Trump claims victory on two trade deals. Diane talks to New York Times reporter Ana Swanson about what they will mean for U.S. business, the economy, and American families.
Guest Host: Laura Knoy
In a speech Monday, President Barack Obama said that “no challenge poses a greater threat to our future” than climate change. To help address that threat, he announced new federal rules limiting carbon emissions from U.S. power plants. Some critics charge these rules should be stronger given the risks ahead; many others say these rules represent a federal overreach, pose an enormous burden on U.S. coal companies and will mean higher prices for consumers. We look at efforts to cut carbon emissions and America’s role in the international effort to confront the challenges of climate change.
- Amy Harder Reporter covering energy and climate policy, The Wall Street Journal
- Kevin Book Managing director of research, ClearView Energy Partners
- Rhea Suh President, NRDC
MS. LAURA KNOYThanks for joining us. I'm Laura Knoy of New Hampshire Public Radio sitting in for Diane Rehm. Diane is on vacation. She'll be back next week. President Obama announced new rules yesterday to limit greenhouse gas emissions from power plants. He called these rules the biggest, most important step we have ever taken in tackling climate change.
MS. LAURA KNOYJoining me to talk about the new regulations and their possible effect on emissions, electricity production and the U.S. economy, Amy Harder of The Wall Street Journal, Kevin Book, managing director of research at Clearview Energy Partners and Rhea Suh, president of the Natural Resources Defense Council. Thanks all of you for being here. I appreciate it.
MS. AMY HARDERThanks for having us.
MR. KEVIN BOOKGood morning.
MS. RHEA SUHGood to be here.
KNOYWe'll also be taking your comments throughout the hour so join us at 800-433-8850. Send email to email@example.com. Find us on Facebook or send us a tweet. And Amy Harder, to you first, please. Just give us the big picture. What are the key points that people need to know about this plan?
HARDERWell, the top line numbers are a 32 percent cut in power plant carbon emissions by 2030 based on emission levels from 2005. So those really are the key numbers that people are talking about. Those are the numbers that President Obama talked about in his announcement on Monday and it's also the numbers that he's going to talk about in international arena because this really, this regulation and other regulations around it, are the cornerstone of what he is going to be submitting to the United Nations Climate Talks, which is something I know we'll get into in this hour.
HARDERSo it's a 32 percent cut over -- between now and 2030. The rule starts in 2022, which is actually two years later than the proposal. The proposal was also slightly less and it was 30 percent cut by 2030. So that's the most significant thing. Two other regulations that the administration also announced yesterday all affecting the utility sector are regulations cutting carbon emissions from power plants not yet built and then power plants that have been significantly restructured or modified.
HARDEROf course, this hits the natural gas and coal sectors the hardest because they emit carbon emissions. Renewables and nuclear power actually are poised to benefit from this regulation.
KNOYYeah, we'll definitely talk about coal, especially, is concerned, as you know, Amy. Is there anything significant about measuring this from 2005?
HARDER2005 has been a date that the international arena has used a lot as a benchmark. It's really actually more for talking points. The regulation itself actually uses 2012 and it has changed that in the proposal so it's a little bit confusing. We say 32 percent cut based on 2005, but the regulation itself is based on a baseline of 2012. So that's a little confusing and it -- to get into some of the details, I'm sure Kevin or Rhea can get into that. But for the international arena, 2005 has been a key year.
KNOYAll right. So, Kevin, from your perspective, as somebody who advises corporations on energy policy, how big a deal is this?
BOOKWell, if you think about this in terms of scale, this rule is part and parcel of a broader suite of environmental rules from the Obama administration that will be responsible for retiring about one-third of the coal-fired generating capacity in the United States over the course of about 15 years. So that's about 110 gigawatts of capacity out of some 330 back in 2005, in the base year. That's a very significant change.
BOOKThe regulatory process is iterative and this is the second iteration in what will then go almost certainly to litigation, but the proposal was much more stimulative for natural gas demand that the final rule is. Initially, the proposal would've spurred pretty significant increase in power sector natural gas demand. Some of the changes that the administration made in the final rule, in fact, put more emphasis on renewables and cleaner sources.
