Dueling experts weigh in on upcoming EPA power plant proposal

Source: Jean Chemnick, E&E reporter • Posted: Thursday, May 29, 2014

With U.S. EPA set to release its greenhouse gas proposal for existing power plants Monday, a leading environmental group and the U.S. Chamber of Commerce painted very different pictures today of the rule’s potential impacts.

The Natural Resources Defense Council, which released its own proposal for the rule in 2012, lauded the coming rule as a boon to energy efficiency and public health, and a game-changing moment in U.S. climate change politics.”We see this as the pivotal battle on climate change for U.S. domestic politics,” said David Goldston, NRDC’s government affairs director, at a Washington, D.C., briefing. Acknowledging the proposal is likely to spark legal and legislative challenges, he predicted the end result would lead to EPA prevailing and carbon dioxide emissions being treated like other pollutants.

But Karen Harbert, president and CEO of the U.S. Chamber’s Institute for 21st Century Energy, countered at a separate briefing that the rule would spur job losses, economic damage and inequality among the states.

The U.S. utility sector is “not a monolith,” she said. And the southeastern United States — with its heavy reliance on coal and fewer low-carbon options — will bear the brunt of the rules, she said.

The environmental benefits, she added, would be eclipsed by expanding emissions abroad.

Both groups used NRDC’s proposal as the point of reference for their discussions as neither side said it had been briefed on specifics of the rule vetted at the White House.

NRDC has proposed that EPA set an emissions limit for each state that reflects its current utility-sector fuel mix. States with a heavier reliance on coal versus lower-carbon technologies would receive a higher limit for each megawatt-hour of power produced, but those targets would still be too stringent for even supercritical coal-fired power plants to comply.

To meet these targets, states could allow utilities to choose from a variety of options on both the demand and supply side, a flexible model that NRDC says would contain cost. It has said its proposal would cost about $7 billion but yield approximately $30 billion in benefits by the end of the decade, depending on a variety of factors including opportunities for efficiency.

NRDC assumes its proposal would encourage a 6 percent drop in electricity demand by 2020, rather than a 4 percent increase that might occur under a business-as-usual scenario. This would be met with an annual 2 percent improvement in efficiency as the rule went into effect.

The rule, under NRDC’s proposal, would allocate a CO2 limit for each state’s power plants based on that state’s energy mix.

The emissions reductions would be significant, NRDC says. It could cut emissions by 35 percent below 2005 levels by 2020 — a performance that would go a long way toward meeting the emissions reduction goals President Obama promised in Copenhagen, Denmark, in 2009.

But Harbert questioned both the cost of the rule and its ability to reduce global emissions linked to climate change.

The chamber commissioned its own analysis of the NRDC proposal. The chamber analysis assumes, among other things, that power demand would continue to climb over the remainder of the decade rather than fall.

The analysis produced by research and analytics firm IHS showed that NRDC’s model combined with the new power plant rule would cost the U.S. economy $51 billion on average each year and would lead to 224,000 fewer jobs on average through 2030.

These costs would be higher than the chamber’s estimates for the comprehensive cap-and-trade bill that cleared the House in 2009. Harbert skirted a question about whether the chamber had “buyer’s remorse” for opposing the bill by Rep. Henry Waxman (D-Calif.) and then-Rep. Ed Markey (D-Mass.).

No legislation is now on the horizon to address emissions, she noted.

“Congress is being bypassed, and this is the path that we are on, which is why we sought to analyze this,” she said. “Obviously, the challenge would be for Congress to weigh in on the implications of the proposed regulatory framework in exercising their oversight function.”

The Republican-controlled House has passed numerous stand-alone measures and policy riders that would strike down or limit EPA’s authority to regulate CO2, but none has cleared the Senate.

NRDC’s David Doniger said that far from “bypassing” congressional authority, Obama “is carrying out his duty to faithfully execute a law that Congress already enacted” — namely, the Clean Air Act.

Harbert pledged the chamber would be “very vigorous participants” in the comment period that will follow the release of the EPA proposal next week. But if the final rule EPA promulgates is not acceptable, she said, “clearly there are litigation options that are always on the table.”

Doniger noted that EPA has been very successful lately in defending its emissions standards against industry legal challenges. The Supreme Court has twice upheld EPA’s climate rules and has established that EPA is due “a substantial amount of deference” in crafting its rules under the auspices of the Clean Air Act, he said. The chamber’s own record in court recently has been “abysmal,” he added.

Doniger declined to answer a question about whether the environmental community might mount a court challenge of its own if EPA floats a rule that is insufficiently stringent, saying that NRDC, too, will participate in the public comment process.