If there is anything you would like to say to the
U.S. Department of Energy, tell me today and I’ll deliver it tomorrow.
U.S. Department of Energy Deputy Secretary Daniel
Poneman will be in Charleston tomorrow.He will be at the dedication of Clemson University’s Energy Innovation Center, an 82,000 sq.ft. wind turbine drivetrain
testing facility.
Following the
dedication I will be meeting him at a business roundtable of local business
owners to discuss climate and energy issues.Mr. Poneman, Sandy Bridges (owner of Palmetto Hammock) and I will hold a
brief press opportunity following the roundtable.
So email me with
your message for the Department of Energy.sbchamber@scsbc.org
Seven
times either I or the SC Small Business Chamber has intervened in rate hearings
for SCE&G and Duke Energy.Seven
times the public was told that these power companies had to have every penny of
their rate hike proposal or their world would come to an end.Seven times their rate increases have been
cut by about 50% or more by the SC Public Service Commission.Seven times SCE&G and Duke continued to
rack up big earnings after the rate cases were over.
Just
last December we settled with SCE&G for a 1.38% rate hike compared to the 6.6% it asked
for.This month we settled with Duke which
had originally asked for a 15.1% overall electric rate increase (14% for small
businesses) but in the end was satisfied with a 8.16% overall rate hike (3.42%
for small businesses).
This
is the background you need to know when utility companies scream that new EPA
rules on limiting carbon pollution from coal plants (which account for 40% of
our carbon emissions in this country) will cause rates to skyrocket.The track record shows that you simply can’t
believe them.
Below
is a story today in The
Hill in which I make this point.
The Hill September 23, 2013
Emissions
regulations are central battle in Obama climate agenda
By Julian Hattem and Ben Goad
If the Obama administration's proposed
limits on greenhouse gas emissions from new power plants become law, they would
represent the first major victory for the president on his second-term climate
plan. But opponents are not ready to roll over.
The Enivronmental Protection Agency's (EPA) proposal
has reignited a bitter fight over the consequence of the proposed regulations
on businesses, with coal country and business groups warning that the
announcement will be a death knell for the energy resource and have
trickle-down effects throughout the economy.
“The facts are plain and simple: coal
provides the greatest share of electricity we use,” said Sen. Joe Manchin,
Democrat of West Virginia. “If these regulations go into effect, American jobs
will be lost, electricity prices will soar and economic uncertainty will grow.”
Together with an upcoming proposal to cap
emissions from power plants already in existence, Friday’s proposal from the
EPA amounts to the centerpiece of the White House’s second-term climate agenda
and a major effort to control releases of the primary greenhouse gas.
Power plants are the largest source of
carbon emissions, accounting for about 40 percent of the nation’s discharges,
but currently they are allowed to spew the gas without limit.
The proposal on future facilities sets
caps for the amount of the greenhouse gas that new coal and natural gas plants
will be able to send into the atmosphere. The draft rules also call for new
coal plants, which emit more carbon than natural gas-fired facilities, to use a
carbon capture and storage technology that opponents believe is too expensive
and still not yet proven to work as planned.
Requiring that technology could amount to
a de facto ban on new coal facilities, they have worried, and could hurt small
companies disproportionately.
“It is clear that small facilities with
sparse capital reserves will be the most impacted by stringent [greenhouse gas]
standards,” the conservative American Action Forum concluded in a report issued
Friday. “Even though they contribute less than one percent of U.S. emissions,
small entities will face the same regulatory hurdles that large utilities
encounter.”
Other businesses, however, counter that
the realities of climate change present far worse threats to portions of the
private sector than do the proposed regulations. Along the coast of South
Carolina, businesses fear rising sea levels that could decimate the state’s
retail and tourism industries, said Frank Knapp, president and CEO of the South
Carolina Small Business Chamber of Commerce.
Knapp rejected claims by industry groups
who say the regulations will necessarily raise energy costs for American
households.
“The sky is always falling for those
guys,” Knapp said. “They simply try to scare the public, and guess what? The
next quarter, they’re still making profits – double-digit profits. It’s
obscene.”
The White House is comparing its
regulatory effort and the opposition it has stirred to Obama’s first-term focus
on developing new fuel economy standards for cars and trucks, the second
largest source of American carbon emissions.
“We saw a lot of the same naysayers who
said that this would be really bad for the auto industry,” Josh Earnest, a
White House spokesman, said on Friday. “But over the course of time in which
those rules took effect, we have seen the auto industry strengthen
significantly in terms of creating jobs and putting forward better products and
improving sales and revenue.”
The administration is predicting that
requiring the carbon capture technology will lead to new advancements, making
it cheaper and easier to employ.
The power plant rules are the
administration’s most prominent environmental and safety regulations of Obama’s
second term to date, but they are hardly the only ones.
In recent weeks, the administration has
issued proposals to certify that the EPA has the authority to regulate streams,
estuaries and smaller bodies of water, and to curb cancer-causing dust that can
occur at construction sites.
Coming down the pike are final rules
limiting pollution from automobiles, upcoming yearly limits for the amount of
biofuel that refiners must blend with conventional gasoline and new standards
for smog.
Yet time is growing short for the Obama’s
second term regulatory agenda, with the clock already ticking on the
president’s time in office.
“It’s important to move quickly, both to
finish it in this administration and because we need to end the unlimited
dumping of carbon pollution from the existing fleet of coal plants, which are
the biggest source of carbon pollution in the country,” Dave Hawkins, head of
the Natural Resources Defense Council’s climate program, said.