KNOYYeah, this is the proposal that Amy mentioned as well that was last year, right, Kevin? And this is kind of the updated final version of that.
KNOYYeah. Go ahead on the natural gas, too, because there has been a concern that as states are under pressure to reduce emissions, they've just been turning to natural gas, which is cleaner, but is still a fossil fuel.
BOOKWell, right. If your goal is to get off of fossil fuels, you're going to have a very long road ahead of you and I think that there's been a pragmatic vision in the Obama administration, at least until relatively recently, something we've called give a little, take a little, where they've been willing to accommodate fossil fuels as part of their broader energy strategy.
BOOKThis particular rule is now looking a little bit greener than it did before and this could be problematic. In a future scenario where you actually have demand growing faster than projected in the rule, and the base case projections embed some fairly (word?) electric power demand growth, you might find that states need to rely on natural gas more heavily and they might blow outside some of their confines of their emissions rates.
KNOYYou said that this could take a third of coal-fired power plants offline, right, Kevin? That in conjunction with other rules that the Obama administration has put forward.
KNOYPeople are calling this new plan a war on coal. Do you agree?
BOOKI think it's more of a police action, sort of an undeclared war, but yes. There's no mistaking that the direct attempt in regulation is to change the demand for coal here in the United States. Most recently, coal demand is from the EIA, the Energy Information Administration, is down almost 200 million tons from its peak several years ago. That is a significant reduction from the 1.1 billion ton year production level and so I'd say the war is being won by the administration.
KNOYRhea, I started out by asking Kevin and Amy how big a deal was this? What do you think? Is this a big deal or a small deal?
SUHLaura, I'd love to just maybe take a step back and draw a little bit more of a context here. The president unveiled the single most important action in the history of our country on the central environmental crisis of our time. By cutting carbon pollution today, we will insure that our children do not inherit climate chaos in the future. This rule, this policy is about one thing and one thing only and it's reducing the dangerous carbon pollution throughout the United States.
SUHYou know, the president's rule -- and we can talk in more detail about the mechanics of it, but there are a couple of, I think, top lines that I want to draw some attention to. First of all, it is clear from all of the polling that's been done that the public hugely supports this rule. They are demanding action for climate change and that's not just in the blue states. It's in the red states as well. And actually, a poll that just came out yesterday of primary -- likely primary voters in Republican primaries, again, majority of those voters say that they want action on climate change.
SUHAnd so we believe not only is this consistent with where the American public is, but it's also consistent with where we are as a country. I mean, you don't have to be a scientist to recognize that we are already experiencing the effects of climate change. Alaska and California are facing catastrophic wildfires as we speak. Last year was the hottest year on record ever and this year is on pace to be even hotter. These things are apparent and clear and as the president so eloquently stated yesterday when he unveiled these regulations, we are the first generation to experience the impacts of climate change and we will be the last generation to be able to do something about it.
SUHThe president's plan gives us bold action to be able to do something about it as a country and we are just grateful for his leadership.
KNOYSo it sounds like you're thrilled with this.
KNOYGo ahead, Amy Harder, jump in.
HARDERYeah, well, on the comment about how this will really help reverse climate change, I think, in and of itself, by -- in isolation, it actually won't, of course. Administration officials have said as much. I think it's important to put into the global context. The U.S. power plant emissions are about 5 percent of global greenhouse gas emissions so we're talking about a pretty small amount. But the administrations hopes that by doing this, it will really set the stage for ambitious global action.
HARDERIf the U.S. puts something forward, other countries will do that, too. President Obama said that yesterday. He said something about if we don't do it, nobody will. The U.S. has to lead for others to follow.
KNOYSo this is all about those Paris Climate Talks?
HARDERIt's all about the Paris Climate Talks and so even though it's just 5 percent of global greenhouse gas emission, symbolically the administration that it holds a lot more than that. To a point that Kevin made about natural gas, I think that was actually one of the biggest changes that I saw. In a fact sheet the White House put out had something along the lines of they want to eliminate the rush to natural gas early on.
