On Monday, the Obama Administration issued new proposed rules that would require states to reduce CO2 emissions from resident power plants. That evening, I joined CNBC’s Nightly Business report to discuss the likely impact of the regulations on climate change, jobs and the economy, and the upcoming elections. You can view the segment here.
While you are there, you will note that we have redesigned The Washington Update website to highlight current news items and make our updates and white papers easier to access. We hope you like it.
Following are the speaking points I provided to CNBC before the interview:
What’s your sense of things on these new EPA rules, why are they so important?
Most scientists believe that industrial emissions are leading to adverse climate change. CO2 emissions are identified as one of the primary reasons for that climate change. The new rule represents the first real attempt of government to cut down on CO2 emissions from power plants.
How does the proposed rule work?
The rule would require each state to meet an overall target for greenhouse-gas emissions. The rule authorizes states to reduce emissions through a variety of methods, including requiring power plants to make structural changes, switching from coal to natural gas, reducing demand for electricity, and producing more energy from renewable sources. States could adopt a carbon tax or a “cap and trade” program in which plants out of compliance would buy allowances from plants in compliance. States must implement plans by 2016. It is hard to see how the rule will avoid imposing significant new costs on many power plants.
How is this helpful for the U.S. economy?
Addressing climate change is not about helping the economy. (The president asserts the changes will result in lower public health costs down the road, but that is a speculative and ancillary benefit now.) If you believe climate change is a problem, these measures are necessary to make the world more livable for future generations. The issue is that these changes come at a cost to the economy. Power plants will incur costs, which they will recoup either by cutting back on hiring or by raising prices.
Will consumers be dealing with higher electric bills?
Probably yes, although the effects of the new law are blunted a bit by the shale gas “revolution” that provides an alternative source for power at lower cost.
Any other talking points or suggested questions for Tyler and Susie?
1. The new rule applies only to CO2 emissions by power plants, which is about 40% of total national emissions. It leaves the bulk (60%) of CO2 emissions unaffected. (The President hoped for new legislation permitting the regulation of all CO2 emissions, but the Republican-led House refused to enact it.)
2. The regulation has limited effect unless foreign countries join in the reduction of CO2.
3. The regulation, which is promulgated under the Clean Air Act from 1970, is likely to be challenged in court. It is unclear that Act authorizes a state-wide approach to reducing emissions, rather than directing changes on a plant-by-plant basis.
4. What happens if a state doesn’t comply? Presumably the federal government will take over the state’s emissions program. For many, that is a hard pill to swallow.
