NTU Comments Opposing EPA's Clean Power Plan Proposed Rule

by Lee Schalk / /

To: Environmental Protection Agency
1200 Pennsylvania Avenue NW
Washington, DC 2046

From: Lee Schalk
State Affairs Manager
National Taxpayers Union
108 N. Alfred Street
Alexandria, VA 22314

Subject: Clean Power Plan Proposed Rule, Docket ID No. EPA-HQ-OAR-2013-0602

On behalf of the 362,000 members of the National Taxpayers Union (NTU), I write in opposition to the Clean Power Plan proposed rule.

Since our founding in 1969, NTU has supported policies that promote an efficient, effective, and limited government as well as a robust, resilient economy. We believe that aside from taxation and regulation, no other factor will more dramatically affect the brighter future all of us seek for our nation than affordable, abundant energy. It is the key to powering factories and retail outlets alike, to providing the lifeblood for small Internet-based firms or keeping everyday households running smoothly.

Unfortunately, the Environmental Protection Agency’s (EPA) goal to reduce carbon emissions for fossil-fuel-fired power plants throughout the country by 30 percent in 2030 could have a devastating effect on taxpayers and state economies. For states that rely heavily on coal for energy and jobs, particularly Kentucky and West Virginia, compliance with the reductions may prove extremely difficult.

The Clean Power Plan proposed rule contains a range of percentage reduction goals for each state, from 10.6 percent in North Dakota to 71.6 percent in Washington, but these numbers do not tell the entire story. Washington has only one coal-powered plant left and gets the majority of its energy (60 to 70 percent) from hydroelectric power. There, the state legislature has already decided to close that one plant in 2025, which will sufficiently reduce emissions to meet their target. Kentucky sits on the opposite end of the spectrum, with a goal to reduce emissions by 18.3 percent. While this might seem like an easily attainable goal, federal regulators should consider that the Bluegrass State receives over 90 percent of its power from coal plants, meaning it will be hard-pressed to comply. Kentucky officials, and many of their counterparts in states south of the Great Lakes, could be forced to close plants, which would immediately result in serious economic disruptions.

Opponents of the regulations have spoken up at the state and federal level from both sides of the aisle. Recently, Democratic Governor Earl Ray Tomblin of West Virginia commented, "If these rules are put into place, our manufacturers may be forced to look overseas for more reasonable energy costs, taking good paying jobs with them and leaving hardworking West Virginians without jobs to support their families.”

Republican Senator Mitch McConnell of Kentucky has called the proposed regulations a national energy tax, since the likely result is higher costs for all individuals and businesses as cheaper sources of energy are forced out of the market. When energy prices rise, so will the costs of goods and services.

We must stress here the importance of more cost-benefit analysis with the Clean Power Plan, especially in light of previous rulemaking. For instance, a June 2011 NERA Economic Consulting analysis commissioned by NTU determined that an EPA study claiming up to $2 trillion in annual economic benefits from the Clean Air Act by 2020 was “greatly exaggerated,” and based on a “suspect” methodology employing a survey-based concept called “willingness to pay.” EPA’s more rational macroeconomic assessment, contained in the very same study, found that by 2020 the impact of the Clean Air Act rules could “range from a loss of $110 billion to a gain of $5 billion.” As we noted earlier in these comments, such an economic loss is not confined to the cold figures of a balance sheet – it can result in a genuine detrimental effect on families.

Our members agree with Governor Tomblin and Senator McConnell’s assessments and are also concerned that the EPA’s proposed Clean Power Plan rule implicitly allows for the creation of state-level carbon taxes without offsetting reductions in other types of taxes. This could lead to a phenomenon called “carbon leakage,” which would further disrupt state economies. Because states have different reduction goals, the tax policies they craft would be different as well. Industries which rely heavily on energy consumption would likely relocate to states with lower taxes, ultimately exporting power and goods back to the states with higher taxes. In this scenario, some states may be marginal winners and others would most definitely be losers. Governments at all levels should be moving to protect taxpayers from excessive burdens rather than creating new ones that carry no promise of reforms to their overall tax systems.

It is not just states that will find themselves on the losing end of the Clean Power Plan but individual Americans who are still struggling through a stagnant economic environment. Instead of living under burdensome regulations crafted by unelected Washington, D.C. officials, our members would like to see solutions arise from a free market system in which the EPA avoids heavy-handed approaches such as the Clean Power Plan proposed rule.

Such solutions have, over time, exerted a positive impact on the environment. For example, as our comments at an EPA Listening Session last year noted, U.S. coal energy infrastructure accounts for a small share of CO2 emissions among worldwide greenhouse gas measurements (approximately 3 percent). Even so, the private sector is making impressive headway toward driving this figure down further. Energy Information Administration data shows that between 2005 and 2012, CO2 from coal-fired electricity has dropped about 50 percent faster than for the power industry overall.

This decline cannot be completely explained away by the more recent closures of coalfired facilities, or by less consumption of energy, or shifts to alternatives. Technologies such as super-critical boilers and integrated gasification combined cycle systems have contributed to shrinking coal’s environmental footprint. Emerging concepts such as carbon capture and storage hold additional promise if they can be further commercialized without taxpayer subsidies.

According to Energy Ventures Analysis, an industry consulting firm, some $103 billion had been invested on emission-control implements of all kinds in the coal-power industry, with another $30 billion to follow by the year 2016. The environmental gains emerging from these investments would be threatened by a regulatory apparatus that forces operators to close more plants and thereby incur stranded costs.

The electricity industry (like any other) must have the cash flow, capitalization, and stable time horizon to achieve it. The imposition of excessive or additional regulatory burdens on any part of it, especially at this sensitive point in time, will jeopardize an economically and environmentally encouraging trend. The Clean Power Plan represents such an imposition.

I hope the EPA will find these comments useful in its deliberations. Included, please find the comments of 703 NTU members and taxpayers who share these views.

Lee Schalk State
Affairs Manager