter at @seanhackbarth and the U.S. Chamber at @uschamber.

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