On Monday, June, 2, the Environmental Protection Agency (EPA) issued a proposed rule change on “emission guidelines for states to follow in developing plans to address greenhouse gas emissions from existing fossil fuel-fired electric generating units.”
Specifically, the EPA is proposing state-specific rate-based goals for carbon-dioxide emissions from energy producers (mostly from 600 coal-fired power plants) and setting guidelines for states to follow in developing plans to achieve new state-specific goals.
Is this is an important change?
According to the New York Times, if implemented the change “could close hundreds of the plants and also lead, over the course of decades, to systemic changes in the American electricity industry, including transformations in how power is generated and used.”
How would the rule change work?
States will be required to develop their own plans based on a range of policy options to meet the new stringent goals. They can replace their current systems with wind or solar or join state and regional “cap and trade” programs, that allow states to cap carbon emissions and buy and sell permits to trade those limits with other areas. If they don’t come up with a plan themselves, the EPA will impose one on them.
Why is the EPA regulating carbon-dioxide?
In the 2007 case Massachusetts v. Environmental Protection Agency twelve states and several cities brought suit against the EPA to force that federal agency to regulate carbon-dioxide and other greenhouse gases as pollutants. The Supreme Court ruled 5-4 ruled that the Clean Air Act gave the EPA the authority to regulate carbon-dioxide and other emissions.
The ruling allowed the EPA to make a number of changes, such as increasing fuel-economy standards on vehicles to 54.5 miles per gallon by 2025 and effectively making it impossible for anyone to build a new coal plant in the United States.
Why is the EPA setting different targets for each state?
Basically, setting targets by states allows the EPA to target states that rely more heavily on coal-burning plants (burning coal is the largest source of energy related carbon-dioxide emissions).
How much will these new rules cost the economy?
The EPA estimates the total compliance costs of this proposal to be approximately $5.5 billion by 2020 and $8.8 billion by 2030.
However, the agency estimates the “health and climate benefits” to be a net of $28 billion to $49 billion in 2020, rising to $48 to $82 billion in 2030.
The EPA also estimates that average nationwide retail electricity prices will increase by roughly 6 to 7 percent in 2020 relative to the base case, and by roughly 3 percent in 2030 (contiguous U.S.). Average monthly electricity bills are anticipated, according to the EPA document, to increase by roughly 3 percent in 2020, but decline by approximately 9 percent by 2030. “This is a result of the increasing penetration of demand-side programs that more than offset increased prices to end users by their expected savings from reduced electricity use,” says the EPA.
Business interests disagree: The U.S. Chamber of Commerce released a report Wednesday predicting that the new rules could cost the economy $1 billion a year in lost jobs and economic activity. The National Mining Association is running radio spots claiming they will lead to an 80 percent jump in electricity bills. The pro-coal group ACCCE conducted its own study, and concluded that the rules could run up $151 billion in additional energy costs for consumers by 2033.
When do these rules take effect, and can they be stopped?
As with any regulation change, the EPA has to spend 120 days getting comments from the public. In reality, though, nothing the public says is likely to sway the decision.
However, Congress has the ability to repeal or modify the EPA’s authority to regulate carbon-dioxide emissions under the Clean Air Act. Few Democrats would support such a modification and President Obama would veto it, so the rule change is likely to withstand any legislative challenges.
While the rule will almost inevitably be challenged in court, legal experts disagree on the likely outcome.
Will this change have a major impact on climate change?
No. The change is equivalent to a roughly 6 percent cut in overall US emissions, a 1 percent cut in total global emissions.
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