Marita Noon: Welcome to the “no pee” section of the swimming pool
Cap-and-trade by executive order
America is poised to become the “no pee” section of the global swimming pool and the useless actions will cost us a bundle—raising energy costs, adding new taxes, and crippling the economy. Even some environmentalists agree. Yet, for President Obama, it’s all about legacy.
On Monday, June 2, 2014, the EPA will release its new rules for CO2 emissions from existing fossil fuel-fired electricity generating plants—which the New York Times (NYT) states: “could eventually shut down hundreds of coal-fueled power plants across the country.” (Regulations for new plants: the New Source Performance Standard rule, requiring carbon capture and sequestration (CCS) that buries emissions in the ground to meet the emissions limits, were released September 20, 2013. The 2013 regulations virtually ensure that no new coal-fueled power plants will be built. Bloomberg Businessweek reports: “Considering the one carbon-capture plant being built in the U.S. is massively over budget and widely considered not ready for commercial use, it seems likely that the new rules will significantly erode coal’s share of power generation down the road.” Politifact says CCS is: “new and expensive.”)
These new rules, reportedly 3000 pages long (300 pages longer than the healthcare bill), are so important, it is believed that the President will make the announcement himself.
Supporters seem gleeful. USA Today cites the liberal-leaning Center for American Progress’ Daniel J. Weiss as saying: “No president has ever proposed a climate pollution clean up this big.” In the Washington Post (WP), advocacy group Clean Air Watch’s director, Frank O’Donnell is quoted as saying: “This is a magic moment for the president—a chance to write his name in the record books.” The NYT claims the plans, “the strongest action ever taken by an American president to tackle climate change,” could: “become one of the defining elements of Mr. Obama’s legacy.” And, Peter Shattuck, director of market initiatives at ENE, a Boston-based climate advocacy and research organization, believes: “This EPA regulation will breathe life into state-level cap-and-trade programs.”
While the actual EPA plan has not been released at the time of this writing, it is widely believed that it will follow a March 2013 regulatory proposal put forth by the Natural Resources Defense Council (NRDC) which projects 35-40 percent cuts in CO2 emissions over 2012 levels by 2025. Once again, as with endangered species listings and the Keystone pipeline, we see environmental groups driving this administration’s policies.
Using the NRDC’s policy framework, on May 28—before the EPA released its new rules—the U.S. Chamber of Commerce’s Institute for 21st Century Energy released a major study done by the highly respected energy analytics firm IHS: Assessing the Impact of Potential New Carbon Regulations in the United States. It concludes that the EPA’s plans to regulate carbon dioxide emissions from power plants will cost America’s economy over $50 billion a year between now and 2030.
- Lower U.S. Gross Domestic Product (GDP) by $51 billion on average every year through 2030,
- Lead to 224,000 fewer U.S. jobs on average every year through 2030,
- Force U.S. consumers to pay $289 billion more for electricity through 2030, and
- Lower total disposable income for U.S. households by $586 billion through 2030.
Addressing the Chamber’s assessment, the Institute’s president and CEO, Karen Harbert, said: “Americans deserve to have an accurate picture of the costs and benefits associated with the Administration’s plans to reduce carbon dioxide emissions through unprecedented and aggressive EPA regulations. Our analysis shows that Americans will pay significantly more for electricity, see slower economic growth and fewer jobs, and have less disposable income, while a slight reduction in carbon emissions will be overwhelmed by global increases.”
Not surprisingly, the EPA quickly tried to debunk the Chamber’s claims. Tom Reynolds, the EPA’s associate administrator for external affairs, called the report: “Nothing more than irresponsible speculation based on guesses of what our draft proposal will be.” Reynolds continued: “Just to be clear—it’s not out yet. I strongly suggest that folks read the proposal before they cry the sky is falling.”
However, the WP states: “While several key aspects of the proposal are still under discussion, according to several people briefed on the matter … the EPA plan resembles proposals made by the Natural Resources Defense Council.” In Grist.com, which calls itself “a source of intelligent, irreverent environmental news and commentary,” Ben Adler, who “covers environmental policy and politics for Grist, with a focus on climate change, energy, and cities,” cites a “video chat” he apparently had with EPA Administrator Gina McCarthy. In his column: “Here’s what to expect from Obama’s big new climate rules,” Adler states: “The agency’s proposed rules will probably roughly follow the model proposed by the Natural Resources Defense Council in a March 2013 report.”
It is likely that the Chamber’s report is spot on. If, after the regulations are revealed, they are different, the Chamber says it will rerun the models using the new data.
Describing the NRDC-based plan, the NYT states: “President Obama will use his executive authority to cut carbon emissions from the nation’s coal-fired power plants by up to 20 percent.” It continues: “People familiar with the rule say that it will set a national limit on carbon pollution from coal plants, but that it will allow each state to come up with its own plan to cut emissions based on a menu of options that include adding wind and solar power, energy-efficiency technology and creating or joining state cap-and-trade programs. Cap-and-trade programs are effectively carbon taxes that place a limit on carbon pollution and create markets for buying and selling government-issued pollution permits.” Note: even the NYT calls cap and trade a carbon tax.
