Policy: Environment & Energy

Chamber: Power plant rules will cost economy $50 billion annually

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Climate Change,2014 Elections,EPA,PennAve,Energy and Environment,Chambers of Commerce,Zack Colman,Electricity

New Environmental Protection Agency rules cutting back on the amount of carbon emissions from power plants would cost the economy more than $50 billion per year through 2030, according to a U.S. Chamber of Commerce report that amounts to one of the first salvos in the upcoming war over the rules.

The report comes as the EPA is preparing to announce the first-ever greenhouse gas emission regulations for the 1,600 power plants that account for 40 percent of the nation's carbon emissions. It signals a tortuous path for the Obama administration that likely will force the courts to decide the fate of the rule that is the centerpiece of President Obama's climate strategy.

The rule's expected June 2 rollout comes as several Senate Democrats are fighting to win races in red-leaning states to keep a majority in the upper chamber.

"I think the most important thing is for us to be very vigorous participants" in the regulatory review process, Karen Harbert, president of the Chamber's Institute for 21st Century Energy, said at a Washington event, though she declined to elaborate on potential legal steps because the rule has not been proposed.

The report, which was conducted by economic consulting firm IHS and also considered a proposed emissions rule for new power plants, said electricity costs would rise $17 billion annually through 2030, with about half of that increase coming from the Midwest and the South. Those are key battleground regions for Senate Democrats this year, and the EPA's proposed rule figures to play into GOP plans to win those seats.

The EPA took the unusual step Wednesday of criticizing the Chamber report, saying the group made assumptions to arrive at its numbers since the rule hasn't been proposed. It's a move that underscores the high stakes surrounding the closely guarded rule and the emphasis being placed on a policy arena that insiders say Obama views as a legacy issue.

"Critics have tried for years to convince people that more pollution equals more jobs and a better economy, but history has proved them wrong over and over again," EPA spokeswoman Alisha Johnson said, adding that extreme weather that some scientists have linked to climate change means that, "The cost of inaction on climate is the real drain on our economy."

The agency slammed the Chamber report for assuming that natural gas plants would need to install pricey carbon capture and sequestration technology. The EPA said the rule won't require that. The agency added that the rule for new power plants proposed in September requires the technology, which traps carbon emissions and stores them underground but hasn't reached commercial scale for the utility sector, only for coal-fired plants.

The Chamber said it based its numbers on an attempt to get to Obama's goal of reducing economy-wide emissions below 2005 levels by 2030.

The Chamber report was contrasted with a 2012 policy proposal by Natural Resources Defense Council for regulating power plant emissions, which was updated in 2013 and is considered a model for the EPA rule. Harbert said that report was too optimistic in predicting growth in energy efficiency and declines in electricity demand.

The NRDC suggested its model would result in $21 billion to $53 billion of net benefits to the economy in 2020 once public health considerations, such as averted asthma attacks, and savings from mitigating extreme weather-related damage are taken into account. It also said that electricity prices would fall, not increase.

Environmental groups said they are ready to defend the coming EPA rule. It is likely to end up in the federal court system and will face stiff resistance from Republicans — and possibly some centrist Democrats — in Congress.

The EPA has netted recent court victories over its rules, emboldening the agency and its allies. Key among them was a Supreme Court decision that deferred to EPA's ability to interpret a section of the Clean Air Act — the same law, though a different section, being used for the power plant rule — to carry out a rule on emissions that cross state borders.

"We see this as the pivotal battle on climate change for U.S. domestic politics," David Goldston, director of governmental affairs with the NRDC, told reporters Wednesday at the group's Washington headquarters. "We are prepared for all those battles. It will be an extended period."

NRDC is going on the offensive. Next month it will begin a 30-state push to champion the power plant rules that will include TV advertisements and public events.

The group also is scheduled to release a report Thursday on the economic benefits of the anticipated rule, which will parse the Chamber report that David Hawkins, climate programs director for NRDC, said failed to account for potential new jobs in clean energy and energy efficiency.

"The Chamber’s so-called study is the latest in a long series of ‘sky-is-falling’ warnings of job losses and economic costs that are a big lie – part of the polluting industry’s disinformation campaign to preserve its profits by thwarting efforts to protect public health and curb climate change," Hawkins said.

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