May 28, 2014 - 6:00pm

EPA’s Attempt to “Set the Record Straight” on Our Carbon Report


Managing Director of Communications and Media, U.S. Chamber Global Energy Institute

Bloomberg_EPA_HQ_800px.jpg

EPA headquarters.
EPA headquarters. Photographer: Andrew Harrer/Bloomberg.


Apparently, the Energy Institute’s report detailing the economic impacts of potential carbon regulations has gotten the Administration’s attention.  Considering EPA is about to propose the largest, most costly and most significant rule in its history, we consider that a good thing.

So let’s take a look at EPA’s response, from Associate Administrator for External Affairs Tom Reynolds:

First, before EPA even put pen to paper to draft the proposed standards, we gathered an unprecedented amount of input and advice through hundreds of meetings with hundreds of groups—including many members of the Chamber.  That input fed into the draft proposal we’ll release on June 2, and we plan to kick off a second phase of engagement as we work through the draft and get to a reasonable, meaningful final rule.

Indeed, the U.S. Chamber and our members have been engaged with EPA for years in an attempt to improve EPA’s regulations.  However, it should be noted that EPA’s much heralded “listening sessions” to receive input on potential carbon regulations completely avoided the ten states that are most dependent on coal for electricity.  As the leaders of 13 state chambers of commerce noted to EPA last fall, the public engagement tour included cities such as San Francisco, New York, and Boston while avoiding areas of the country that will be most affected.

We take EPA at its word that they want input from industry on their rules, and that was part of the reason why we decided months ago to embark on a project to produce a comprehensive, transparent analysis of how potential regulations could impact the economy.

Second—the Chamber’s report is nothing more than irresponsible speculation based on guesses of what our draft proposal will be.  Just to be clear—it’s not out yet. I strongly suggest that folks read the proposal before they cry the sky is falling.

We based our analysis on NRDC’s proposal, which they themselves have indicated is likely to be close to what EPA will be releasing.  

We are well aware that EPA has not yet released its rule, and our CEO, Karen Harbert, was very clear today that the Chamber is not taking a position on the rule at this time precisely because we haven’t yet seen the regulation. 

Our purpose when we began this project months ago was to provide a baseline analysis of what it would cost to meet President Obama’s stated emissions reduction target of 42% by 2030.  While EPA hasn’t released its rule, the Obama Administration has endorsed this emissions trajectory in Copenhagen. 

Third, there are some major gaps in the numbers touted by the Chamber:

Actually, EPA only identifies one “gap,” so that seems to be an overstatement.

The Chamber report assumes that States would need to require carbon capture and sequestration (CCS) for new natural gas plants to hit their goals under the proposal for existing power plants.  That’s not true.  Not even the EPA’s proposal for new power plants requires that technology for natural gas.  And EPA has indicated frequently that CCS would not be considered for existing power plants.  Given that three-fourths of the Chamber’s alleged cost estimates come from power plant construction—namely, natural gas with CCS plants—this assumption drives up the topline cost associated with this study.

The modeling by IHS shows that there is simply no way to achieve a 42% reduction in emissions by 2030 without CCS on new natural gas plants.   If EPA doesn’t believe us, perhaps they should listen to their own Administration’s Secretary of Energy:

[Energy Secretary] Moniz said that while natural gas is a "bridge fuel" that has proved effective at limiting coal use and supporting renewable energy use, unregulated gas use will not continue indefinitely. In order to meet the administration's midcentury targets of reducing greenhouse gases by 80 percent compared with 2005 levels, gas plants must also someday reduce their emissions.

"Eventually, gas itself would need to be either phased out or have the CO2 captured if we were going to go to a very, very low-CO2 world," he said.”  (Source: E&E News, 5/19/14)                                                                                                                                                                                                                                                                                                         

So the question is: Is EPA today signaling that the Administration is backing off from its stated climate goals?  How would they propose meeting their 2030 and 2050 climate targets without CCS on new gas plants?

Furthermore, our study does not assume CCS on any existing sources, either now or in the future, as Mr. Reynolds claims.  We encourage him to read the study.

Finally, EPA’s response discusses the need to act on climate change.

Our report gives global context to potential EPA regulations.  Even with aggressive regulations crafted to meet an aggressive climate target, global greenhouse gas emissions are only reduced by 1.8%.  That is weighed against significant impacts to jobs (an average of 224,000 fewer jobs per year), GDP (lost GDP of $51 billion per year), and higher electricity costs ($17 billion more per year). 

Our report undertakes an analysis that to date, EPA has not—what the costs associated with climate regulations will be.  We think the costs are significant, but most importantly, we want the American people to have a thorough and clear understanding of the costs and choices that will need to be made.

We welcome EPA’s interest in our study, and we look forward to reviewing regulations when they come out next week.

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About the Author

About the Author

Managing Director of Communications and Media, U.S. Chamber Global Energy Institute

Matt Letourneau is managing director of communications and media at the U.S.