On June 2, 2014, the Environmental Protection Agency (EPA), under the authority of Section 111(d) of the Clean Air Act, proposed a plan to mandate a 30 percent reduction in carbon dioxide emissions from U.S. power plants’ 2005 levels by 2030. According to EPA’s website, 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.”
As EPA develops these guidelines, state legislative responses have varied widely. Unique among such responses has been the Pennsylvania Greenhouse Gas Regulation Implementation Act, a bipartisan bill recently signed into law in Pennsylvania by Gov. Tom Corbett (R). The bill requires the Pennsylvania General Assembly to approve any CO2 reduction plan the state’s Department of Environmental Protection develops before submitting it to EPA.
Supporters say the requirement will allow elected officials to have final say on the state’s CO2 regulations, thus democratizing the process. Opponents say legislative approval will merely politicize a very technical cost-benefit process best left to an executive agency.
Bloomberg View columnist Ramesh Ponnuru says a reason the Clean Power Plan circumvented democratic review before implementation is the regulations likely have an even poorer cost-benefit ratio than the last major climate change proposal, the 2009 Waxman-Markey cap-and-trade bill, which was defeated in the 111th Congress.
An October 2014 study by NERA Economic Consulting projects Clean Power Plan regulations could cost U.S. consumers and businesses $41 billion annually. A study by Energy Ventures Research found the average annual U.S. household gas and power bills will increase by 35 percent from 2012 to 2020. Louisiana, Mississippi, North Dakota, and Texas will suffer the largest total cost increases on a percentage basis, averaging more than a 115 percent increase in annual electricity and gas bills, the study found.
Democratic review is essential to proper cost-benefit analysis. Legislative approval requirements for CO2 regulations are a productive first step toward creating more balanced, less costly regulations. However, even with such requirements, the Clean Power Plan remains heavy-handed and costly. To change that, Congress will have to rewrite the Clean Air Act to include serious consideration of the net benefits and costs of enforcement actions and accurately define what constitutes a pollutant. In addition to advocating Clean Air Act reform, state legislators should require legislative approval for state implementation plans, and should engage with EPA and other federal agencies to minimize government-imposed energy cost increases and the consequent economic damage.
The following documents provide additional information about EPA and carbon dioxide regulation.
Ten Principles of 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.
State Factor: States are Engaging EPA on Clean Power Plan
A November 2014 white paper by three legislators from different parts of the country and published by the American Legislative Exchange Council (ALEC) examines the impact of EPA’s proposed Clean Power Plan and what state legislators should do in response. John Eick, director of the Energy, Environment, and Agriculture Task Force at ALEC, recommends legislators, “(1) submit public comments to EPA regarding the proposed rule; (2) to develop state implementation plans (SIPs) in ways that protect residential, industrial and commercial electricity users and (3) to engage with EPA and other federal agencies to minimize many of the financial and reliability risks noted above and in the State Factor.”
Energy Market Impacts of Recent Federal Regulations on the Electric Power Sector
A November 2014 study by Energy Ventures Analysis, Inc. examines the Clean Power Plan’s impact on U.S. electric power, natural gas, and coal markets and how the average U.S. household will be affected if each state meets EPA’s proposed CO2 emission rate targets. The study finds the rule would increase average annual household gas and power bills by 35 percent from 2012 to 2020.
EPA Clean Air Rule Could Cost Ohio Billions, Regulator Predicts
Asim Haque, vice-chairman of Ohio’s Public Utilities Commission, tells the audience at the Advanced Energy Economy Symposium that despite EPA being “nothing but gracious” to work with, forcing natural gas combined cycle to run at 70 percent capacity, as EPA recommends to do in order to satisfy provisions of the Clean Power Plan, “will cost billions.”
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 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.
Despite Their Carbon Rebellion, States Prepare for the Worst
Writing in the October 2014 issue of Governing, Chris Kardish documents several states’ responses to the proposed EPA carbon-dioxide regulations for existing power plants. Some states passed legislation requiring the state plans account for the economic impact of compliance, and other states have prepared to adopt the proposed rule.
Governors: EPA Carbon Dioxide Rules Job Killer
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.
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 website at http://news.heartland.org/energy-and-environment, The Heartland Institute’s website at http://heartland.org, and PolicyBot, Heartland’s free online research database, at www.policybot.org.
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