The move could produce a dramatic makeover of the power industry. EPA carbon crackdown set to launch

The EPA will launch the most dramatic anti-pollution regulation in a generation early next month, a sweeping crackdown on carbon that offers President Barack Obama his last real shot at a legacy on climate change — while causing significant political peril for red-state Democrats.

The move could produce a dramatic makeover of the power industry, shifting it away from coal-burning plants toward natural gas, solar and wind. While this is the big move environmentalists have been yearning for, it also has major political implications in November for a president already under fire for what the GOP is branding a job-killing “war on coal” and promises to be an election issue in energy-producing states such as West Virginia, Kentucky and Louisiana.


The Environmental Protection Agency’s proposed rule is aimed at scaling back carbon emissions from existing power plants, the nation’s largest source of greenhouse gases. It’s scheduled for a public rollout June 2, after months of efforts by the administration to publicize the mounting scientific evidence that rising seas, melting glaciers and worsening storms pose a danger to human society.

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“This rule is the most significant climate action this administration will take,” said Kyle Aarons at the Center for Climate and Energy Solutions, one of a host of groups awaiting the rule’s release. Sen. Sheldon Whitehouse (D-R.I.) has urged the EPA to “go ahead boldly” with the rule, saying the agency must step in where Congress has refused to act.

But for coal country, the rule is yet another indignity for an industry already facing a wave of power plant shutdowns amid hostile market forces and a series of separate EPA air regulations. Coal-state Democrats like West Virginia Sen. Joe Manchin have joined the criticism, echoing industry warnings that the fossil fuel was crucial to keeping the lights on in much of the U.S. during this past brutal winter.

“You have another polar vortex next year, how many people will lose their lives?” Manchin asked at a POLITICO energy policy forum Tuesday.

Other red-state Democrats, like Alison Lundergan Grimes, who is challenging Senate Minority Leader Mitch McConnell in Kentucky’s Senate race, have disavowed Obama’s EPA proposals — she denounced an earlier agency power plant rule as an “out-of-touch Washington regulation.” West Virginia Rep. Nick Rahall, one of the most vulnerable Democrats in November, complained last year that “this callous, ideologically driven agency continues to be numb to the economic pain that their reckless regulations cause.” And Sen. Mary Landrieu (D-La.), a top Republican target this year, has voted with Republicans to hobble the agency’s rules.

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But supporters say that whatever the political dynamics, the need for acting on climate change is dire.

Next month’s debut comes after a series of scientific reports warning about the rising seas, worsening storms and other havoc that global warming will bring to people around the world, including effects that have already started to appear in the U.S. The White House has spent months in a steady effort to call attention to those findings, as part of an outreach that included having Obama give one-on-one interviews with television meteorologists this month.

“This is a problem that is affecting Americans right now, whether it means increased flooding, greater vulnerability to drought, more severe wildfires,” Obama told one of the forecasters. “And people’s lives are at risk.”

‘We can’t sit by silently’

It’s not just the coal industry that’s losing sleep over the rule. Manufacturers and industries like oil refining have been eyeing the power plant regulations as the starting gun for a process that will eventually lead to greenhouse gas limits for a wide variety of businesses.

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“These regulations could reduce the diversity of our energy supply, increase electricity and compliance costs for American businesses and shrink our competitiveness,” said Ross Eisenberg, vice president for energy and resources policy at the National Association of Manufacturers. “We can’t sit by silently while that happens.”

Despite opponents’ warnings that the rule will be a death sentence for coal-fired power, EPA leaders have been adamant that they’ll offer states ample “flexibility” to devise their own ways to cut carbon. Some states may join regional cap-and-trade networks, similar to an existing Northeastern compact that has co-existed with coal plants for years. Others could push for investments in wind and solar power, or in energy efficiency programs that help homeowners and businesses reduce their demand for electricity.

The rule, set to become final in mid-2015, would apply to the nation’s thousands of coal and natural gas-fired power plants. But coal — the cheapest, dirtiest and most abundant fossil fuel — would bear the heaviest burden.

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That means its impact could be greatest in states like Kentucky, a major coal producer that gets as much as 90 percent of its power from the fuel — and which as recently as 2010 had the country’s lowest electricity prices. It’s also a crucial state in the 2014 Senate electoral calendar.