HARDERNow, natural gas emits 50 percent fewer carbon emissions than coal, but still quite a bit more than renewables and nuclear power, which emits no carbon emissions. And up until now, I would say climate -- natural gas has been the administration's default climate policy. Carbon emissions in the U.S. have gone down, largely because of the economic recession, but also partly because of natural gas. Now that the administration is seeing renewables grow more, they're turning a little bit of a cold shoulder to natural gas after the administration has embraced it for most of Obama's term. So I found that quite significant.
KNOYThe administration in many states have gotten more and more of their electricity supply from natural gas. Let me also remind our listeners that you can join us. Your questions and comments are welcome, 1-800-433-8850. Send email to firstname.lastname@example.org. Find us on Facebook. Send us a tweet. Again, the number, 1-800-433-8850. This hour, we're looking at the president's new plan to cut power plant emissions of carbon as part of an overall attack on climate change and we'd love to hear from you, 1-800-433-8850.
KNOYAnd just back to you real quickly, for Amy, just remind us of how coal fits into our energy production today versus a decade ago, just finishing up what you said about this move we've seen towards natural gas for electricity production.
HARDERRight. Well, right now, we get about a little bit under 40 percent of our electricity from coal. That's down from a little bit under 50 percent in the last 10, 15 years. Under EPA's rule, by 2030, the administration estimates that coal will account for about 27 percent of our electricity mix. So we talk about this war on coal. We talk about how war is -- about how coal is dead. It's still a -- even after the regulation is in effect, based upon EPA's predictions, there's still quite a lot of coal.
HARDERI would say it's more like Old King Cole, you know, that's been kind of its nickname over the decades. It's been knocked down off of its thrown, but it's certainly still a large percentage.
KNOY40 percent is a lot, Kevin, and I wonder when those plants that you predicted go offline, how that will affect U.S. energy production.
BOOKWell, in the out years of the program outline yesterday, Laura, the 40 percent, which is really been trending down, continues falling by another 10 percent over the next 10 years and so a lot of the plants that are going to go offline are probably going to do it on the tail end of that decade. They'll be running up until then.
KNOYAll right. We will talk more in just a moment. Stay with us.
KNOYWelcome back. I'm Laura Knoy of New Hampshire Public Radio sitting today for Diane Rehm. We're talking about President Obama's announcement of new rules aimed at carbon emissions from power plants. Our guests are: Amy Harder, reporter covering energy and climate policy at The Wall Street Journal, Kevin Book, managing director of research for ClearView Energy Partners, and Rhea Suh, president of the Natural Resources Defense Council. You can join us, 1-800-433-8850. Drshow@wamu.org is the email. Or you can find us on Facebook, send us a Tweet. Again, the number, 1-800-892-6477. (sic)
KNOYRhea Suh, I want to turn to you. So as we talk about turning away from coal and as you have all described this new approach also hopes to not have states rely too much on natural gas, because it's still a fossil fuel, only cleaner. So what replaces it?
SUHWell, I think we've seen an explosion in both solar and wind generation throughout the country. Some 43 percent of all new electricity generated were from these cleaner fuel sources. That's going to further under this new framework that the president has unveiled and, you know, the additional incentive that they have put in this regulation that will give states credit for transitioning to renewable fuels, in the early years, will be an additional boon to...
KNOYSo they give states credits for doing this.
KNOYTo encourage them to do it. How do you feel, Rhea -- and I want to ask you, too, Kevin -- about the critique that often comes up that wind and solar, especially, are just not ready for prime time. They're intermittent. They don't supply, at least right now, nearly enough capacity to power the enormous needs of our economy. What do you think, Rhea? Fair critique or not?
SUHI think it's completely unfair. And I think it does not actually acknowledge the significant leaps and bounds that this technology has experienced just in a relatively short period of time. You know, increasingly, wind and solar are integral parts to the power generation for many states. They're reliable and, increasingly, a huge part of our clean energy economy.
KNOYWhere do you see them taking off the most? Because some states don't have the wind and solar resources that other states do.
SUHWell, I think market forces oftentimes drive where we actually see this generation. But in terms of the technology and where the technology is being produced, I mean, you know, these are significantly large industries for states like North Carolina, Colorado, Illinois. So, you know, it's not necessarily just the hotbeds of solar energy, like Southern California or the Southwest. It's really an opportunity throughout the country that we're seeing in the development of clean energy technologies.
