Policy Documents

Research & Commentary: EPA’s Clean Power Plan

July 14, 2014

On June 2, 2014, the Obama administration mandated a 30 percent cut in carbon dioxide (CO2) emissions by 2030 from power plants’ 2005 levels. According to EPA’s Web site, the proposal, also known as the Clean Power Plan, “provides guidelines for states to develop plans to meet state-specific goals to reduce carbon pollution and gives them the flexibility to design a program that makes the most sense for their unique situation.”

All states are required to submit initial or complete plans to reduce carbon dioxide emissions to EPA by June 30, 2016 or be subject to the federal government’s plans. In its “Fact Sheet” about the Clean Power Plan, EPA claims the Clean Power Plan will create “significant public health and climate benefits” for future generations. However, EPA never quantifies exactly how much benefit to the climate the restrictions are expected to cause. To ascertain this, climate researchers Patrick Michaels and Chip Knappenberger have used a publicly available climate model emulator that was in part developed through EPA support. They found the Clean Power Plan’s “climate benefits” amounted to an aversion of only 0.018°C of temperate rise by 2100, an amount too small to detect from the background of natural variability.

Since U.S. power plant CO2 emissions have already dropped by 15 percent from 2005 to 2012, EPA’s new restrictions are already nearly half-accomplished. Peter Van Doren, editor of Regulation magazine, says unless natural gas prices rise or the economy grows at a much faster rate, there was a good possibility EPA’s target could have been accomplished entirely through market forces. If such trends continue, Van Doren says the rules may not be so binding. However, Congress still needs to rewrite the Clean Air Act, which he says is plagued by a severe lack of cost-benefit analysis structure and an extremely vague definition of “pollutant.”

Restrictions will come at a great cost, reducing job numbers by 224,000 per year through 2030 and suppressing the nation’s average annual Gross Domestic Product (GDP) by $51 billion, according to a U.S. Chamber of Commerce analysis. Supporters of EPA rules counter by saying the nation must impose some rules to motivate the world’s top CO2 emitters, China and India, to implement CO2 reduction measures of their own.

Although China has indeed paid lip service to reducing CO2 emissions, its government has repeatedly stated the nation’s per capita GDP would have to be around five times what it is today before CO2 emissions peak, The Federalist reports. India Environment Minister Prakash Javadekar has made a similar case, saying India’s first economic and environmental priority is to “eradicate poverty” and that their net emissions “may increase” in the meantime. According to the International Energy Agency, economic growth in China and India is a major reason coal has become the fastest growing global energy source since the beginning of the 21st century.

State legislators should analyze costs and benefits before submitting emission plans to EPA and pursuing potentially costly emission restriction schemes. For the long term, states should aggressively call on Congress to rewrite the Clean Air Act to include serious consideration of the net benefits and costs of enforcement actions and more accurately define what constitutes a pollutant.

The following documents provide additional information about carbon dioxide regulation.

 

Ten Principles of Energy Policy
http://heartland.org/policy-documents/ten-principles-energy-policy
Heartland Institute President Joseph Bast outlines the ten most important principles for policymakers confronting energy issues, providing guidance to help deal with ongoing changes in markets, technology, and policies adopted in other states, supported by a thorough bibliography. 

0.02°C Temperature Rise Averted: The Vital Number Missing from the EPA’s “By the Numbers” Fact Sheet
http://www.cato.org/blog/002degc-temperature-rise-averted-vital-number-missing-epas-numbers-fact-sheet
Chip Knappenberger and Patrick Michaels of the Cato Institute’s Center for the Study of Science point out EPA’s “By the Numbers” Fact Sheet makes no mention of how much climate change would be averted because of the Clean Power Plan. Using a climate model emulator developed with EPA support, they found the costly Clean Power Plan would avert only 0.018°C of temperate rise by 2100, a number so small it would be undetectable. 

Assessing the Impact of Proposed New Carbon Regulations in the United States
http://heartland.org/policy-documents/assessing-impact-proposed-new-carbon-regulations-united-states
A well-respected energy and economics firm commissioned by the U.S. Chamber of Commerce quantifies how much EPA’s new regulations on carbon dioxide emissions will raise Americans’ electricity prices, destroy jobs, and reduce economic growth. 

Sluggish Economy Prompts Europe to Reconsider Its Intentions on Climate Change
http://www.nytimes.com/2014/01/17/business/energy-environment/sluggish-economy-prompts-europe-to-reconsider-climate-goals.html?_r=0
The New York Times reports on the European Union’s decision to consider turning its mandatory renewable energy targets into goals only. After years of attempts to be the world’s leader in addressing climate change, the reporters write, “persistently high prices for renewable energy sources and years of inconclusive international negotiations” have led European officials to temper their aggressive ambitions and back off the idea of restricting shale gas exploration. 

