Why Obama’s Plan to Cut Carbon Emissions Could Be DOA
Business + Economy

Why Obama’s Plan to Cut Carbon Emissions Could Be DOA

REUTERS/Larry Downing

Willie Sutton famously said that he robbed banks “because that’s where the money is.” In unveiling his long-awaited proposals for combatting climate change on Tuesday, President Obama signaled a major assault on the nation’s coal-fired power plants because – let’s face it -- that’s where most of the carbon dioxide emissions are coming from.

Electric power plants by far are the largest single source of global warming in the country, responsible for nearly 40 percent of greenhouse gas emissions that scientists have directly linked to global warming. Currently, 1,142 coal-fired utility plants operate across the country, most of them spewing carbon dioxide into the atmosphere. The largest, Georgia’s Robert W. Scherer Power Plant located near Macon, burns 11 million tons of coal per year.

The industry has tried to wean itself off of coal by gradually shifting to cleaner burning natural gas, and for a while it looked as if it was succeeding.  But those efforts have been thwarted in recent months by a spiking of natural gas costs. Overall, energy-related carbon emissions in the U.S. rose 3 percent in the first quarter of this year, compared with a 4 percent drop in 2012.


Enter Obama:  After years of frustration in trying to enlist support from Congress to crack down on power plant emissions, the president yesterday essentially flexed his muscles as chief executive to impose the first carbon limits on existing power plants.

The president directed the Environmental Protection Agency – operating under the Clean Air Act -- to set carbon pollution standards for new and existing coal-burning power plants and have final regulations in place by June 2015.

Obama outlined a series of initiatives – both old and new – for addressing the long term threat of climate change, including a requirement that all new federal projects be able to withstand rising seas and more intense storms.  The president’s strategy also calls for increased fuel standards for large vehicles and sets an ambitious goal of reducing 3 million metric tons of carbon pollution by 2030 – half of the U.S. annual output - by improving energy efficiency standards for federal buildings and appliances.

But the nub of the announcement was Obama’s go-it-alone approach to gradually rein in the $370 billion a year utility industry’s greenhouse gas emissions. At best the president’s plan faces an uphill battle. He can expect huge resistance from the utility and coal industry and their allies, but in some ways time is Obama’s biggest enemy.

With little more than three years left in his presidency, he has a relatively small widow to push through the new regulations and policy before he becomes a lame duck. And while getting legislation passed in Congress is arduous, so is rule making.  Lawmakers and industry officials have many options – both through Congress and the courts – to slow down or even derail the new rules.

Moreover, there’s no guarantee that industry will stick to the timetable Obama has laid out for submitting plans for complying with new rules that for now are vague notions.  Some critics say it might have been a lot easier for the president to get this done if he had made climate change a priority in his first term, although his previous ideas for a cap and trade approach to reducing greenhouse gas emissions hit a wall. 
Obama is also facing a challenge from states.

Last week, a bipartisan group of 21 state attorney generals sent acting EPA administrator Bob Perciasepe a letter warning him not to issue new regulations without consulting the states and Congress.
“If the administration blows off that letter, it’s an indication that they don’t intend to have a cooperative approach to dealing with these issues,” said Scott Segal, a utility industry advocate and a partner at the PR firm Bracewell & Giuliani. 

Finally, Obama is not changing the law, he is simply once again trying to circumvent the Congress and achieve his goals by administrative decree.  The next president could simply decide to kill the program the day he or she takes office.

For sure, Obama has scored a number of important successes on the environmental front by issuing the first-ever national standards for mercury emissions, increasing the use of wind energy and setting higher fuel standards for cars and small trucks.

Obama’s speech on Tuesday at Georgetown University was his boldest statement on climate change, an ambitious push to comprehensively overhaul U.S. environmental policy. "While no single step can reverse the effects of climate change, we have a moral obligation to act on behalf of future generations," Obama said.

Predictably, Democrats and environmentalists hailed the speech while Republicans and industry spokesmen warned that Obama’s proposals could ruin the utility industry, forcing higher energy rates for consumers and job losses as some power-plants are forced to close down.

“Today’s speech builds on previous statements from the president with a specific plan of action for federal agencies to use their authority under existing law to reduce dangerous carbon pollution,” said Dan Lashof, director of the Natural Resources Defense Council’s climate and clean-air program. “For the health of our families, our communities, and our planet we desperately need climate leadership. Today, that’s just what President Obama delivered.”

But Senate Minority Leader Mitch McConnell (R-KY), who represents a major coal state, said the proposal was “tantamount to kicking the ladder out from beneath the feet of many Americans struggling in today's economy.”  Coal companies’ stocks have been down this week in anticipation of the speech.

Representatives of the utility industry, which accounts for nearly 68 percent of all electricity production, warned that any effort to impose new emission restraints would almost certainly lead to higher utility bills.  The American Public Power Association (APPA) said it would work with the administration but expressed concerns about new regulations.

"Taking America's most significant source of electricity offline would have disastrous consequences for our nation's economy," Mike Duncan, the president of the American Coalition for Clean Coal Electricity, said in a statement.

The conservative Heritage Foundation warned that the plan would increase natural gas prices by 42 percent. Segal said it was too early to accurately determine what the economic impact would be, although he cited an analysis of the economic impact of a 2009 climate change plan offered by Reps. Henry Waxman (D-CA) and   Ed Markey (D-MA). According to the National Association of Manufacturers, that bill would have reduced GDP by $3.1 trillion from 2012 to 2030, eliminated 2.4 million jobs and caused steep increases in electric prices.

The Natural Resources Defense Council recently proposed its own plan for regulating existing plants that the group estimated would cost the utility industry $4 billion annually beginning in 2020, but that would saved five to six times as much through reductions in costly treatment of asthma and other respiratory illnesses caused by air pollution.

Under the NRDC proposal, the EPA would set specific targets for states to reduce emissions of greenhouse gases but leave it up to those states and industries to achieve those new standards, including allowing plants to use the full range of technological upgrades to cut emissions as well as credits for utilities. Just as the president is attempting to do, the NRDC plan could be implemented by the administration without specific authorization of Congress.

“What’s exciting about this is that we don’t need to wait for Congress to get started on making very significant reductions in the carbon pollution that’s driving climate change,” Lashof said in unveiling the plan. “The good news is that we know where the carbon is, and now we just need to go get it.”