SUHAnd what the president has done, by putting this out as the marker, as how the United States will finally address climate change systematically, will position the United States for being the leader -- the world leader in clean energy technologies in a way that I think will be the greatest economic boom of our generation.
KNOYKevin, go ahead. The critique that these sources are not ready to take up the enormous capacity that our economy needs.
BOOKWell, the intermittency you mentioned, Laura, is certainly a factor but it's not the only factor. What we're looking at right now is an inflection point. And perhaps we'll see that this is the day and this is the year when solar power and wind energy are going to just continue growing without any support. But right now, they're driven almost entirely by subsidies. When our team looks at what correlates most closely with the growth of renewable energy -- look at Germany, where there's enormous solar installations but virtually no sun. What's the thing that moved solar there? Well, it was government incentive programs.
BOOKSeveral of those programs are either lapsing or poised to lapse. And it will be a very interesting thing to see whether or not solar and wind energy can continue to grow in a less subsidized environment, perhaps under a Republican president. One other point here, too -- they have largely gone by without any significant backlash. And there's an interesting and perhaps ironic reason for that. Natural gas prices have kept power prices so low, because of the supply, that no one has had any reason to blame renewable energy -- wrongly, perhaps -- for raising power prices. But the backlash is starting. The utilities in many states are starting to look at the net-metering systems that pay out to rooftop and distributive generation systems.
BOOKAnd they're starting to ask whether or not it's undercutting their business models. This, again, this could be a very interesting time. It could go one way or another. And we're watching it with great interest. But it may be too soon to say that this is a definite thing.
KNOYWell, we often hear that, you know, renewable energy costs more. But we also hear, more recently -- and I think Rhea alluded to this, Kevin -- that solar energy prices are coming down, a lot cheaper than it used to be. You've got companies like SolarCity and so forth making new breakthroughs in terms of the business model. So what do you think? Is that critique that alternative energy is too expensive still on target?
BOOKWell, you can always look thinner if you get a lot of fat friends. So as power prices rise, some of the more expensive resources will start to look better. That's not necessarily an intrinsic value in its own right.
KNOYAmy, can you comment on that? And then we'll go to our listeners.
HARDERRight. Well, I think that's the whole purpose of this regulation. Obviously, one purpose is to address climate change and take a leadership role in the United Nations climate talks later this year. But another one is to help renewable energy. Now the administration doesn't like to say that they're helping one energy source over another. But by putting an implicit price on carbon emissions, which is what this regulation is doing, they're going to make sources like coal and natural gas relatively more expensive to renewables and nuclear power, which by the way we haven't discussed much. Nuclear power accounts for about 20 percent of our electricity.
HARDERThe regulation is sort of a mixed bag for that. It was a better mixed bag than the proposal was. But anyway, so the regulation is really going to help prompt renewable energy. That's the goal of the administration anyway. In the final regulation, they created this clean energy incentive program that's optional. But it incentivizes states and it gives credits to states if they act early. The administration would never call it that but this is essentially one big cap-and-trade system, where you cap the amount of emissions that you can send out into the atmosphere and trade to comply with it. It is quite -- it is one of the most effective ways to do it. It's been politically a bad word but economically, it makes a lot of sense.
HARDEROne other point about the regulation, going back to net-metering and utilities, this regulation really will help compel consumers to be more active in their electricity. A lot of people turn on their lights and expect it to be there.
KNOYCrank up the air-conditioner to who knows how cold. And some people do say that, you know, conservation really should be considered the number one alternative energy.
KNOYThat we don't do enough.
HARDERRight. And energy efficiency is actually a big part of this regulation. That's the way that the EPA decides -- comes to the conclusion that electricity bills will actually go down.
KNOYAll right. Again, you can join us at 1-800-433-8850. And first up is Cody in Jeffersonville, Ind. Hi, Cody. Thanks for calling "The Diane Rehm Show." Go ahead.
CODYHello, guys. How you all doing?
