Last week, West Monroe Partners’ Energy & Utilities Practice attended the US EPA Clean Power Plan public hearings in Washington, DC and Atlanta, GA.
The hearings on the proposed carbon rule were well-attended with many people using their five-minutes of speaking time to represent themselves as individuals or as advocacy groups addressing consumer, environmental, economic, and industry concerns. Some state and federal elected officials also attended, speaking generally about energy and environmental policy and the need to address climate change. Some chastised Congress for not taking action directly, and permit EPA to define climate policy through its rule-making.
Most speakers supported EPA taking action to curb carbon emissions – but there was no consensus on timing – some thought EPA was moving too slowly and the reductions were not great enough and others thought EPA was moving too quickly and needed to consider other factors than carbon reduction, like economic impacts before adopting a final rule. Mostly absent from the hearings were state environmental authorities.
We noticed a few themes that emerged from the hearings:
- Environmental advocacy groups and most individuals were anti-coal, almost to the point of waging war against coal. Attendees argued that closing coal power plants should be an explicit intention of CPP and that many side benefits would be realized, including less fly-ash and other by-product disposal, associated with mining, transporting, and using coal.
- Business groups and utilities blamed other “up-wind” sources for carbon pollution in their states and associated ill-health effects – claiming their states are moving aggressively to curb carbon (and other criteria pollutant emissions under the Clean Air Act) and support EPA taking action to force other states to now “get on board.” Some opposed the proposed rule because it does not give credit for nuclear units that are under construction and, therefore, penalizes them and their states unfairly and for already acting to reduce carbon emissions(for example: actions taken to improve energy efficiency and demand-side management and implementation of renewable portfolio standards).
- Some industry associations asked EPA to expand its list of available compliance options, and making explicit the ability to use waste-heat-to-power (combined heat and power project) as a compliance option. Some also wanted EPA to look beyond power plants and include the transportation sector and land-use planning as other areas for inclusion in the rule.
- Industry officials argued that they had made great strides in improving industrial and manufacturing processes through efficiency enhancements and that pushing the envelope further by requiring power plants to reduce carbon will add to costs that have to be passed on to consumers, in part negating the benefits of industry’s efforts to improve efficiencies and reduce costs.
- Elected officials favored a carbon tax as being a more efficient approach to reducing carbon emissions, but recognized that this is beyond EPA’s authority under the Clean Air Act.
- With near unanimity, speakers favored more US, state, and local investment in and use of energy efficiency, renewable energy and other cleaner or zero-emitting forms of energy.
- Some state regulatory commission representatives opposed the rule on the grounds claiming that EPA’s estimates of costs and savings associated with CPP implementation were flawed, and that the states, not EPA, are responsible for energy policy, and that the goals established by EPA could not be economically achieved.
- Utility association representatives argued that the rule would have a negative effect on reliability and because the rule used averages for determining each states requirement, it did not represent the peculiarities that each reliability region faces in meeting their already mandated requirements.
- Representatives of industry trade groups not in the renewable energy industry and some area and labor unions opposed the rule as being detrimental to the economy.
Clearly, there are many competing views and perspectives on the rule and its expected impact. Utilities, generators, alternative energy businesses, regional transmission organizations, state environmental, utility regulatory, economic development agencies, and local governments all have a stake in these discussions and their ultimate outcome.
The winners in this effort will be those that deliberately plan and invest in new businesses models and technologies; “first-movers” will lead the way. Laggards and foot-draggers will be forced to act at some point, and have limited optionality from waiting too long to be involved and take action. If you’d like to talk in further detail on this subject, feel free to reach out to me at email@example.com.