EPA Proposed Repeal of Clean Power Plan Unleashes Controversy
Future of US Electricity Generation, Environmental Regulation, Clean Energy Industry at Stake
US Environmental Protection Agency (EPA) Administrator Scott Pruitt issued a Notice of Proposed Rulemaking earlier this week, proposing to repeal the Clean Power Plan (CPP), an Obama administration initiative. In a nutshell, EPA has proposed to determine that the Obama-era regulation exceeds the agency’s statutory authority under the Clean Air Act.
The EPA says repealing the CPP will facilitate the development of US energy resources and reduce unnecessary regulatory burdens associated with the development of those resources.
“We are committed to righting the wrongs of the Obama administration by cleaning the regulatory slate,” said EPA Administrator Scott Pruitt. “Any replacement rule will be done carefully, properly, and with humility, by listening to all those affected by the rule.”
The EPA will likely get an earful from both sides of the issue during the 60-day comment period, as reflected in reactions to Pruitt’s move. Besides an arduous regulatory process, the federal government is likely to face litigation over the issue from states and environmental organizations.
According to Pruitt, EPA rules were traditionally based on measures that could be applied inside of a particular facility. The CPP required regulated entities to take actions “outside the fence line.” Thus, the argument goes, the CPP departed from the traditional limit on EPA authority.
Pruitt also argues that the Obama administration’s estimates of the costs and benefits of CPP were uncertain. He claims that the Obama administration failed to follow well-established economic procedures in estimating benefits. The previous administration, he says, included in CPP benefits the reduction of non-greenhouse-gas pollutants that had nothing to do with the rule’s stated purpose.
Pruitt also takes issue with the Obama administration counting energy efficiency as an avoided cost, rather than as a benefit of the rule, thereby, in his view, distorting the total costs of the CPP. The EPA also says that repeal will save $33 Billion in avoided regulatory compliance costs in 2030.
Not surprisingly, environmental groups attacked the proposed CPP repeal. “The Trump Administration’s climate action repeal and replace proposal is a public subsidy for old coal plants to emit more pollution,” said Howard Learner, executive director of the Environmental Law & Policy Center. “It misses sensible opportunities to boost clean energy and avoid pollution in ways that make economic sense. “The economics of avoiding carbon pollution through wind power, solar energy and energy efficiency are stronger than ever. Clean energy technology is advancing and moving forward.”
“Keeping the Clean Power Plan makes sense for the environment and the economy,” said Heather Taylor-Miesle, executive director of the Ohio Environmental Council. “President Trump’s short-sighted decision means we will lose out on a $2.1 billion GDP increase and 20,000 jobs in Ohio.”
“Seas are rising. Croplands are turning to desert. Storms, floods and wildfires are raging,” said Rhea Suh, president of the Natural Resources Defense Council. “And it all gets worse if we let Trump walk away from the chance to clean up our dirty power plants, create half a million good-paying clean energy jobs and protect our children and communities from the growing dangers of climate change.”
On the other side, Juanita Duggan, president and CEO of the National Federation of Independent Business spoke out on behalf of Pruitt’s proposal. “Small business owners depend heavily on affordable, reliable electricity,” she said. “The CPP would drive up operating expenses for small businesses, and it would discourage consumer spending. It would force small businesses to spend more on overhead, and it would leave their customers with less money to spend at their businesses.”
US Senator Shelley Moore Capito, a Republican from the coal state of West Virginia, also lauded Pruitt’s move. “For years, the Obama administration waged a war on coal and issued heavy-handed regulations to pick winners and losers among energy industries,” she said. “It’s refreshing to see how committed the Trump administration is to pursuing a true all-of-the-above energy policy, and Administrator Pruitt’s announcement is another sign that America’s energy strategy is headed in the right direction. Our country can be a real global leader when it comes to energy production, but we can’t shutter entire industries that have helped power this country for decades.”
Washington watchers say the politics of coal is what is behind the Trump administration’s proposed rescinding of the CPP. Pruitt telegraphed his move the say before his final announcement at a speech in Kentucky, another coal state.
According to reporting in the Washington Post, only 32 percent of Americans approve of the Trump administration’s handling of environmental issues, but 69 percent of Republicans favor it. Just as Trump plays to his base so do his lieutenants such as Pruitt. A few swing states were crucial to Trump’s victory in the electoral college, and two of these—Pennsylvania and Ohio—have disproportionate numbers of voters working in fossil-fuel industries.
That’s why Pruitt made his announcement in Kentucky. “He’s speaking directly to people in coal county about how the rule negatively affected the whole industry,” EPA spokeswoman Liz Bowman told The Washington Post.
Pruitt’s actions do not come as a surprise. Trump pledged to roll back CPP along with other regulations affecting the US power sector while running for president. “While the new administration has the authority to undertake certain deregulation,” wrote the Brookings Institution’s Sarah Ladislaw, “the process will be long and the government will be sued by states and environmental organizations.”
The bidder issues is the uncertainty this kind of deregulation engenders for the US private sector, which ultimately must make long-term investment decisions about the country’s power generation infrastructure. “The outcome will be greater uncertainty rather than a clear signal toward more or less climate regulation over the lifetime of the long-term investments,” Ladislaw wrote. “Stakeholders across the sector recognize that these changes are stressing a system whose physical and regulatory structure was designed for a different time, and changes must take place to accommodate the new realities of a system in transition.”
Anti-Manipulation or Currency Alignment?
Download the FREE Global Trade Magazine APP!