- - Thursday, April 24, 2014

ANALYSIS/OPINION:

The year ahead could have a transformative impact on America’s energy landscape.

In June, the Environmental Protection Agency (EPA) will propose its long-awaited greenhouse-gas standard for the country’s fleet of existing power plants. Depending on how overzealous it is, the rule could be enormously costly to American consumers and profoundly devastating to the U.S. economy.

Many groups, including my own, the American Coalition for Clean Coal Electricity, have provided input on how we think the EPA should go about regulating greenhouse-gas emissions from power plants. Environmental groups and other opponents of coal have also weighed in with their own recommended approaches.

Recently, the coalition released a detailed economic analysis that sheds light on the many impacts of the Natural Resources Defense Council’s carbon-regulation proposal, first released in December 2012 and updated last month. The NRDC’s proposal completely miscalculates the real-life impacts of its proposed program, such as lost jobs, soaring energy costs for families and businesses, and electric-reliability issues.

The Natural Resources Defense Council’s most recent update went so far as to claim that there would be no costs at all stemming from its proposal. Our analysis, performed by leading research firm the National Economic Research Associates, outlines how the NRDC’s proposal left out many critical facts, including a staggering price tag for consumers and the millions of jobs America stands to lose under its proposed policy.

The NRDC proposal advocates for a system-based approach, commonly known as “outside-the-fence,” which is essentially a cap-and-trade program. Simply put, this is the wrong approach for American consumers, who will experience huge costs and marginal benefits. Instead, our projections show that this flawed proposal would cost consumers a total of between $116 billion and $151 billion during the period of 2018 to 2033.

During this same time, electricity rates would increase by double digits in nearly 30 states. With American families already paying high bills to cover their most basic expenses, they cannot afford an even greater burden from higher energy costs.

What’s more, millions of jobs stand to be lost under the Natural Resources Defense Council proposal. Our analysis projects more than 2.8 million lost jobs over the next two decades, while the NRDC projects a few thousand net job gains. Not surprisingly, the organization chose to cherry-pick just two years, 2016 and 2020, to make its claim instead of an extended time period.

The NRDC also falsely asserts that natural-gas-fired generation would increase by a mere 2 percent. However, our analysis found that natural-gas-fired generation would increase by up to 16 percent to keep up with demand, driving natural gas and electricity prices higher.

Groups like the Natural Resources Defense Council like to portray coal as an antiquated resource that has no role in our energy future. Whether it is the organization’s blissful ignorance or its willful failure to acknowledge reality, there is no denying that coal is a vital resource today — powering 40 percent of our nation’s electricity — and will certainly be vital to our future. To date, the coal industry has invested $130 billion into clean-coal technologies, and the industry will invest an additional $100 billion over the next decade. Thanks to these investments, major emissions from coal-fueled power plants have been reduced by nearly 90 percent. By 2015, more than 90 percent of the U.S. coal fleet will have installed clean-coal technologies or advanced emissions controls.

There is, of course, a common-sense approach to greenhouse-gas emissions regulations that would achieve emissions reductions without causing widespread economic destruction. The EPA should use a source-based approach, also referred to as “inside-the-fence,” which bases emissions reductions on measures taken at individual fossil-fuel generating units.

This approach allows power providers to better maintain reliability and limited cost increases but still attains significant emissions reductions. Unfortunately, many have speculated that EPA is more likely to follow the NRDC’s framework in crafting its greenhouse-gas rule for existing power plants.

The American Coalition for Clean Coal Electricity’s analysis has brought to light sobering realities of the Natural Resources Defense Council’s plan that we hope EPA fully considers when crafting its rule. Our analysis ultimately reveals that the NRDC proposal is, in fact, all pain for our economy with very little noticeable gain for our global environment.

Mike Duncan is president and CEO of the American Coalition for Clean Coal Electricity.

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