A full spectrum of reactions to EPA power plant proposal from corporate groups

Source: Daniel Cusick, E&E reporter • Posted: Wednesday, June 4, 2014

Depending on who’s predicting, yesterday’s Clean Air Act draft rule targeting carbon pollution from existing power plants will either revive the U.S. economy by tapping America’s spirit of energy innovation, or it will sink the economy as the government attempts to remove coal and other carbon-intensive fuels from the country’s energy mix.

Groups representing a broad cross-section of the U.S. economy wasted little time picking apart the Obama administration’s highly anticipated Section 111(d) rule for existing power plants. Yet the only firm consensus to emerge from early analysis is that the next two years — roughly 12 months of agency review and revision followed by another 12 months of state implementation — will be critical to evaluating the rule’s real effects.”Everyone needs time to digest the proposal, and certainly many will have issues,” Eileen Claussen, president of the nonpartisan Center for Climate and Energy Solutions, said in a statement after details of the proposal were released yesterday morning. “But in our view, EPA’s proposal is a good starting point for getting to a rule that delivers significant carbon cuts while ensuring the reliability and affordability of our electricity supply.”

As expected, business-sector responses to EPA’s draft rule differed from sector to sector. But a clear line could be drawn between two groups: those that believe the economy will benefit from the challenge of retooling the electricity generation system to eliminate carbon-intensive fuels, and those that believe that coal, oil and other fossil fuels should remain a part of the nation’s energy mix for generations to come.

The Business Roundtable, whose members are drawn from the ranks of Fortune 500 chief executive officers, including those of top-tier energy companies, said it looked forward to working with the Obama administration “on how best to achieve cost-effective greenhouse gas emissions reductions while continuing to support growth and job creation.”

But the group stopped short of an endorsement of the draft rule, which would place immense pressure on power generators to stop burning coal. In a 2013 blueprint of its vision for comprehensive U.S. energy policy, the Business Roundtable made clear its view that “a broad portfolio of traditional energy resources, including coal, will remain essential to U.S. economic success and job creation.”

The green investment group Ceres, meanwhile, garnered support from 128 companies and 49 investor groups managing $800 billion in assets in a letter-writing campaign calling EPA’s proposed rule “a critical step” to address climate change. “The new standards will reinforce what leading companies already know: climate change poses real financial risks and substantial economic opportunities and we must act now,” Ceres said.

Bob Keefe, executive director of Environmental Entrepreneurs, a business group that tracks clean energy development and jobs, said EPA’s draft rule sends “a clear market signal to businesses that America is on the path to a clean energy future,” one marked by the creation of “hundreds of thousands of good, high-paying jobs that will help make our nation’s workforce more competitive.”

Mild applause to flexibility from utilities

For their part, the nation’s electric utilities and power producers, which will be most affected by the power plant rule, offered tepid enthusiasm for the proposal, placing strong emphasis on EPA’s promise of a flexible rule that gives states wide latitude in choosing strategies to reduce power plant emissions without driving up electricity costs or compromising reliability.

Among the key upsides of the proposal, according to utility groups, is that EPA set its 30 percent carbon reduction goal using a 2005 emissions base line, which means that all progress made in reducing emissions since the pre-recession days of the George W. Bush administration can be applied to the overall goal.

“While the 2030 reduction target is ambitious, it appears that utilities may be allowed to take advantage of some of their early actions,” said Tom Kuhn, president of the Edison Electric Institute, one of the largest and most influential groups representing U.S. electric utilities in Washington, D.C.

He added that EEI members were also encouraged that EPA “appears to have allowed for a range of compliance options to reflect the diversity of approaches that states and electric utilities have undertaken and may undertake to reduce GHG emissions,” although concerns remain about the agency’s “broad approach to ‘best system of emissions reductions.'”

Sue Kelly, president and CEO of the American Public Power Association, which represents publicly held electric utilities, noted that the U.S. electricity sector “has reduced carbon dioxide emissions by more than 12 percent between 2007 and 2012, without federal rules and regulations.” She cautioned against policies that aim to shutter most of the nation’s existing coal plants in favor of a heavy reliance on renewable resources like wind and solar power.

“Public power utilities are good environmental stewards,” Kelly said. “But we need a middle path, one that respects the needs of energy producers and the pocketbooks of energy customers.”

Coal burners get fired up

But other organizations, including those representing coal-, oil- and gas-fired utilities, railed against EPA’s blueprint for achieving a 30 percent reduction in power plant emissions, calling it “an expensive and intrusive attempt to fundamentally change the way that power is generated in the United States.”

“For the rule to work the way the agency hopes it will work, it must be intrusive,” said Scott Segal, executive director of the Electric Reliability Coordinating Council, which represents coal-fired utilities in D.C. “You have to get unprecedented levels of energy efficiency for these emissions reductions to be realized. And no state in the union, no matter how green they are, has achieved those kinds of efficiencies.”

In a statement, Atlanta-based Southern Co., one of the nation’s largest coal-based utilities, pledged to work with EPA and state officials on Clean Air Act compliance issues using an “all-of-the-above” strategy for power generation, including coal.

However, the utility added, “EPA’s proposed emission guidelines appear to be based on reduction measures that extend well beyond Clean Air Act requirements and infringe upon states’ authority to determine the best approach for their own generating sources.”

Hal Quinn, president and executive director of the National Mining Association, said in a statement that EPA’s ideas for reducing carbon emissions from existing power plants “embody unrealistic measures that move America’s electric grid away from the low cost and reliable power our economy needs to grow.”

Other organizations that strongly criticized the proposed rule included the U.S. Chamber of Commerce and the National Association of Manufacturers.

On a conference call with reporters, NAM President and CEO Jay Timmons said that although the Obama administration deserves credit for policies that helped the manufacturing sector emerge from the recent recession, yesterday’s power plant proposal threatens to undermine much of that recovery by driving domestic energy costs higher.

“The rule as proposed would absolutely limit fuel choice [for manufacturers],” he said, making it harder for U.S. firms to compete against low-cost manufacturers in places like China and India. Moreover, Timmons said, growth and investment in energy-intensive sectors of the U.S. economy, such as chemical manufacturing, may falter as U.S. firms lose their competitive edge due to higher electricity prices. He was also skeptical of officials’ claims that the new carbon regulations would be implemented in a way that protects states and power consumers.

“The mantra is flexibility. But when it come