The Pros and Cons of Obama’s New Carbon Rule
Policy + Politics

The Pros and Cons of Obama’s New Carbon Rule


President Obama on Monday is unveiling a controversial environmental and energy initiative: an executive order to force coal-fired power plants to reduce carbon dioxide emissions by 30 percent from 2005 levels by 2030—the boldest move yet in the administration’s efforts to fight climate change.

Coal-fired power plants account for some 40 percent of U.S. greenhouse gas emissions, which scientists say are the main cause of global warming. At 39 percent in 2013, they are also the largest supplier of fuel powering electricity in the U.S. “I refuse to condemn our children to a planet beyond fixing,” the president said Saturday during his weekly radio and Internet address. “In America, we don’t have to choose between the health of our economy and the health of our children.”

Related: Cities Face Costly Projects to Cope with Climate Change

Drafted by the EPA, the new rule puts a national limit on carbon pollution from coal plants, as The New York Times and others have reported. It also gives the states flexibility to devise their own approaches, such as creating energy-efficiency technology, using more wind and solar power, and starting or joining “cap-and-trade” programs, which allow utility companies to buy and sell government-issued pollution permits.

Obama tried previously to push “cap and trade” through Congress as part of an effort to control carbon emissions, but it died in 2010 in the Senate. The GOP, Tea Party groups and the coal industry attacked Democrats who supported it, warning the legislation would raise energy prices and cost jobs.

Now the president is invoking executive authority instead, and Republicans and energy insiders are complaining that Obama is circumventing lawmakers on a critical policy that could raise energy costs and shutter many coal-fired power plants.

In drafting the executive order, the EPA turned to a little-used provision of the Clean Air Act (CAA), since carbon dioxide isn’t regulated under government air pollution programs. States and industry groups are preparing to wage legal challenges to the rule, The Wall Street Journal reported.

Last September, the administration announced new regulations setting strict limits on the amount of carbon pollution that can be generated by new U.S. power plants. The proposal sparked a backlash from supporters of the coal industry and is certain to face legal challenges.

Related: Obama Fights Global Warming, One Hot Spot at a Time  

The president’s latest targeting of existing power plants is pitting major environmental groups, including the Natural Resources Defense Council (NRDC), against industry and business organizations, such as the U.S. Chamber of Commerce. Long a booster of “cap and trade,” the NRDC says the executive order would stem carbon emissions while encouraging economic development and job creation – while the Chamber of Commerce warns of $50 billion in economic costs per year.

Both groups have issued dueling assessments of the plan’s likely impact. Here are 6 major arguments in favor of, and 6 against, Obama’s executive order, based on a summary the NRDC provided to The Fiscal Times and on excerpts from a Chamber of Commerce study.

6 Reasons to Support Obama’s Carbon Rule, from the NRDC

  • Carbon pollution fuels climate change, which triggers more asthma attacks and respiratory disease, worsens air quality, and contributes to destructive, costly and deadly extreme-weather events.
  • In 2012 alone, extreme weather cost the U.S. more than $130B, and taxpayers picked up nearly $100B of the cleanup’s cost, according to an NRDC analysis.
  • Setting federal limits on carbon pollution from power plants is essential: Power plants are responsible for 40 percent of U.S. carbon pollution, the single largest source. Right now, we limit mercury, arsenic, lead, soot and other dangerous pollutants from power plants, but not carbon pollution.
  • While many states and communities have taken action, the new federal safeguard will set commonsense limits on carbon pollution, inspire investment in infrastructure to protect communities, and spur innovation to power America with clean energy in the 21st century.
  • States have flexibility to implement plans to increase efficiency, improve resiliency and remove carbon pollution. Carbon standards can create hundreds of thousands of jobs and save American households and businesses billions on electricity bills, NRDC claims, as energy efficiency is ramped up.
  • New clean energy technologies that produce less carbon pollution will create a new generation of clean energy jobs. Carbon pollution limits will spur investment and innovation in clean energy technologies to modernize and clean up power plants. Since 1970, every dollar invested in compliance with Clean Air Act standards has yielded $4-8 in economic benefits.

6 Reasons to Oppose Obama’s Carbon Rule, from the Chamber of Commerce:

  • It will negatively affect national GDP, employment, and real income per household. A Chamber of Commerce study predicts a peak decline in GDP of $104B in 2025, with an average of $51B per year from 2014 to 2030. It also predicts the loss of up to 442,000 jobs.
  • It will have a very small impact on global CO2 emissions, which are set to rise rapidly. The Chamber’s analysis finds the proposal would address “a mere 1.8 percent of global CO2 emissions.” Regardless of national emissions reduction policies and adverse economic impacts, global CO2 emissions will grow rapidly.
  • It will be extremely costly. Regulating CO2 emissions will generate adverse economic impacts in the U.S. in exchange for reductions overshadowed by rapidly rising emissions elsewhere. The plan would shave $51B off GDP annually and increase electricity costs by $289B.
  • The law governing mercury and other toxins is a huge economic drain; the new plan would be even worse. To date, the Mercury and Air Toxics Standard (MATS) is the most expensive power sector rule issued by the EPA, at a projected total cost of $9.6B per year… The average compliance cost of the EPA’s CO2 regulations is nearly triple that, at $28.1B, over a 17-year time frame.
  • The plan will force the energy industry to deal with the cost of decommissioning or retrofitting existing, functional power-delivery infrastructure and replacing it. The total cost for incremental generating capacity, supporting infrastructure (electric transmission, natural gas pipelines, CO2 pipelines), decommissioning, stranded asset costs, and offsetting savings from lower fuel use and operation and maintenance is nearly $480B.
  • The proposal places unrealistic demands on states, resulting in more burden on individuals and businesses, says the Chamber: “In regulating CO2 emissions, it appears the EPA will attempt to mandate a level of CO2 emissions reductions that is unachievable at the source (power plants).”

The Fiscal Times’ Rob Garver contributed to this article.

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