CODYIt's get -- I'm -- so I am a college student. I'm 21 years old. And I wanted to call and just kind of give my perspective, as a young person looking at this issue. And I think, on behalf of all young people my age, we have a different perspective. Because we are going to grow up into this world that is heating up. At least that's what the scientists are saying. And so, to me, the scientists are calling this the biggest environmental, you know, global crisis of our time. It would be -- you'd think that members of Congress would -- and, you know, other political leaders, would want to treat it as such. And I would like to say, thank God for President Obama and the steps that he's taking.
CODYSo I just wanted to voice my support as -- for someone who is looking to the future. And I find it very disheartening that there are so many members of Congress and other political leaders and business leaders that deny scientific fact.
KNOYOkay, Cody. Thanks for calling in. And, Kevin, I'll turn to you. The polling, young people, do we know if that generation is more concerned about this than older generations. I'm wondering about that sort of divide there.
BOOKWell, I think it's interesting. Cody is calling from Indiana. 84.5 percent of generation comes from coal in the state he's calling from right now. He's a new generation with an old coal fleet. And it'll -- he's very much part and parcel of what is starting to change. Let me give you a couple quick thoughts. One is that the president uses the phrase carbon pollution over and over again. He did it 13 times in yesterday's speech. That's not the phrase most of us who have been studying this for a long time use. We usually call it climate change or greenhouse gas emissions. It implies and imparts an urgency that may be one of the president's biggest legacies. And folks like Cody are definitely keying into it. They're feeling it and they're responding to it.
BOOKThe second thing is -- this may surprise you, since I think I may be the industry voice on your panel today -- but I believe the climate scientists. I think they may have some decimal places missing and they may have some data problems. But don't we all? The thing is that economics is also a science. And if I look at this regulation and I ask, you know, is this the most efficient route to try to deliver a tangible result? It's awfully hard to say that it is. One argument -- and I think it's the argument Amy's been making -- is that this is the first domino that moves the stack in the world. And if that's the case, that's great.
BOOKBut it may also be the case that this makes it look like climate regulation is impossibly difficult, convoluted and full of lengthy legal challenges. That may not be a very good example to set.
KNOYWell, and we are going to definitely talk later on about all the legal challenges that are being talked about. And -- but go ahead, Rhea and then back to our listeners.
SUHSo I want to pick up on this question that Kevin posed about the efficiency of this measure. You know, I mean, I think we can all maybe take a step back and say this is probably not the most efficient way that the United States can cut our greenhouse gas pollutions. That being said, you -- and Cody alluded to this in his statement -- you know, Congress has refused to act in any meaningful way and certainly in any systematic way. So in the absence of leadership, in the absence of action, in the absence of any driving force from the legislative branch, we have the executive branch that is combining both leadership and action around, again, what is essentially the most critical environmental challenge of not only our time, of generations to come.
SUHAnd so, you know, it may not be -- it may not be everything we want it to be and it may not, you know, single-handedly address and solve our climate change problems but this is a fantastic start. And it is, again, represents the most systematic approach we have ever had as a nation to combat carbon pollution. That's just extraordinary and I think we need to give it credit not only for putting down the marker but, as Amy said, signaling to other countries around the world that we mean business when we say we're going to actually address our own carbon pollution.
KNOYHow concerned are you, Rhea, about the possible costs to consumer if this new regulatory framework were to go through? Because there are estimates out there that they could go up 10, 15, 17 percent. And that not only affects your household bill but also manufacturers, who are huge users of electricity, that affects their production a lot.
SUHSo there's a lot of numbers that are going -- that are circulating out there right now. And, you know, the opposing sides have their own numbers. I mean, the numbers that I have read from the administration's own rule, the EPA analysis is saying that, you know, this rule will actually save individual families around $80 a year. Now, that may not seem a lot, particularly to, you know, people who work in the fossil fuel industry. But, you know, for regular Americans, for American families, you know, this actually does matter and it's a savings.
KNOYHow do they reach that savings? I mean, through what? I read that number yesterday and I thought, "Okay. Sounds good." How did they assume that? What's driving that cost change?
