Oct 30, 2015 - 2:30pm

The Wide Canyon Between Carbon Regulations and the Real World

Senior Editor, Digital Content

There’s a chasm between the rarified world of international climate negotiators—who will gather in Paris in December—and the people who will have to cope with the policy edicts established by them.

Christine Figures the United Nations’ top climate change official, told Reddit not to expect anything historic. Paris is only a next step toward even more draconian carbon emissions reduction goals [emphasis mine]:

I have been pellucidly clear that the agreement in Paris is not going to reach a 2 degree limit on temperature rise as though that were something we can take off a magical shelf and put on the table. I have been equally clear that getting us on to the 2 degree pathway is entirely possible. This is why the Paris agreement will have two very important components with regard to emission reductions: First, it will harness all the national climate change plans which as a group, if fully implemented, already substantially reduce the BAU growth in emissions. Second, in recognition that this first set of INDCs is a departure point and not a destination, the Paris agreement will construct a path of ever-increasing emission reductions with periodic checkpoints of progress until we get to the 2 degree pathway.

Carbon restrictions might be fine for globe-trotting bureaucrats like Figures, who can afford to buy credit offsets to compensate for all the carbon produced hopping from one climate conference to the next. But what about villagers in India who desire the convenience of light produced by reliable electricity generated from coal instead of less-reliable, “fake electricity” from solar?

Or coming closer to home, what about rural utilities and their customers in America? As a recent Washington Post story shows, they’ll be the ones—not climate negotiators—who have to live with the consequences from EPA’s stringent carbon regulations the Obama administration is using as the foundation for the United States’ contribution to reducing global carbon emissions:

Some, such as the Tampa-based Seminole Electric Cooperative, went deeply into debt to build the coal-fired power plants U.S. officials demanded years ago, and now they are stuck with facilities that can’t meet the new standards and can’t be easily upgraded or replaced.

“We can’t just run out and invest in some new technology,” said Seminole General Manager Lisa Johnson, who oversees an electric grid that supplies dozens of small towns and farming communities across north-central Florida. “We don’t have multiple plants.”

But rural electric cooperatives — mostly small nonprofit groups owned by the customers themselves — have fewer options. Some, such as Seminole, rely on a single coal-burning plant for most of the electricity they provide. Seminole’s customers will be paying down the debt for the company’s existing generating plant until 2042, and officials with the nonprofit utility say they can’t afford to replace it.

“If we have to close it down, it becomes a stranded asset that we still have to pay for,” said Brenda Atkins, the manager of Seminole’s coal-fired generating station. “We would have to pay to provide electricity to our customers from another source. And meanwhile, the debt service continues on the old one.”

Under EPA's Clean Power Plan—mostly full of tricks with few treats--states must submit plans for restructuring their power systems by 2016. Avoiding the types of disruptions we’ll see in Florida is why a stay is needed to delay implementation of EPA’s regulations. Implementing the carbon rule will mean “immediate and permanent injury,” The Wall Street Journal’s editorial board writes [subscription required]:

The EPA’s own models show utilities will shed 233 coal-fired power plants in 2016 alone, or 20% of the grid’s remaining coal generation. Some marginal generators like rural electric nonprofit cooperatives may go under.

The plaintiffs are also likely to prevail on the legal merits, both statutory and constitutional. The 2,000-page CPP is conjured from a couple hundred words in a subsection of a 38-year-old statute about “best systems of emissions reduction.” Traditionally this has meant technology that can be installed on a given site, like scrubbers.

Now the EPA is rewriting the definition to direct states to regulate “outside the fence line” of power plants well beyond the best tech. They must not only decommission sources of carbon energy, but they must also run the green gamut from mandating a new fleet of wind and solar, building new transmission lines, creating more efficiency subsidy programs for consumers and much else. On a rewrite so grandiose, the EPA has earned a stay and deserves no administrative deference.

Such regulatory chaos, to what end? To put in some perspective how inconsequential U.S. efforts will be globally, Sam Batkins at the American Action Forum writes, “Combined, previous EPA action to limit climate change could avert just 0.0573 degrees by 2100.”

All pain for little gain: job losses; higher electricity prices; and continued sluggish economic growth. This might not mean much to those headed to Paris in December, but it will mean everything to people who lose their jobs or find an unpleasant surprise on their electricity bill.

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About the Author

About the Author

Sean Hackbarth
Senior Editor, Digital Content

Sean writes about public policies affecting businesses including energy, health care, and regulations. When not battling those making it harder for free enterprise to succeed, he raves about all things Wisconsin (his home state) and religiously follows the Green Bay Packers.