November 17, 2015

Jobs and Energy at Stake with CO2 Rules

  • President Obama’s CO2 rules for new and existing power plants are potentially unlawful and will be harmful to the economy.  

  • The CO2 rules are another EPA power grab that will devastate America’s energy economy with negligible environmental benefit.

  • The Senate will vote on bipartisan resolutions of disapproval filed by Senators McConnell and Capito to block the CO2 rules.

The Obama administration’s rules governing carbon dioxide emissions from new and existing power plants are potentially unlawful and will be harmful to the economy. They will raise energy prices, threaten electric reliability, eliminate jobs, and destroy economic growth. Twenty-three states have filed lawsuits to block the CO2 rule for new power plants in federal court, and 27 states have filed lawsuits to block the CO2 rule for existing power plants. The Senate will vote on bipartisan Congressional Review Act resolutions of disapproval to block these rules.

Shutting Down Existing Power Plants Causes Economic Pain

The rule for existing power plants is designed to shut down coal-fired plants by requiring states to reduce CO2 emissions from the electricity sector by 32 percent below 2005 levels over the next 15 years. The rule relies heavily on renewables, which currently only provide 5 percent of energy despite significant investments by taxpayers. It eliminates the move toward natural gas that has supported a manufacturing renaissance and created thousands of new jobs across the country.

CO2 Rule Double Digit Price Hikes Map - rates

This month, a NERA Economic Consulting study concluded that all of the lower 48 states will experience higher electricity prices under the CO2 rule for existing power plants. Forty states could experience double-digit electricity price increases. The rule could reduce household spending power by up to $79 billion. The study estimated that compliance costs will total $220 billion to $292 billion from 2022 through 2033. That does not include additional costs for electricity transmission and distribution, or for natural gas infrastructure. The American Action Forum predicted that the rule will eliminate 125,800 jobs across the country.

Barely Measurable Gain

The American Coalition for Clean Coal Electricity, using EPA’s methodology, estimated the climate impact of greenhouse gas reductions from the final CO2 rule for existing power plants. In an August report, it predicted that the climate impact will be “meaningless.” In 2050, global average CO2 concentration would be reduced by 0.2 percent, global temperature would be reduced by 0.01 degree Fahrenheit, and sea level rise would be reduced by 0.20 millimeter – the thickness of one or two human hairs.

The EPA estimated that the benefits flowing from the CO2 rule for existing power plants will total $20 billion in 2030. But this projection rests on a rickety foundation: it is based on the administration’s controversial “social cost of carbon” methodology. It counts benefits that would accrue to countries around the globe, not just to the United States. According to a 2014 paper by the Brookings Institution, the EPA’s method for calculating climate benefits represents a “dramatic shift” in policy. In 2010, the administration determined that Americans would only receive 7 to 23 percent of a rule’s climate benefits, but pay 100 percent of a rule’s costs. Applying this estimate to the CO2 rule for existing power plants, Americans will receive climate benefits of only $1.4 billion to $4.6 billion in 2030 versus what the EPA estimated to be compliance costs of $8.4 billion. The remaining $15.4 billion to $18.6 billion in benefits will flow to the rest of the world.

A Legal Avalanche against the Rule

A total of 27 states have filed lawsuits against the rule governing existing power plants. These petitioners and others have asked the U.S. Court of Appeals for the D.C. Circuit to issue a stay against the rule pending resolution of the lawsuits. The Obama administration opposes a stay. It hopes that if states and businesses have to start complying with the law while the lawsuits proceed, EPA will get its desired result of shutting down power plants even if the administration ultimately loses in court. When the Supreme Court struck down the EPA’s Mercury and Air Toxics Standards rule this summer, the agency’s administrator bragged on television that implementation of the rule began “three years ago,” “investments have been made,” and many coal-fired power plants had already been irreversibly shut-down or retrofitted.  

Additionally, a coalition of 23 states led by West Virginia has filed a lawsuit to stop the CO2 rule for new power plants.

Climate Buildup before Paris Conference

The CO2 rules for new and existing power plants are just the beginning. Other CO2 rules will target other industries – transportation, manufacturing, buildings, and agriculture. They will not stop at coal and oil either. They will soon target natural gas. The Obama administration signaled its preference to sideline natural gas in a background sheet on the CO2 rule for existing power plants: “In the final rule, that early rush to gas is eliminated.”

The change from the proposed rule, which boosted natural gas, to the final rule, which effectively bypasses the low-carbon fuel, is perplexing. The final rule is less workable. It poses an even more economically, technologically, and commercially problematic puzzle for states and power producers to solve. They must now use fewer reliable, affordable fossil fuels and more unreliable, expensive renewables – all while still guaranteeing electric reliability and affordable electricity.

The administration doubled down on a rule that further handicaps fossil fuels in favor of renewables – and further hurts jobs and energy security – for a reason. Later this month, 196 countries will convene in Paris to enter into final climate negotiations. The Obama administration wants to “show the world that the United States is committed to leading global efforts to address climate change,” as it stated in a fact sheet on the rule. That way, even if the rule does not survive legal or political scrutiny over the long term, it will at least provide the administration with a plausible negotiating tool in the short term.

After seven years of review that yielded five favorable environmental reports, the administration rejected the Keystone XL pipeline – and all of its economic, energy security, and environmental benefits – for no reason other than to send a message to other countries that President Obama is a global “leader” on climate change. The CO2 rules for new and existing power plants are no different. Their most immediate purpose is to serve as a message that President Obama can tout as he seeks to win the approval of his international peers as a global “leader” on climate issues.

Senate Fighting Back

The Senate is not waiting for the courts to stop the rule. Last month, Senators McConnell and Manchin filed S.J. Res. 23, a bipartisan resolution of disapproval to block the CO2 rule for new power plants. Senators Capito and Heitkamp filed S.J. Res. 24, a bipartisan resolution of disapproval to block the CO2 rule for existing power plants.

Both resolutions were filed under the Congressional Review Act. This statute provides fast-track procedures for Senate consideration. Most notably, a resolution of disapproval cannot be filibustered, enabling passage by two simple majority votes – first on the motion to proceed, then on final passage. If a motion to proceed is agreed to, the resolution of disapproval is subject to a maximum of 10 hours of debate before a vote on final passage. Amendments are not permitted. If the Senate and House pass these resolutions, and if the president signs them into law, the CO2 rules will not take effect and cannot be issued in “substantially the same form” as the disapproved rules. The Senate is expected to vote on these resolutions this week.

The CO2 rules are two in a series of executive actions by the Obama administration that will constrain our country’s economic growth. Republicans are working to support Americans who responsibly use our nation’s abundant fossil fuel resources to create economic opportunity. By voting for S.J. Res. 23 and S.J. Res. 24, Republicans and Democrats can work together to protect American families and businesses from the disastrous impacts of the CO2 rules.  

Issue Tag: Energy