August 10, 2015

MSCI Oppose EPA’s Final Clean Power Plan

Last Monday, the U.S. Environmental Protection Agency (EPA) released the final version of its regulation governing greenhouse gas emissions from existing power plants. 

The final regulation deviates significantly from the preliminary proposal released last summer. (Indeed, EPA’s proposed rule was about 650 pages in length; the final rule is more than 1,550 pages.) First, while the plan gives states an additional two years to comply with the rule, it also requires more significant emissions’ cuts. Under the regulation, called the Clean Power Plan, existing power plants would have to cut their emissions by 32 percent by 2030. That figure is an increase over the 30 percent reduction the EPA originally proposed. 

The Clean Power Plan also requires each individual U.S. state to submit a plan for reaching the carbon emissions’ goal set for it under the plan. Those plans are due by 2018. The EPA then gives states until 2022 to comply with their first targeted emissions reduction goal. (The preliminary proposal set this compliance date for 2020.) The EPA would write a plan for any state that does not submit its own. Those federally-written plans could include a cap and trade proposal

MSCI opposed the new rule in a statement released to the press last Monday (the statement was mentioned in Metal Miner and American Metal Market) and in a letter to federal lawmakers. As part of the Partnership for a Better Energy Future (PBEF), MSCI asked U.S. senators to oppose the rule and to support a bill – S. 1324, the Affordable Reliable Electricity Now Act of 2015 – that addresses industry’s concerns about the Clean Power Plan by ensuring technology requirements are commercially demonstrated, allowing the judicial review process to conclude before requiring that states develop implementation plans and protecting states from being forced to implement the rule if doing so would increase energy prices or reduce grid reliability. (Read the full letter PBEF here.) The Senate Environment and Public Works Committee passed S. 1324 last Wednesday, but it’s unclear when the full Senate will vote on the bill. 

The National Mining Association and several U.S. states also want the EPA to delay implementation of the rule. Two days after the EPA released the Clean Power Plan, 16 states submitted a request to the EPA asking it to consider putting off implementation of the rule until all lawsuits against it have been settled. According to The Hill, “[T]he states said waiting to implement the rule would protect consumers and others from regulations that are likely to be overturned.” 

The states with the most aggressive emissions reduction targets are: Iowa, Illinois, Kentucky, Montana, South Dakota, Wisconsin and Wyoming. Each of these states would have to reduce current emissions by 41 percent to 50 percent. States have several options for reducing emissions, including: shifting from coal power to natural gas power plants, increasing use of renewable energies, implementing plans to increase household energy efficiency or implementing cap and trade programs or carbon taxes. 

How much will this rule cost? While it will be several weeks before updated economic impact analyses are released, the U.S. Chamber of Commerce last week argued that, based on evidence from U.S. states that have passed similar plans, it’s clear that energy prices for households and U.S. job creators will increase under the Clean Power Plan. However, even though the plan will increase consumer costs, it will have a negligible impact on climate change. As the U.S. Chamber of Commerce notes, the rule will reduce global temperatures by an estimated 0.018 degrees Centigrade over the next 85 years – a figure that researchers maintain is “essentially undetectable.”  

The EPA released its rule as news broke that carbon emissions from U.S. power plants are at a 27-year-low, mostly due to increased use of natural gas. (Unfortunately, the final rule is much less favorable to natural gas than the original proposal.) Because this rule will impose significant costs on U.S. consumers and businesses without making a significant impact on greenhouse gas emissions, MSCI, as part of the Partnership for a Better Energy Future, will support efforts to oppose this rule. To add your voice to the effort to oppose this costly rule, we encourage you to sign this petition from the U.S. Chamber of Commerce.