EPA’s historic proposal to regulate carbon emissions from existing power plants will not hit the streets until Monday, but some industry and environmental groups have already staked out their positions on what they anticipate the proposal’s contents will be. 

For example, this week, both the U.S. Chamber of Commerce and the Natural Resources Defense Council (NRDC) issued reports on the economic ramifications of how they believe the EPA will seek to use the regulation of power plant emissions as the major element in President Obama’s overall climate goal of reducing U.S. greenhouse gas (GHG) emissions by 17 percent by 2020 compared to 2005 levels.  Existing power plants account for about 40 percent of all U.S. emissions.  Organizations that have been following EPA’s rulemaking anticipate that the Agency will seek a 20 percent reduction in power plant GHG emissions.

Lower GDP

In its report, the Chamber states that such a plan will lower the nation’s gross domestic product (GDP) by an average $51 billion a year through 2030.  Written by the Chamber’s Institute for 21st Century Energy, the report is in fact based on a framework the NRDC developed on how the EPA can regulate power plant emissions by setting mandatory state-by-state emissions rates and giving the states broad flexibility, including trading of emissions credits by energy companies, in how they achieve those rates.  The Chamber says it expects that EPA’s proposal will resemble NRDC’s framework.

In addition to shrinking the GDP, the Chamber predicts that such an approach would also lead to an average 224,000 fewer U.S. jobs every year through 2030, force U.S. consumers to pay $289 billion more for electricity through 2030, and lower total disposable income for U.S. households by $589 billion through 2030.  Moreover, the actual reductions this approach would achieve—about 1.8 percent of worldwide emissions—would be “overwhelmed” by an expected global increase in emissions of 31 percent between 2011 and 2030. 

“Different regions of the country will see profoundly different impacts from these rules,” states the Chamber. “Generally, the largest impacts on jobs and the economy will be in the South Atlantic, West South Central, and East North Central census divisions. The South power region will see the biggest increases in electricity costs by far.”

Money saved, more jobs
But based on its own commissioned study, the NRDC claims that the proposal it hopes for will achieve the reverse—cut household and business electricity bills and create jobs. 

“If the U.S. Environmental Protection Agency adopts a similar approach [to the NRDC framework], the nation would slash carbon pollution by 531 million tons per year, nearly 25 percent by 2020 from 2012 levels (nearly 950 million tons and 35 percent below 2005 levels), helping deliver more than $50 billion in health and environmental benefits,” says the NRDC.

In NRDC’s framework, the savings would be largely generated by energy efficiency investments that will result from rules and incentives the states will introduce to meet their target emission rates.  The analysis, which was conducted by ICF International, “using NRDC’s assumptions,” shows that the energy efficiency investments will create 274,000 jobs, save U.S. household customers $13 billion per year, or an average of $103 per household per year, and save U.S. commercial and industrial customers $24.3 billion per year.

While EPA’s proposal may indeed shadow NRDC’s framework, EPA Administrator Gina McCarthy has stated that it is a proposal only and that the Agency will seriously consider changes and different approaches contained in what will likely be an extraordinarily voluminous public response. 

This is an unfolding drama that may produce the most consequential air rule in the nation’s history.