3:06pm: Hotline with Dave Weekley

EPA does Obama’s heavy lifting on coal

This week, the EPA is holding a series of public hearings on the agency’s proposal to cut emissions from existing power plants by 30 percent below 2005 levels by 2030.  EPA administrator Gina McCarthy says the agency has received “tremendous comments” so far, adding, “we’re excited to have these public hearings.”

McCarthy, unlike her prickly predecessor Lisa Jackson, is credited with being a pragmatic straight-shooter, but she sounds like she’s trying a bit too hard to convince us that the EPA is really interested in what those who disagree have to say about these punitive rules.

Not so much.

These hearings are formalities, awkward exercises for the powerful government agency that long since decided that the often discussed all-of-the-above energy strategy for this country does not include cheap, plentiful supplies of coal.

The EPA, the Obama Administration and environmental acolytes assume America is on their side.  A poll conducted by The Winston Group for the American Energy Alliance found that voters in five states (Arkansas, Colorado, Iowa, Montana and North Carolina—key battleground states in the 2014 election) want the EPA to reduce carbon emissions.

Sixty percent either strongly support or somewhat support the proposed regulation. After all, who doesn’t love Mother Earth?

However, when voters were told of the possible economic consequences of dramatic carbon reduction—loss of jobs, a shift in jobs and energy production to countries with lower environmental standards—opinions change dramatically.  Only 39 percent support the regulations, while 55 percent oppose.

Naturally, the administration expects a different economic outcome with more jobs in green energy production and… wait for it… cheaper energy for consumers.  If making energy production more expensive through regulation is supposed to lower energy bills, why not drive production costs even higher?

Closer to home, the new carbon emission standards will make it even more difficult to mine and sell coal domestically as power plants switch to lower carbon natural gas and investors shy away from the risk associated with an industry targeted by the EPA.

Along with the new carbon standards, the EPA has also made it harder to get mine permits.  National Mining Association President and CEO Hal Quinn testified before Congress earlier this month that “the process for obtaining permits to proceed with economic and land use activities has become longer and more complicated.”

The regulatory uncertainty, including the EPA’s power to retroactively invalidate a permit, makes investing in the coal business even more risky.  Quinn cited a 2011 study by UC Berkeley Professor David Sunding which found that just a one percent chance of a permit revocation decreases the cost-benefit ratio of the project by nearly 18 percent.

The EPA will hold its public hearings and McCarthy will patiently field questions during Congressional hearings with her usual aplomb, but the agency’s actions are predetermined.  The Congress refused to pass President Obama’s cap-and-trade controls of the energy economy, so the heavy regulatory lifting falls to the EPA.

 

 

 





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