A Barry O

Last month the Obama Administration and EPA released the final version of their so-called “Clean Power Plan,” which seeks to regulate carbon in the U.S. While the President and his army of EPA bureaucrats tout the “flexibility” of the carbon rule, the reality is the rule is anything but flexible and will hits states the hardest. Projections show the finalized version of the carbon rule will have a much more devastating impact than originally expected in the proposed version.

For states, the finalized rule means massive energy rate increases and compliance scenarios that will prove crushing for their economies. The carbon rule offers two compliance scenarios, both of which are practically unworkable for states and will send energy rates skyrocketing.

It is projected that over 40 states will see double digit rate increases under the carbon rule, inevitably killing thousands of jobs and pushing integral industries to search for lower energy prices, potentially oversees. 

Worst of all is the impact the carbon rule will have on 22 states that were blind-sided by much more stringent emissions reduction targets in the finalized rule than in the proposed rule. Twenty-one of these 22 states enjoyed average electricity prices 12% below the national average last year. More stringent targets however mean residents will be paying more for energy and sectors such as manufacturing could soon leave states for more affordable climates.

For instance the reduction target originally proposed for North Dakota was 11%, yet the target contained in the finalized rule is almost 50%. Iowa, Kentucky and Wyoming were originally projected to see targets just below 20% but the finalized rule requires well over 40% reduction targets for each. States such as Indiana, Kansas, and Montana also saw their compliance targets roughly double in the final rule.   

Furthermore, in drafting the final rule, the assumptions made by Obama and the EPA are not only illogical but extremely misleading. In the final version the EPA assumed that roughly 100 GW of coal would inevitably be retired by 2020, even without the carbon rule. 

This assumption however is much larger than the 66 GW the EPA originally projected in the proposed rule or the 55 GW the Energy Information Administration projected. By assuming more coal retirement in the final version absent the carbon rules enactment, the EPA tries to misrepresent the actual impact the carbon rule will have on the industry.          

The final version of the rule also assumes that 41,000 MW of renewables such as wind would come on line by 2030. The EPA claims such sources would replace roughly 38,000 MW of coal the Agency projects will be retired during the same period.  However this swap is not only wildly impracticable but doesn’t take into account the unreliable nature of wind.

Because wind generation is so sporadic it is estimated that for such a drastic shift in energy supply to be effective over 170,000 MW of wind would actually be needed, as opposed to the 41,000 MW the EPA projects. The feasibility of doing so would require over 20 million acres of wind generation, a landmass the size of 16 million football fields or roughly the State of Indiana.    

As unclear and unforthcoming as the President and the EPA have been in disclosing the impact the final carbon rule will have on states, the one thing that is clear is a majority of states will be hurt. For the 40 or so states that will see double digit rate increases, or the 22 states facing compliance targets well above those initially projected, this rule will prove an economic disaster that ripples across the U.S. 


Photo Credit: Sal