Obama’s Clean Power Plan: All Pain, No gain

During a January 2008 interview with the San Francisco Chronicle editorial board, then-Senator Barack Obama remarked that under his ideal energy plan, “electricity rates would necessarily skyrocket.”  He further noted that by capping greenhouse gasses, producers of energies like coal would need to make vast changes and, “that will cost money.  They will pass that money onto consumers.”

On August 3, 2015, President Obama unveiled a clean energy proposal that appears to have delivered on those campaign promises.  The New York Times heralded the plan as “the strongest action ever taken in the United States to combat climate change.”  Regardless of one’s opinion of the science behind global warming or climate change, President Obama’s plan should be judged by the only metric that matters:  Whether or not it will deliver the intended results at a reasonable cost.  On both counts, his plan falls well short.

The plan calls for the Environmental Protection Agency (EPA), using Section 111(b) of the Clean Air Act, to cap carbon dioxide (CO2) emissions on new and existing power plants, as well as new electricity-generating units.  EPA is giving states one year to submit proposals to comply with these new standards. 

As usual, EPA has overstepped its authority when issuing draconian regulations.  Past rules under Section 111(b) applied only to the “source” of the supposed pollution.  These new guidelines coerce entire states to comply with federally administered standards rather than limiting them to individual plants, which is by definition the source of any pollution.  The proposal would also regulate the same energy source twice using two separate sections of the Clean Air Act, which is a clear violation of the law. 

Since President Obama took office in 2009, the EPA has been slapped down by the courts on a number of occasions.  The latest decision occurred on June 29, 2015, when the Supreme Court ruled that the EPA could not disregard the cost of regulation in relation to its “Mercury and Air Toxic Rule.”  Each time EPA overreaches, it requires an onerous legal defense bankrolled with taxpayer money.  These new “clean energy” rules are sure to be subject to the same sort of court challenges, resulting in the expenditure of millions of dollars in their defense.

Putting aside Constitutionality, the practical impact of the regulations on the climate would be minuscule, at best.  During a July 9, 2015 hearing before the House Science Committee, EPA Administrator Gina McCarthy was asked by Committee Chairman Lamar Smith (R-Texas), “On the Clean Power Plan, former Obama Administration Assistant Secretary Charles McConnell said at best it will reduce global temperature by only one one-hundredth of a degree Celsius… Do you disagree with my one one-hundredth of a degree figure?”  McCarthy answered, “I’m not disagreeing that this action in and of itself will not make all the difference.”  Other estimates put the impact even lower, at just 0.009 degrees.

The microscopic temperature reduction would come at a steep price to American consumers.  Coal accounts for nearly 40 percent of America’s electricity portfolio.  Shuttering coal-fired plants will both directly impact the thousands of blue collar workers who earn a living there and drive up the cost of energy for every American by cutting off the supply of low-cost energy and replacing it with more expensive, less reliable alternative fuels.  Because energy is a necessary component of shipping and commerce, driving up energy costs will indirectly raise the price of most American goods.  A July 7, 2015 Heritage Foundation study determined that the U.S. could lose out on $2.5 trillion of economic growth as a result of the EPA’s “clean energy” regulations. 

In a rare moment of candor about the administration’s real motivation for the proposed regulations, McCarthy argued that the U.S. needs to lead the world with these actions so that large-scale polluters like China will follow.  Basic logic posits that “global” warming cannot be solved by a single nation, especially when the “solutions” all involve curtailing economic growth.  U.S. agreements with China have no binding standards beyond Chinese President Xi Jinping’s word that his country will cap CO2 by 2030.  In essence, this plan would hamstring America’s economy, while allowing China’s to grow along with its emissions.   

President Obama’s energy plan will inevitably mirror his other ambitious endeavors.  Start with a regulatory overreach that faces frequent legal hurdles, then over-promise and under-deliver.  Finally, after all the campaign-like bluster and bravado, the result is an industry worse off with higher prices than before.  If Americans didn’t like what President Obama did to the healthcare economy, the effects on the energy sector will be equally, if not more damaging.