Energy & Environment

EPA emission rules threaten the interstate energy market

EPA emission rules threaten the interstate energy market

You won’t find too many people more skeptical about the intelligence of Big Government than me, but even I’m having a hard time believing no one in the mulit-trillion-dollar fortress of bureaucracy on the Potomac saw the “unintended consequences” of the EPA’s new emissions regime coming.  How could this not have been discussed at the very first planning meeting?  Luckily, there’s still time to make corrections because it will take years for the proposed regulations to take full effect, but reading this article from the Washington Times makes you wonder how things could have progressed so far before the backlash against these rules finally obliged the EPA to admit it had a serious structural problem:

States that import their electricity from neighbors are giving theEnvironmental Protection Agency headaches when it comes to crediting them for emissions reductions under the agency’s proposed power plant rules.

As it stands, the proposed EPA rule would not give a state credit for instituting an energy efficiency program if the emissions reductions occur at a power plant in another state. Instead, the state hosting that power plant would receive the benefit, even though it did nothing.

That’s a problem for states that import their electricity from others, and it’s one they’re increasingly voicing. Failing to address it could discourage states from pursuing energy efficiency programs, which the EPA is banking on to realize its projected savings in customers’ electricity bills by the time the rule is fully implemented in 2030.

It’s not the sort of thing that can be addressed with a few minor tweaks:

“This is absolutely a big deal,” said Kyle Aarons, a senior fellow with the Center for Climate and Energy Solutions, who has looked closely at interstate electricity flows and how the EPA rule would apply to such states.

Jeff Holmstead, a former EPA air and radiation administrator under President George W. Bush, said states have cited the cross-border issue as an example of the proposed rule being unworkable.

“There are a lot of states that are unhappy about this. EPA is struggling with a number of issues, and that’s one of them,” said Holmstead, whose clients at lobbying firm Bracewell & Giuliani include several energy industry companies fighting the proposed rule.

One of the states that  imports a great deal of its power is Maryland.  But the sultans of hyper-regulation presiding over the Empire of Paperwork didn’t realize they were creating a massive problem right next door to D.C.?

This whole federal regulatory quagmire got bubbling in the first place because states have no control over the emissions generated by facilities located beyond their borders, but the pollutants do float across state borders upon the wind, not to mention how we’ll all be turned into charcoal when carbon dioxide unleashes global warming hell upon us.  But nobody paused to do any deep thinking about how interstate commerce would be affected – a nice bit of irony for a centralized super-government whose growth was largely facilitated by abusing the Commerce Clause.

The EPA has a few helpful suggestions for how to navigate its new regulatory maze:

States could engage in multi-state or regional programs, agency spokeswoman Liz Purchia said. A potential middle ground may exist in which states coordinate with each other on limited agreements but don’t commit to a broader, multi-state program.

“EPA has proposed allowing states to adopt multi-state plans to meet a joint emissions performance goal,” Purchia said in an email. “States in a contiguous electricity grid region that choose this option would not have to attribute the effects of renewable energy and end-use energy efficiency programs among states in the region.”

The EPA has maintained that a broader, regional program would be the easiest way to comply with the proposed rule, and many analysts agree. The interstate electricity issue brings that to the foreground.

But banding together for regional programs recalls memories of cap-and-trade legislation that passed the House in 2009 but failed in the Senate. Conservatives on Capitol Hill and in state legislatures across the country have resisted efforts carrying even the faintest hint of the scheme.

Set aside any of that nonsense you were taught in school about the separation of powers – you’re going to get that cap-and-trade system, no matter what little bills your funny little pretend legislature might have voted down.  Have fun filling out all the compliance forms!

In its proposed rule, the EPA noted that a state could account for “only those [carbon dioxide] emission reductions occurring … in the state that result from demand-side energy efficiency measures implemented in the state.” Aarons said it might not be possible for the state that hosts the power plant to take credit for reductions because it didn’t do anything, but the state that instituted the energy efficiency program might be able to prove the reductions were a direct result of its actions.

But even then, the agency could have a hard time determining where emissions reductions come from as a result of energy efficiency programs. That’s because power markets are fluid, as utilities draw electricity from all over the grid to plug supply gaps.

“There’s really no way to know in advance where the emission reductions are going to occur. There will be a fair amount of controversy over how you credit those things,” [former EPA air and radiation administrator Jeff] Holmstead said.

“Fair amount of controversy” = “billions of dollars lost to compliance costs and legal battles.”  Fortunately our roaring economy has left us all swimming in cash and showered the land with jobs, so the private sector can afford to spend loads of time on paperwork and court filings.  You all won’t mind paying more for your energy costs, right?  Especially if the rosy predictions of savings from the new energy-efficiency plans don’t materialize.  Central planners have never accurately predicted the results of their policies before, but there’s a first time for everything.  You’re already paying more for electricity – an average 3.2 percent increase over the past year, with much higher jumps in certain areas – so you’re already accustomed to getting shaken down.  California’s price hikes are hidden with a “climate credit” that supposedly “offsets” the cost of green energy programs… and is funded by fees leveled against energy providers… who of course pass those costs along to their customers.  An awful lot of this “green revolution” seems like paper-shuffling, which is mostly done with computers, which use energy.

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