President Obama’s Clean Power Plan for existing and new power plants stretches to a combined 2,328 pages, exclusive of supporting documents and fact sheets. The language is Orwellian, with talk of “a partnership between the EPA and the states under which the EPA establishes emission guidelines and the states take the lead on implementing them by establishing emission standards or creating plans that are consistent with the EPA emission guidelines.” It’s no partnership if Big Brother is imposing its will on the different states.
The Clean Power Plan would, by 2030, reduce CO2 emissions from the utility sector by 32 percent from 2005 levels. It would raise electricity prices by an average of 15 percent, discouraging energy-intensive manufacturing.
Of the ten states that will have to reduce emissions the most, seven voted for Romney in 2012, and the others all voted for Obama by a margin of less than 10 percent. Of the ten states that will have to reduce the least (or have leeway to increase emissions), eight voted for Obama in 2012.
RELATED: The Cynicism of the Clean Power Plan
EPA gives states choice between a “rate-based approach,” where states reduce emissions from their power plants, and a “mass-based approach,” where other sources of carbon — from manufacturing, for example — can be lowered to count toward the reductions that power plants would otherwise have to make. States can combine in regions for the “mass-based approach,” and it is less expensive to follow.
The Clean Power Plan moves beyond regulation of power plants to regulation of regional emissions. If emissions from a power plant exceed the EPA’s requirements, a state, or group of states, would be required to shut down other energy-intensive manufacturing in order to allow the power plant to continue its emissions.
Obama has shown that Congress is not needed for cap-and-trade. Now his EPA is instituting the scheme by regulation.
This is “cap-and-trade” by another name. The Clean Power Plan is the same program — advanced by former senators John Kerry (D., Mass.) and Joe Lieberman (D., Conn.) and former representatives Henry Waxman (D., Calif.) and Edward Markey (D., Mass.) — that did not pass the Democratic House and Senate in 2010. It failed to become law because cuts in carbon emissions slow economic activity by raising the cost of electricity and American-manufactured goods.
Obama has shown that Congress is not needed for cap-and-trade. Now his EPA is instituting the scheme by regulation. No need for congressional legislation; Obama is taking matters into his own hands.
The question to ask is why any of this is necessary. Greenhouse-gas emissions from power plants have declined by 15 percent from 2005 to 2013, according to the Energy Information Administration. Carbon dioxide is not a pollutant. Everyone breathes it out every day. It even helps the growth of trees and other greenery.
Nevertheless, with these new rules, some states or groups of states would have to meet their targets by ensuring that plants reduce emissions or by financing reductions in other ways, such as reducing consumer demand or investing in more costly renewable energy, such as wind and solar power. These impose real costs on the economy: fewer factories and jobs and less travel. Electricity made from solar power costs twice as much as electricity made from natural gas.
The Clean Power Plan’s Stationary Sources report spells out some job losses: “The EPA recognizes as more efficiency is built into the U.S. power system over time, lower fuel requirements may lead to fewer jobs in the coal and natural gas extraction sectors.”
The EPA estimates that the plan could result in a net decrease of approximately 31,000 full-time jobs in 2030 under the rate-based plan approach and approximately 34,000 full-time jobs under the mass-based approach. In addition, 52,000 to 83,000 jobs would be lost in 2030 as higher electricity prices would decrease consumer demand and the demand for workers in electricity-intensive manufacture.
These job-loss projections are likely to be a substantial underestimate, because delivered electricity prices are likely to rise by 12 percent to 17 percent, according to a report by NERA. As energy-intensive manufacturing leaves the United States for less-expensive overseas locations, employment will decline. Americans will import goods that were formerly made in America.More imports from abroad mean fewer jobs in America and more jobs offshore. Obama has frequently voiced his opposition to offshoring jobs, but his new cap-and-trade policies will give firms a new incentive to do so.
The EPA appears to be more concerned about “environmental justice” than about higher electricity prices and lost jobs. The report states that “climate change is an environmental justice issue. Low-income communities and communities of color already overburdened by pollution are disproportionately affected by climate change and are less resilient than others to adapt to or recover from climate-change impacts.”
Environmental justice is not much use if people lack jobs. With an average person in the lowest quintile paying 24 percent of income on electricity, gasoline, and motor oil, compared to 4 percent for someone in the top quintile, according to the Bureau of Labor Statistics, increases in electricity prices are highly regressive.
To avoid a rollback of the rule by the next president, states are being asked to submit their plans for emissions reductions by September 2016. States should stall, and in 2016 Americans should elect candidates who will repeal this monstrosity.
— Diana Furchtgott-Roth is a senior fellow and director of Economics21 at the Manhattan Institute. She is coauthor, with Jared Meyer, of Disinherited: How Washington Is Betraying America’s Young.