The EPA has laid out a schedule of
deadlines meant to ensure its goals are accomplished. Pollution standards for
existing plants, for instance, are due to be proposed next June and finalized
the following year.
“To do what is on his agenda is definitely
within the realm of the practical,” said Abigail Dillen, vice president of
litigation for climate and energy for EarthJustice.
Regulators certainly aren’t wasting any time.
As it unveiled the proposal on Friday, the EPA announced that it would begin
outreach on the second set of rules, for currently operational plants, which
are sure to face greater opposition.
“We’re beginning the discussion, and as we
go through that discussion lots of ideas will come forward about sensible and
cost-effective ways to reduce carbon from the existing fleet,” an EPA official
said.
Critics of the power plant initiative
worry about the dynamic it will create, especially for other industries.
“This rule sets a dangerous
precedent that EPA will soon extend to other sectors, including refineries,”
Rep. Lamar Smith (R-Texas), the chairman of the House Science Committee, said
in a statement on Friday. “It is just the latest example of the President’s
all-of-the-above rhetoric not matching his administration’s actions.”
Ross Eisenberg, the vice president of
energy and resources policy at the National Association of Manufacturing,
shared Smith’s concern about other sources of greenhouse gases that the EPA
might decide to regulate. “It’s chemicals, it’s natural gas distribution
systems, it’s iron and steel, metal manufacturing, food distribution,”
Eisenberg said. “We’re expecting the decisions and the precedent that’s being
set here, in terms of what they can and can’t mandate, what data they need to
set this rule, to matter for those follow-on regulations.”
WITH more than
a million people in China dying prematurely each year from breathing its dirty
air, and with warming temperatures portending rising sea levels and disruptions
to food production, the centrally planned Communist country is experimenting
with a capitalist approach to address the problem: it is creating incentives so
that the market — and not the government — will force reductions in emissions.
The United
States invented this approach in the 1990s to deal with acid rain. The effort
was tremendously successful in reducing sulfur dioxide emissions that were
poisoning lakes and streams, contaminating soils and accelerating the decay of
buildings, at a cost lower than even its advocates anticipated.
But the United
States has taken a policy detour that has hurt its efforts to reduce greenhouse
gases. Congress has spurned the cap-and-trade approach China is trying, even
though it is widely recognized as a cheaper way to lower emissions. As a
result, President Obama has had little choice but to turn to government
regulation to reduce these pollutants. Consumers will pay a higher price for
electricity as a consequence.
China, the
world’s largest emitter of carbon dioxide, has begun its effort in the southern
city of Shenzhen, paving the way for a national Chinese market in a few years.
Like Europe, which voted to extend and improve its emissions market, and
Australia and New Zealand, Shenzhen chose a carbon market as the most efficient
way to lower its greenhouse gas emissions.
Under the
Shenzhen program, the government will set limits on carbon dioxide discharges
for 635 industrial companies and 197 public buildings that together account for
about 40 percent of the city’s emissions. Polluters whose emissions fall below
the limit can sell the difference in the form of pollution allowances to other
polluters. These companies must decide whether it is cheaper to reduce
emissions or pollute above their limit by buying allowances, whose price will
be set by supply and demand. But the pressure will be on, because the limits
will decrease over time. Six more regional pilot programs are planned over the
next year.
More than 20
percent of global greenhouse gas emissions are now subject to carbon pricing
systems. About 60 other states, provinces or countries are considering similar
approaches, according to a recent World Bank report.
Carbon
cap-and-trade programs align environmental goals with market incentives.
Conventional regulatory approaches “cannot ensure achievement of emissions
targets, create problematic unintended consequences, and are very costly for
what they achieve,” says the economist Robert N. Stavins,
director of the Harvard Environmental Economics Program.
So how did
America detour away from emissions markets, which are the preferred approach of
many economists, climate and consumer advocates, and many electric utility
companies that own and operate power plants?
It all comes
down to politics. Before the last recession, political support was building for
a carbon market, with various Republicans, including Senator John McCain, his
party’s 2008 presidential nominee, supporting a market-based approach. After
House Democrats approved a cap-and-trade bill in 2009 that put a price on
fossil-fuel emissions, the issue became a target of the Tea Party. In the midst
of the worst economy in 75 years, the Senate declined to take up the measure,
and cap and trade became a dirty term on Capitol Hill.
Even so,
several states already have turned to this approach. California’s effort began
in January. Nine mid-Atlantic and Northeast states use it under the Regional
Greenhouse Gas Initiative.
In Washington,
faint whispers of a carbon tax are still occasionally heard as a solution for
budget and environmental problems in a single policy. But even if that were to
happen, the tax would probably be small and would not guarantee the reduction
in emissions needed. Like a tax, carbon markets can also generate revenue that
can be rebated to consumers or used to lower other taxes.
The United
States can still move back into a leadership position in the effort to reduce
carbon dioxide in the atmosphere. Learning from the experiences of the European
Union and other programs, America can avoid the hiccups that hampered early
efforts.
As the effects
of a warming climate become increasingly apparent and the costs of adaptation
rise, inaction will become an untenable political position. Markets play to
America’s strengths. As the first President Bush said about his policy of
emissions markets for controlling acid rain, markets “harness the creativity
and ingenuity of the private sector.” What could be more American than that?
Just ask the Chinese.
Dirk
Forrister is president and chief executive officer of the
International Emissions Trading Association. Paul Bledsoe
is a senior fellow in the energy and climate program at the German Marshall
Fund of the United States.
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