The NYT story points to cap-and-trade programs in California and the northeast, which have some of the highest electricity rates in the country. It cites officials of the northeastern regional program who claim: “it has proved fairly effective.” Between 2005 and 2012, the program dropped power-plant pollution by 40 percent, “even as the states raised $1.6 billion in new revenue.” Where did that “new revenue” come from? Higher rates paid by consumers—essentially a tax. Realize that power companies don’t really care about how much the new regulations cost, as they simply pass them on to the end users. In the NYT story, John McManus, vice president of environmental services at American Electric Power, is quoted as saying: “We view cap and trade as having a lot of benefits. … There are a lot of advantages.”
Adler explains the cap-and-trade aspect of the new regulations this way: “States could set up their own emissions-trading programs, under which solar and wind facilities would receive credits for each megawatt-hour of energy produced with less than the allowable amount of CO2 and sell those credits to coal plants.” He continues: “economically—and therefore politically and legally—such an approach would carry major risks. A dramatic spike in electricity prices could cause a recession and significant hardship for lower-income families. That, in turn, would likely create a political backlash that would spur Congress to try to revoke the EPA’s authority to regulate CO2. It could even splinter the left, pitting unions, consumer groups, and anti-poverty advocates against the environmental movement. The GOP-controlled House has already voted numerous times to revoke the EPA’s authority, and much higher energy prices might cause some Democrats to join the Republicans.”
Bloomberg calls the new rule “politically painful” for Democrats from coal-producing regions “as it forces power-plant closures and threatens to increase electricity rates for consumers.”
In response to the Daily Kos reporting on the new EPA regulations, a reader, John in Cleveland, commented: “if the regulations are enough to get a good number of coal plants shut down we had better brace for impact because people’s heating/electric bills are going to increase. … People are going to be pissed when their bills go up, and they will go up.”
The Kos reports: “Obama has said he wants the existing plant rule in place by the time a new president takes the oath of office in January 2017”—though many in Congress, including coal-state Democrats, are asking that the 60-day comment period be extended to 120 and, as the WP points out, lawsuits are likely.
The Kos reader rightly points out: “As long as China and India are allowed to spew as much carbon as they want into the air it is going to be near impossible to rally this country behind anything that means higher prices that doesn’t do anything to solve the problem.”
The Chamber reports that global emissions are expected to rise by 31 percent between 2011 and 2030, yet, all the pain—economic and political—the new regulations will inflict “would only reduce overall emissions levels by just 1.8 percentage points.”
Defending the NRDC plan, David Hawkins, director of climate programs, is quoted in Grist: “Power plants don’t operate in a vacuum. The energy they produce is fungible.” The same is true for the emissions. The U.S. can adopt these draconian regulations, but the U.S. doesn’t operate in a vacuum. The emissions are fungible.
Bloomberg states: “The administration and its Democratic allies are bracing for a political fight over the rule, which is critical to Obama’s legacy on climate and his efforts to coax other nations to agree.” USA Today cites David Doniger, NRDC’s policy director and senior attorney for NRDC’s climate and clean air program in Washington, DC: “the EPA rules will show the United States is ‘in the game’ and will help nudge other countries to make reductions.”
Should we be “in the game” when the other major developed countries have quit playing? Australia has already walked away from its previous administration’s stringent climate policies due to economic pain and public backlash. Germany is becoming more dependent on coal-fueled electricity. Wood is the number one renewable fuel in Europe. Following what has already taken place in England and much of Europe, on May 31, it was announced that Spain is cutting back on its green energy programs. China and India have repeatedly refused to cripple their growing economies by cutting back on their fossil fuel-based energy usage.
The U.S. may be “in the game” alone. All the regulations the administration may impose will not “nudge” the rest of the world to follow. Just because we declare that we won’t pee in the pool, won’t stop the others. And, just like the water in the pool, CO2 emissions are fungible.
We’ll be stuck in our little no-pee section with a crippled economy while the rest of the world will be frolicking in unfettered growth. As chlorine, filters and other processes make public pools safe for swimming, scrubbers and other pollution controls have already dramatically cleaned up the air in America. But Obama needs his legacy—and that will be, as House Speaker John Boehner said: “every proposal that comes out of this administration to deal with climate change involves hurting our economy and killing American jobs.”
The author of Energy Freedom, Marita Noon serves as the executive director for Energy Makes America Great Inc. and the companion educational organization, the Citizens’ Alliance for Responsible Energy (CARE). Together they work to educate the public and influence policy makers regarding energy, its role in freedom, and the American way of life. Combining energy, news, politics, and, the environment through public events, speaking engagements, and media, the organizations’ combined efforts serve as America’s voice for energy.