SUHWell, you know, the principal driver -- the principal reducer of costs within this whole area is energy efficiency. It's the cheapest, fastest, safest way to actually get less -- get more with less. And so I think, as Amy and Kevin both alluded to, energy efficiency is really the key driver of compliance for all of these states. And as we see our systems being operated in a much more efficient manner, we are also going to see our costs reduced.
KNOYReal quick, Kevin.
BOOKYeah, the greatest strength in the program, the way it's outlined as a money saver, is also potentially its greatest weakness. Efficiency is often presented as a negative cost. You see it listed as a -- in order of sources to reduce emissions, one of the cheapest. Because technically you'll make money by doing it. But I don't believe in a land of free money lying around on the ground all the time. There's almost always a reason why it isn't being picked up. One -- the implementation challenges and some of the incumbent infrastructure challenges can make it very difficult to realize those efficiency gains.
KNOYI'm Laura Knoy and you're listening to "The Diane Rehm Show." Again, you can join us at 800-433-8850, as we talk about President Obama's proposal to cut carbon emissions from power plants, all the impacts that might happen from that. And all of you, let's go right back to our listeners. And Tim is calling in from Pittsburgh, Pa. Hi, Tim, you're on "The Diane Rehm Show." Thanks for being with us.
TIMGood morning, Laura.
TIMLaura, I have been a big utility customer in my area for over 40 years. And they have filed many, many rate-hike requests with the Public Service Commission for this reason or that. And it seems like they've always gotten it. And it doesn't matter to me what mandate is coming from Washington, D.C. Recently, we had the Public Service Commission order my utility provider that they have to make meter readings every 30-day cycle instead of 60-day cycle, which means they had to hire more personnel. Do you realize they made us pay for it through a separate rate-hike request? Well that has nothing whatsoever to do with global climate change. They've always had...
KNOYSo what's your point about these new rules, Tim?
TIMWell, my point is that it doesn't matter, you know, whether it has to do with the environment or not. They'll always find a reason to raise our rates, you know? And they usually get it.
TIMThey've always had the capability of buying, you know, off the grid, you know, if they need more power for their customer base. Or if they have too much, they can always sell it, you know? So I, you know, regardless of what kind of fuel you're using -- so it doesn't matter to me, you know, what is going on environmentally. They'll get their prices up somehow or other.
KNOYWell, thank you for calling in, Tim. And, Kevin Book, I'm hearing some cynicism from Tim. It doesn't really matter what we do on the policy end, the companies are going to find a way to raise rates and make money. What do you think?
BOOKWell, that's not entirely, I think, a fair comment. Because at some level, the utilities are driven by local regulators -- 51 of them. The 10th Amendment gives states a lot of control here. So the federal rules are actually being structured around that very difficult contour. That's part of why there are such difficult processes that have to be gone through in this regulatory proceeding to do what President Obama wants to do. But if you think about what's raising Tim's power prices, he mentions distribution charges. And a lot of what that does is it buys reliability. I suspect that, by and large, Tim might prefer to have an occasional distribution charge, rather than a blackout. But, you know, everybody hates bills.
KNOYWell, grid reliability is also discussed in this proposal from President Obama, right, Amy? That's a big deal.
HARDERRight. That has been one of the persistent concerns throughout this year-long regulatory rulemaking. The EPA added what's called a safety valve into the regulation, which basically means that we will make sure and we will take steps with the Federal Energy Regulatory Commission, which regulates the electricity markets here in the U.S., to make sure that can ensure reliability. That has been one of the common concerns by industry and by Republicans, that Obama will cause the lights to go out. And that really -- the concern for blackouts and the concern for high electricity prices are probably what most Americans care about.
HARDERSure, there is, I would say, a growing amount of people who care about climate change. But more people care about their electricity prices and making sure their electricity stays on. I remember the blackout -- the Super Bowl blackout from a couple of years ago. And that really, for a day or two, really brought -- shined a light, no pun intended, on this whole concept of having stable electricity. So that's something that EPA has repeatedly said it will address. I think there are still some concerns in the utility industry. But I think time will tell how that plays out.
