Industry Gears up to Fight Obama's Climate Rules

Wednesday, 28 May 2014 02:50 PM

 

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This summer is likely to see a series of attacks by industry opponents of a U.S. plan to curb carbon emissions from power plants in a bid to stir voter anger ahead of elections in November, when voters in states such as Kentucky and West Virginia may determine whether Democrats keep control of the Senate.

On Monday, the Environmental Protection Agency is expected to propose new rules to crack down on power plant emissions, part of President Barack Obama's efforts to combat global climate change.

The U.S. Chamber of Commerce released a report Wednesday that predicted the yet-to-be-announced regulations will cost consumers $289 billion more for electricity through 2030, and crimp the economy by $50 billion a year.

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The chamber hired energy research firm IHS to model the costs, based on a regulatory approach promoted by the Natural Resources Defense Council which the chamber expects to be the foundation for the new EPA regulations.

Coal industry lobbyists say the new rules will probably raise household electricity costs, prompt power brown-outs during heat waves and cold snaps and destroy jobs at coal mines and manufacturing plants.

"We fully expect that whatever comes out will be overly stringent, and will be something that is not good for American consumers or businesses," said Laura Sheehan, spokeswoman for the American Coalition for Clean Coal Electricity.

In March, Sheehan's group, which represents coal mining companies as well as owners of coal-fired plants like American Electric Power and Southern Co, released a report warning that the EPA plan may kill more than 2.85 million jobs.

The National Mining Association, which represents large coal mining companies including Peabody Coal Co, Arch Coal Inc , Alpha Natural Resources and Cloud Peak Energy Inc has spent $1 million on a radio and digital campaign in five states depicting shocked consumers opening expensive electricity bills.

To be sure, because the new U.S. rules will take years to be implemented, the industry's arguments have "the virtue of not being testable" before the midterm elections, said Andrew Holland, a former Republican legislative aide who is now an energy analyst at the American Security Project, a nonpartisan think tank.

Holland said the industry has made similar arguments for previous EPA rules, arguing they would drive up costs. But in those instances, the rules have ended up being cheaper than the industry feared, he said.

"It turns out that engineers are better at this than the lawyers expect them to be," said Holland.

Environmental groups plan to fight back with their own projections. On Thursday, the NRDC will release a report showing the EPA rule will create "hundreds of thousands of jobs" and save consumers "tens of billions of dollars" on electricity.

"The chamber's so-called study is the latest in a long series of 'sky-is-falling' claims that cleaning up harmful air pollution will cost jobs. The real world has a 40-year track record proving the chamber is wrong," said David Hawkins, director of NRDC's climate programs.

Industry groups made their concerns clear to regulators. For example, the National Rural Electric Cooperative Association sent three of its experts to a White House meeting to show how not-for-profit co-ops that rely on coal for fuel could be pinched by the new EPA proposal.

"They obviously are concerned about cost," said Jo Ann Emerson, chief executive of NRECA, who explained the co-ops provide power to some of the nation's poorest regions.

And some industry coalitions have said they will try to work with the EPA and state officials to craft practical rules rather than flatly oppose them.

After the EPA first said in 2008 that it would treat carbon as a pollutant, power companies including AES and NRG and manufacturers including Boeing and 3M formed the National Climate Coalition.

It wants the EPA to phase in standards, and eventually develop rules for companies and states to trade credits for carbon-reducing actions, said Robert Wyman, a partner with law firm Latham & Watkins, who represents the coalition.

The coalition will take at least a week to read and understand the EPA rule before responding, Wyman said.

"Obviously the more politicized the issue becomes, the more likely it is that rhetoric will overshadow some of the technical issues," he said.

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© 2014 Thomson/Reuters. All rights reserved.

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