Climate Change: Unleash the EPA to Save our Future

The Obama Administration announced yesterday its intent to raise the price of electricity for everyone in the country. The feat will be accomplished by regulatory fiat by the Environment Protection Agency on existing power plants by forcing an artificial reduction of the emissions of carbon dioxide known as one of the Green House Gases. GHG are thought in some circles to be a chief cause of the pheromone of climate change or global warming.

 

I have worked for the past five years of analyzing various proposals to curb GHG.  I have to say, I no idea if there is climate change or not. I am pretty certain CO2 levels have been rising over the years in the world, but that is not the issue here.

 The action by the Administration was predictable and inevitable. Having failed to get Congress to pass a “cap and trade” scheme in 2010, the Administration waited until after the election to move their program forward and forward it will come.

The EPA has been asked to issue proposed regulations in the next 12 months. I suspect they have working on them for some time so this will not be a problem.  

Power plants that currently use coal (about 38% of electricity is generated from coal) will have figure out a way to comply either by fuel switching, technological change or just shutting down. However that plays out, electricity cost will increase and in some areas increase considerably. Although the details of what is to come is not known, cost increase is certain, also predictable, and inevitable.

 Of course, GHG emissions are a global issue with China the leader in the amount of stuff that spews into the air. Interesting enough, GHG are also emitted by every human and animal breathing as well as by the billions of people who burn fuel in their open fire to cook. It is not an easy problem to address.

There are many consequences of this action and how it will affect the future use of energy. Mr. Obama has been clear for some time he wants the cost of energy to rise. Rising prices for traditional sources of energy may mean less GHG but also promote the economics of alternative and renewable energy. His Administration has tried and largely failed to promote these alternatives so the strategy is to try to force the market dynamics, by penalty rather than by subsidy. This is like many of the policies of the Administration- naive and uncaring of the impacts. 

The use of coal to generate domestic power will likely diminish in the future due to supplies of natural gas and regulations. No problem for the coal guys as there is a robust market for coal overseas. Burning it in China and India does little diminish GHG

There will be a big impact on big users of energy. Manufacturing and raw material creation are intensive energy users. In a global market place, it means U.S. companies will not be able to compete; they will just stop, curtail or move production to more favorable places.

The last consequences, is that until there is an international agreement on a coordinated effort to reducing global GHG, the unilateral action by the United States is futile, short sighted and harmful to the economy. The full impact of the final regualtions will not be felt for a few years. However, the results will be a lasting legacy burdening the country for years to come.

There have been lots and lots of political and substantive criticism about the announcement. The process will go forward and in the end likely succeed assuming the process is adhered to. Congress has been more or less impotent in trying to rein in regulations issued by this Administration. There is considerable commotion but meaningless results. There will be inevitable litigation, there always is. Regulating GHG under the Clear Air Act was never intended. However, overturning EPA regulations are infrequent. 

So, business will be adversely impacted, consumers will pay more, GHG worldwide will not be significantly curtailed, alternative energy sources even if grossly subsidized will still not fill the void.  I am wondering what the point of all of this except a continued grab for power, callous disregard for the health of the economy and a sop to a political philosophy that believes it is always right. I guess the point is Mr. Obama is saving our future. Please, don’t!