EPA to States: ‘Flexibility’ Means Many Ways to Fail

One way to tell if someone is lying is if they tend to excessively repeat words and phrases. As a case study, the Environmental Protection Agency can’t stop saying the word “flexible.” The EPA uses it to describe its so-called “Clean Power Plan” forcing states to impose strict carbon dioxide reductions, with some variation of the word appearing 163 times in the proposed rule. The gist of the claim is that “each state will have the flexibility to select the measure or combination of measures it prefers in order to achieve its CO2 emission reduction goal.”

As we have explained before, the EPA’s claim doesn’t reflect reality. The emission reductions are so severe that the rule pressures states to adopt costly policies that were either too politically unpalatable for President Obama to pass when his party controlled Congress (cap-and-trade, carbon tax) or are being rolled back in states that enacted them (renewable energy mandates).

In case you had any doubt that EPA isn’t sincere about its flexibility claim, consider this recent opinion piece in The Wall Street Journal. In it, Ben Zycher at the American Enterprise Institute explains how the EPA’s key “building blocks”—which EPA touts as evidence of its flexibility—are “mutually inconsistent” and unworkable.

In other words, the EPA’s “Clean Power Plan” is flexible in the sense that it gives states numerous ways to fail. Here we excerpt Mr. Zycher’s piece at length to explain how the building blocks conflict:

FERC and those in the industry it regulates seem to realize what the EPA does not: that the agency’s “building blocks” are mutually inconsistent. The recommended 6% efficiency improvement for coal plants is prohibitive in cost because their individual operating characteristics—the types of coal they use, operating pressures, emissions equipment, etc.—are predetermined in their designs and extremely difficult to change. Few if any owners of coal plants will be willing to make that huge investment. Moreover, the recommended increase in the capacity utilization of natural gas combined cycle (NGCC) turbines to 70% from roughly 45% today means reduced output and a smaller market share for coal.

The coal-efficiency path is made even more difficult by the EPA’s recently implemented Mercury and Air Toxic Standards. Compliance with this new rule requires the installation of costly scrubbers and other equipment that reduce operating efficiency.

The increase in the utilization of natural-gas plants also conflicts with the increase in wind and solar power. Because renewables are unreliable, they must be backed up by coal- and gas-fired plants, which must be cycled up and down depending on whether the wind is blowing or the sun is shining. This cycling reduces efficiency for the backup coal and gas plants in much the same way as stop-and-go driving cuts automotive fuel efficiency, and this will make it more difficult for gas plants to achieve higher capacity utilization.

The “energy efficiency” path means a reduction in demand for both coal- and gas-fired power, again inconsistent with investment in improved coal efficiency, and with the envisioned increase in the utilization of gas plants.

No one knows how this demand reduction will affect power consumption at peak periods relative to off-peak ones. This will exacerbate the uncertainties regarding investment in new power plants, which will again increase costs and create significant risks to the reliability of the grid.

The operators of electricity systems have always used the cheapest power first and then more-expensive power as demand increases through a given day. How will costs and reliability change when they are forced to adopt a convoluted system combining operating cost and greenhouse gas considerations? No one knows.

Resistance Gaining Momentum in States

States that don’t want to accede to the EPA have a way out: don’t submit a state plan. Already several states are realizing that working with the EPA is more trouble than it’s worth:

  • In April, Oklahoma Governor Mary Fallin signed an executive order preventing her state’s environmental regulators from developing and submitting a state plan.
  • Texas Governor Greg Abbott believes the rule will result in “grave consequences” for Texas, offering his “full support” to Senate Majority Leader Mitch McConnell, who has encouraged states that want to resist to refuse to submit plans to EPA.
  • Wisconsin Gov. Scott Walker recently called the EPA’s plan “unworkable” for the Badger State, highlighting the rule’s many “inaccuracies, questionable assumptions and deficiencies.”
  • Newly elected Chairman of the Texas Railroad Commission, David Porter, said last week after his election, “Perhaps our greatest challenge comes from EPA regulations brought on by Obama’s war on fossil fuels.”
  • Former North Dakota Public Service Commissioner Tony Clark has testified that the rule forces states into “a comprehensive ‘mother may I?’ relationship with the EPA that has never before existed.” Clark is currently a member of the Federal Energy Regulatory Commission.

These statements are in addition to bills proposed in several other states that would require legislative approval before a state agency can submit a compliance plan to the EPA. For states that want to retain their flexibility, resistance isn’t futile—it’s necessary.

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