The EPA Train Wreck
Scott Manley
Director of Environmental & Energy Policy
Wisconsin Manufacturers & Commerce
Contact: PO Box 352, Madison, WI 53701.
Tel: 608.258.3400; email: smanley@wmc.org
The EPA Train Wreck
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A series of environmental regulations targeting coal-fired electric
utility and industrial boilers.
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New Ozone Standard
Cross State Air Pollution Rule (CSAPR)
Utility MACT
Industrial Boiler MACT
Greenhouse Gas (GHG) Regulation
New SO2 Standard
New NO2 Standard
PM2.5 Standard Implementation
Various Water Intake & Effluent Rules
Coal Ash Regulations
The EPA Train Wreck
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The “Train Wreck” rules individually will add
considerable cost to manufacturers and utilities, but the
cascading impacts of these rules are likely to be
devastating.
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"So if somebody wants to build a coal-powered plant, they can. It's just
that it will bankrupt them because they’re going to be charged a huge sum
for all that greenhouse gas that's being emitted." --Barack Obama, January
17, 2008
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"Under my plan of a cap-and-trade system, electricity rates would
necessarily skyrocket. Coal-powered plants, you know, natural gas, you
name it, whatever the plants were, whatever the industry was, they would
have to retrofit their operations. That will cost money. They will pass that
money on to consumers." --Barack Obama, January, 2008
The EPA Train Wreck
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President Obama’s cap-and-trade approach for
bankrupting coal plants failed in Congress – the
Democrat-controlled Senate would not even
bring the bill to a vote in the 2009-2010 session
of Congress.
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The “Train Wreck” rules appear to be a
surrogate vehicle to achieve the goal of making
the use of coal economically untenable.
The EPA Train Wreck:
Wisconsin in the Crosshairs
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Wisconsin typically produces between 65-70% of its
electricity from coal.
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Wisconsin has the second-most manufacturing
intensive economy in the U.S.
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Manufacturing accounts for 18% of Wisconsin’s annual
economic output.
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Industrial ratepayers are the largest class of electricity
consumers in Wisconsin.
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Manufacturers need affordable energy to remain
competitive.
2000-2010 Industrial Electric Rates: Wisconsin vs.
Midwest Average
Wisconsin
Midw est Average
7.00
Electric Rate (cents per kWh)
6.50
6.00
5.50
5.00
4.50
4.00
3.50
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Midwest Industrial Electric Rate Trends: 2000-2010
80
70
Percent Increase
60
Inflation:
Net Change in
CPI 2000-2010
50
40
30
20
10
0
WI
IN
OH
MI
MN
Source: U.S. Department of Energy, Bureau of Energy Information
IA
IL
MO
Midwest
Avg
WI Manufacturing Jobs vs. Industrial Electric Rates: 2000-2010
Manufacturing Jobs
7.00
600
6.50
575
550
6.00
525
5.50
500
5.00
475
4.50
450
4.00
425
3.50
400
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Manufacturing Jobs (thous)
Electric Rate (cents/kWh)
Industrial Electric Rate
New Ozone Standard
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Obama Administration EPA proposed a new ozone
standard between 60-70 parts per billion (ppb).
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Current ozone standard of 75 ppb set in 2008.
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EPA proposal would have placed much of Wisconsin
(and the US as a whole) at risk of being an ozone
nonattainment area.
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Nonattainment area = nearly impossible for new or
expanded power plants or factories.
New Ozone Standard
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The EPA proposal would be incredibly
expensive – up to $1 trillion per year between
2020 and 2030, and 7 million lost jobs by 2020
(Manufacturers Alliance Study).
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Dodged a bullet (for now): President Obama
recently announced no new ozone standard…
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But…Clean Air Act process requires another
review in 2013, so relief may be temporary.
Cross State Air Pollution Rule
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Requires severe NOx and SO2 reductions of power
plants to address air quality impacts in downwind states.
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Phased compliance horizon beginning in January of
2012 (impractical timeline).
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Wisconsin utilities were under-allocated the amount of
emission “allowances” they need to operate, making a
difficult rule even worse.
Nationally, expected to cost up to $120 billion by 2015.
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Utility MACT
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Imposes very stringent limits on mercury and
other hazardous pollutants from utility boilers.
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EPA to finalize the rule in November of 2011.
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Will require compliance within a three-year
timeframe.
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Nationally, cost estimates range from $261
billion to $358 billion.
CSAPR & Utility MACT:
Wisconsin Cost Study
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American Coalition for Clean Coal Electricity
commissioned a cost study for these two rules.
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Used NERA model – same as U.S. DOE
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Projected electric rate increase in Wisconsin of
21.7% by 2016.
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Estimated 24,500 lost jobs
Industrial Boiler MACT
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Like the Utility MACT rule, requires stringent reductions in
mercury emissions from industrial boilers.
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EPA rule on hold after major pushback nationally from industry
and lawmakers.
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EPA rule presents virtually impossible compliance requirements
for many facilities.
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Nationally, expected to cost more than $100 billion, and result in
800,000 lost jobs.
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In Wisconsin, paper industry job losses expected to hit 7,500,
with likelihood of 11 mills shut down -- $680 million overall cost
for the rule.
GHG Regulation
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Regulates GHG emissions from “large” facilities
under the Clean Air Act.
Applies primarily to power plants and larger
factories.
New regulation with no commercially available
compliance technology – creates significant
regulatory and cost uncertainty.
Projected to reduce GDP by $500 billion by
2030, and result in 2.5 million lost jobs.
GHG Regulation
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Regulating CO2 under the Clean Air Act is projected to
increase prices:
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Gasoline – 50% increase
Industrial Electricity – 75%
Residential Natural Gas – 75%
Litigation Pending: If EPA’s effort to narrow scope of
rule is found to be illegal, and its GHG regulations
must be applied consistent with the plain language of
the Clean Air Act, costs go up to $7 trillion and 800,000
lost jobs each year.
EPA Train Wreck: Next Steps
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These EPA rules beg for reform of the federal Clean Air Act,
and reform of the federal rulemaking process in order to put
elected officials in charge of decisions involving hundreds of
billions of dollars and hundred of thousands of jobs.
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Public needs to be vocal with concerns with federal elected
officials – political solution will not happen if voters remain
silent and unaware.
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Talk to your lawmaker, and urge your friends, family and
coworkers to do the same. Be assured that environmental
groups are sending loud messages in the opposite direction.