Now that the air has cleared after a media blizzard about the significance of the proposed EPA ruling, let’s step back and take a look at what this really means.
First, if you are in the renewable energy, coal mining, or utility business, don’t get too worked up. The new EPA rules will take several years to effect any change in your business. In a one sentence summary, the proposal by the Environmental Protection Agency would cut carbon pollution from coal fired power plants 30 percent from 2005 levels by 2030 — the equivalent, according to the agency, of taking two-thirds of all cars and trucks in America off the road.
This is just the beginning of the long process to cut carbon emissions via EPA policy. What takes so long? The agency will now take public comment and spend the next year completing the proposal before releasing the final rule in June 2015. Then, each state will be given another year to submit compliance plans, or apply for an extension. So at least two years before you see any actual movement toward mandated reduction in carbon dioxide pollution.
Although the Obama administration has been waiting a long time to take a lead in climate change and energy policy, they can conveniently do both by playing this one card, also known as the Clean Power Plan, which, by the way, is not an executive order. It has been on the table since a 2007 Supreme Court decision led to an E.P.A. determination that carbon dioxide is a pollutant, thus requiring that the agency regulate it or be in violation of the law. Under the Clean Air Act, the E.P.A. is required to regulate any substance defined as a pollutant, which the law defined as substances that endanger human life and health. While there are limits in place for the level of arsenic, mercury, sulfur dioxide, nitrogen oxides, and other particle pollution that power plants can emit, there are currently no national limits on carbon pollution levels.
By consensus of environmentalist, the EPA rule will not lower greenhouse gas pollution enough to prevent catastrophic effects of climate change. On the world stage however, it would allow the United States to meet its commitment to the United Nations pledge to cut carbon pollution 17 percent by 2020 and set an example for other major polluting countries, particularly China and India, to follow suit. So far, it has had the desired effect.
What Are the Costs?
To the coal industry there is only a projected net 10 percent decline in production by 2030. The E.P.A. expects that under the regulation, 30 percent of electricity in the United States will still come from coal by 2030, down from about 40 percent today. The E.P.A. estimates that the rule will cost the economy $7.3 billion to $8.8 billion annually, but will lead to benefits of $55 billion to $93 billion, primarily by preventing premature deaths and mitigating respiratory diseases. Also consider that fifteen years is long enough time for natural market forces to work magic. Many of the coal-fired plants are old and scheduled for retirement or plan conversion to natural gas. Critics complain that the rule will drive up electricity costs, but the agency forecasts that the rule will increase energy efficiency across the power sector, leading to lower electricity bills when the program is fully implemented in 2030. The amazing thing about this proposal is that it is rumored to have bi-partisan support in the U.S. House and Senate.
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