About Coal
http://www.iea.org/topics/coal/
The International Energy Agency offers a primer on coal and the ongoing trends regarding its use around the world. IEA notes coal is the fastest-growing energy source globally since the beginning of the 21st century, mainly because of economic growth in developing countries, primarily China. According to IEA, China installed more than 150 MW of coal power generation capacity every day from 2005 to 2012. 

No, China Is Not Following Obama’s Lead On Carbon Emissions
http://thefederalist.com/2014/06/04/no-china-is-not-following-obamas-lead-on-carbon-emissions
David Harsanyi, a senior editor at The Federalist, responds to various headlines extolling the Clean Power Plan as motivating China, the world’s top CO2 emitter, to commit to placing a cap on CO2 emissions just one day after Barack Obama’s plan was announced. Harsanyi notes the verbal commitment came from He Jiankun, chairman of China’s Advisory Committee on Climate Change, who had no authority to speak for the Chinese government or even the committee. In fact, Harsanyi points out the Chinese, in one form or another, have continually promised to reduce CO2 emissions and have always disregarded those promises. As China still has a long way to go to overcome its relatively low per capita GDP, the nation’s CO2 emissions are expected to continue to rise. 

Trampling Democracy to Fight Climate Change
http://www.bloombergview.com/articles/2014-06-09/trampling-democracy-to-fight-climate-change
Ramesh Ponnuru, a Bloomberg columnist and resident fellow at the University of Chicago’s Institute of Politics, argues the Obama administration’s mandate of drastic cuts in CO2 emissions is “highly unlikely” to pass a cost-benefit test, and—citing even some supporters of the strategy—is unlikely to inspire the needed international cooperation to make it worthwhile. Even more troubling, these costly, ineffective regulations are being imposed with no real democratic review. 

41 Senators Urge Obama to Repeal EPA Rules
http://www.epw.senate.gov/public/index.cfm?FuseAction=Files.View&FileStore_id=ba5b2aa8-f287-4eb7-a460-d7a1aef542af
An open letter to President Obama signed by 41 U.S. senators urges the president to withdraw the proposed CO2 emission restrictions, citing concern for energy consumers, particularly low-income households. The letter quotes former Obama EPA administrator Lisa Jackson, testifying before the U.S. Senate Committee on Environment and Public Works, as saying, “U.S. action alone would not impact world CO2 levels.” 

Coal’s Share of World Energy Demand at Highest Since 1970
http://www.bloomberg.com/news/2014-06-16/coal-s-share-of-world-energy-consumption-at-highest-since-1970.html
Researchers from many of the world’s largest energy companies tell Bloomberg that coal is the world’s fastest-growing fossil fuel, with demand being driven primarily by developing countries such as China and India but also industrialized countries such as the United States and Germany. 

Governors: EPA Carbon Dioxide Rules Job Killer
http://newsok.com/gop-governors-epa-carbon-dioxide-rules-job-killer/article/feed/700053
The Associated Press reports the governors of Alaska, Indiana, Louisiana, Mississippi, North Carolina, North Dakota, Pennsylvania, Texas, and Wyoming sent a letter to President Obama saying EPA’s proposed CO2 restrictions will lead to millions of job losses and cost billions of dollars. Many of the governors say they will use litigation and EPA’s public comment period to express their concern and try to force needed reforms before the rules become official. 

India Invokes 'Right to Grow' to Tell Rich Nations of its Stand on Future Climate Change Negotiations
http://timesofindia.indiatimes.com/home/environment/global-warming/India-invokes-right-to-grow-to-tell-rich-nations-of-its-stand-on-future-climate-change-negotiations/articleshow/36724848.cms
India’s Environment Minister, Prakash Javadekar, told the audience at a “World Day to Combat Desertification” event that poverty is an “environmental disaster” and “unless we tackle poverty, unless we eradicate poverty, we cannot really address the climate change.” And, "To that end, we need to grow. Our net emission may increase," this June 2014 Times of India story reports. 

EPA Rules and the Clean Air Act
http://www.cato.org/multimedia/daily-podcast/epa-rules-clean-air-act
In a Cato Institute podcast, Regulation magazine editor Peter Van Doren says he’s surprised not more opponents of the Clean Power Plan are advocating a rewrite of the Clean Air Act as a solution to the plan’s heavy-handedness. Van Doren says the Clean Air Act currently does not operate with any cost-benefit analysis structure and too vaguely defines what a “pollutant” is.

 

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this and other topics, visit the Environment & Climate News Web site at http://news.heartland.org/energy-and-environment, The Heartland Institute’s Web site at http://www.heartland.org, and PolicyBot, Heartland’s free online research database, at www.policybot.org.

Whether sending an expert to your state to testify or brief your caucus, hosting an event in your state, or simply sending you further information on the topic, Heartland can assist you. If you have any questions or comments, contact Heartland Institute State Government Relations Manager Logan Pike at lpike@heartland.org or 312/377-4000.