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US states, industry lash out at final Obama climate rules

5th August 2015

By: Henry Lazenby

Creamer Media Deputy Editor: North America

  

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TORONTO (miningweekly.com) – Several coal-producing US states and the private sector have lashed out at President Barack Obama and the US Environmental Protection Agency’s (EPA’s) first-ever Clean Power Plan Rule that was finalised on Monday, aiming to cut carbon pollution from existing power plants and dealing the domestic fossil-fuel industry a bloody nose.

Under the newly finalised Clean Power Plan, the EPA would attempt to use its authority under the Clean Air Act to regulate carbon emissions from fossil-fuel burning power plants, which accounted for the largest single source of US carbon emissions, representing about one-third of the total.

The plan would cut carbon emissions from the power sector by about 30% from 2005 levels by 2030. The plan also provided state-specific goals and flexibility in meeting emissions targets, such as partnering with other states, emissions trading or implementing renewables and efficiency programmes.

It also included state incentives to invest in renewable energy and energy efficiency measures, and called for increases of 30% in renewable-energy generation and 28% in energy capacity from renewable sources. Simultaneously, it estimated that coal and natural gas would in 2030 remain the leading sources of electricity generation, at 27% and 33%, respectively.

States would be required by September 2016 to submit final plans for the implementation of carbon emission performance rates, or an initial plan and request a two-year extension.

Obama’s Clean Power Plan was a critical component of meeting a US pledge on emissions cuts for the United Nations climate change summit, in Paris, in December. Yet it would be up to Obama’s successor to implement his plan, which had also attracted strong opposition from the field of Republican presidential candidates.

Significant coal-producing states, such as Kentucky and Indiana, were among seven governors to state that they did not plan to comply, while the private sector vowed to fight the rules tooth and nail.

“If the final rule is not significantly improved, then Hoosiers [a native or inhabitant of the state of Indiana] can be assured that on behalf of families, businesses and other ratepayers, Indiana will not comply.

“Indiana will also continue to vigorously challenge the legality of this rule in the federal courts. Far too much is at stake for jobs and the economy in Indiana for us to do anything less,” Indiana’s Republican governor Mike Pence said in a statement on Monday.

Governor Pence had previously written to EPA administrator Gina McCarthy on December 1, describing the proposed rules as “ill-conceived and poorly constructed” and called for the rules to be withdrawn.

His views were echoed by Kentucky Attorney General Jack Conway, who vowed to join a bipartisan group of attorneys general asking the EPA and the federal court to stay implementation of the rule while it was challenged in court.

“I believe, once again, the courts will rule that the EPA has overstepped its authority,” he said, calling on Kentucky Governor Steve Beshear to direct his environmental cabinet to stop developing a state plan attempting to comply with this “illegal” rule.

NYSE-listed Arch Coal’s senior VP of strategy and public policy Deck Slone noted that the Obama administration seemed “increasingly desperate to salvage an ill-advised and poorly designed rule, which won't work, won't pass muster with states and won't stand up to legal scrutiny".

Arch charged that rather than fix the rule, EPA had “in many ways made matters worse,” saying more than 20 states were already preparing to challenge the rule in court.

Previously, NERA Economic Consulting reported that the proposed rule would cost as much as $479-billion and drive up electricity rates by double digits in 43 states.

Arch pointed to the critical role fossil fuels and, specifically, coal played in developing economies such as China, India and the rest of emerging Asia.

"To truly address the threat of climate change, these countries will need low-cost, low-carbon mitigation tools for fossil fuels. The administration's rule will do nothing to deliver such tools and could, in fact, slow their development here in the West, even as it hurts American ratepayers, American businesses and American competitiveness.

"We urge states to contest the rule vigorously and to defend their long-standing authority to manage their electricity systems in the way they deem most cost effective, prudent and wise," Slone stressed.

The coal industry had been hit hard by stubbornly low coal prices on weaker global demand and a supply glut, which had forced Walter Energy, Patriot Coal and most recently, Alpha Natural Resources on Monday, to file for bankruptcy protection this year. Energy Future Holdings, a power company that also had a large coal mining business, had been in bankruptcy since 2014.

Edited by Tracy Hancock
Creamer Media Contributing Editor

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