Republicans have said they also intend to use Obama’s climate policies as a wedge in states such as Alaska, Louisiana, Michigan, North Carolina and Iowa — all places where the GOP has a chance to pick up a Senate seat now held by Democrats.

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Outside the fence

Obama commanded the EPA to write the rule last summer, when he announced his climate strategy at Georgetown University. Its fate will be crucial to Obama’s legacy, and it may give the U.S. added leverage at major climate negotiations next year in Paris.

The rule’s legal fine print will be crucial, since the EPA is relying on a section of the Clean Air Act that has never been used for such a sweeping program. But a string of recent court victories has left the agency confident that the rule will withstand the inevitable legal challenges.

People who follow the agency have long expected the EPA to take on existing power plants, and the broad contours of its likely approach have been a topic of conversation among observers for years.

Contrary to many rumors and misconceptions, the rule will not require individual coal plants to capture and store their carbon emissions. That is a key feature of a separate rule that the EPA proposed last year for future power plants.

Instead, Obama is expected to endorse a strategy that seeks creative ways to achieve big carbon cuts — one that could lead some utilities to help their residential and business customers reduce their demand for electricity. Insiders refer to that as going outside the power plants’ “fence line.”

A less ambitious approach would require only the kinds of modest energy-efficiency improvements that the power plants themselves could achieve but that would bring only negligible reductions in carbon output. That’s OK if “you want to settle for some chump change,” Natural Resources Defense Council attorney David Doniger said this month.

Still, opponents will launch a major legal fight against the broad approach, saying the EPA can’t legally require steeper pollution cuts than a power plant could make on its own. “The reason why EPA has never before obligated a source to reduce emissions beyond its control is because it’s beyond its control,” industry attorney Robert Wyman said.

The new rule also won’t set up a single way for power companies to meet its requirements. Instead, it will set an emissions goal that states must meet, then give them guidelines for how they can comply. States must write their own compliance plans — subject to EPA approval — or the agency will step in with its own requirements.

Broad, state-level pollution targets would mean greater cuts and more flexibility for states, while viewing power plants as part of a collective system. Several environmental groups have offered model plans to the EPA in which some states would encourage utilities to switch from coal to gas and generate more wind or solar power.

Another option is reducing the demand for electricity — cutting both carbon pollution and, advocates say, customers’ power bills. Such efforts could include installing “smart” thermostats that help residents use less power when demand is highest, or perhaps offer them a discount in return for allowing their homes to be a few degrees warmer in the summer.

And the rule could give a lift to regional carbon-credit trading programs, similar to the nationwide cap-and-trade system that the unsuccessful 2010 climate bill would have set up across the entire U.S. economy. One existing compact, the Regional Greenhouse Gas Initiative, already includes nine Northeastern and mid-Atlantic states.

The price tag

But no matter how much flexibility the EPA’s rule offers, somebody will have to pay for complying with it — and again, coal customers would feel the biggest hit. Utilities heavy on coal-fired power would be the ones paying for credits in any carbon-trading scheme, while utilities with lots of gas, nuclear and wind power would have credits to sell.

One environmental group, the Clean Air Task Force, estimated that utility bills would go up an average of 2 percent under the rule, while greenhouse gases would go down 27 percent below 2005 levels. In the nine-state Northeastern cap-and-trade program, utility bills have risen only about 1 cent per kilowatt-hour in some areas, and not at all in others, said the group’s Maryland commissioner, Kelly Speakes-Backman.

Some states may have an easier time than others meeting the rule’s requirements.

At least 30 states already have laws requiring some portion of their power to come from renewable sources like wind, solar and hydropower, and they might be allowed to count those programs toward compliance with the rule.

Some states might also be allowed to count the shutdowns of coal plants that utilities were already planning to close. That could amount to a big portion of the required cuts, since coal plants account for 75 percent of the power sector’s carbon emissions.

The rule’s effects could be profound and long-lasting, said Tim Profeta, director of Duke University’s Nicholas Institute for Environmental Policy Solutions, noting that it comes at a time when utilities are putting a lot of investment into new power sources. An aggressive rule, he said, could “lock the trajectory in for cleaner and cleaner power generation.”