KNOYSo the words, wind and solar, a lot are in this. The term, reliability, a lot is in this. You also mentioned nuclear. And I wonder what you think, Rhea, how much does this proposal pay tribute to nuclear power -- add in nuclear power? You keep seeing wind and solar all over it but not as much about nuclear.
SUHYou know, I think the proposal acknowledges the fact that nuclear power is relatively clean compared to the other fuel sources that we're looking at. But I don't think it all gives it any preference. And the reality of nuclear power is that there are significant economic, environmental, national security risks associated with that. And all of those things need to come into play when we make decisions about our fuel sources.
KNOYComing up, more of your calls and questions on President Obama's new rules on carbon. Stay with us.
KNOYWelcome back. I'm Laura Knoy, sitting in for Diane Rehm. This hour we're gauging reaction to President Obama's new rules on power plant carbon emissions, and let's hear from you. Join us at 800-433-8850. Send email to email@example.com. Find us on Facebook or Twitter. We have three guests, Rhea Suh, president of the National Resources Defense Council, Amy Harder, a reporter covering energy and climate policy at The Wall Street Journal, and Kevin Book, managing director of research for ClearView Energy Partners.
KNOYAnd Kevin, before we go back to our listeners, I did want to ask you, also, about nuclear power and how this plan incorporates it or not.
BOOKWell, the answer is mostly not. As were saying over the break, Amy mentioned that it's doing more than the proposal did, but we're talking about 20 percent of generation fleet and a very clean 20 percent at that.
KNOYThat's a lot, 20 percent.
BOOKBut a very expensive 20 percent, too. So if you were going to build a new power plant today, you almost certainly wouldn't build a new, coal-fired power plant to meet the standards that Amy mentioned in the Clean Power Standard because it's too expensive, and it's really hard to do. You also probably wouldn't build a nuclear plant. You'd probably build a natural gas plant, or you might build wind or solar.
BOOKAnd the reason that you're not seeing more nukes is that there is no effective incentive program to offset that tremendous cost relative to alternatives. On the other hand, it is a consistently on, baseload power source, and as such, it can be very useful, particularly when you think about greening up your generation mix. So the Obama administration seems to have taken a stand. They're not saying no to nukes, they're just saying no mas.
KNOYSo cold wind and solar eventually meet the amount of power that you get now from a nuclear plant or a natural gas plant? Because, you know, like them or not, they do pump out a lot of electricity.
BOOKThe long and complicated answer is yes, but it's a long and complicated process. Solar power is on about 25 percent of the time. Wind power is on between 40 and 50 percent of the time. Nuclear power is on between 90 and 100 percent of the time.
KNOYThat gets into the intermittency and the reliability questions, Rhea. We talked about that earlier, but do you want to jump in again there?
SUHWell, I think as you've seen the market bring on more renewables throughout the last couple of years, you know, the grid's adapted to that, and you're not actually seeing the kinds of concerns that have been raised around this in reality. You know, in addition to that, as Amy said, there is not only a phase-in time that the EPA has provided to the states and the collaborative work that they're doing with the FERC, there's also a safety valve that was placed there specifically in the final rule to ensure that we wouldn't experience reliability problems in the future.
KNOYSomething that you mentioned earlier, Amy. Do you want to jump in? And then we'll go back to our listeners.
HARDERRight, well, this concept of intermittency and natural gas, there's been this long-running debate about how natural gas and renewables can get along both technically speaking, on the grid, but also here in Washington and throughout the states' legislatures throughout the country. They both kind of need each other. Most recently, they both think that they can do without one another, but it's interesting that this regulation will really kind of put to the forefront this debate.
HARDERI spoke with Marty Durbin, the president of America's Natural Gas Alliance, who was trying to downplay the fact that it should be either renewables or natural gas. And I find the debate between these two industries quite interesting. I spent some time out in Colorado, at an electricity facility of Xcel Energy, where I really did see in real time the relationship between wind and natural gas. When there was a lot of wind, they would pare down the natural gas plant, and when there wasn't a lot of wind, the natural gas plant would come back and kick in.
HARDERSo you have this interesting debate here in Washington. I think there's some conflict. I think this regulation will increase that conflict between these two industries now that the industry has put its thumb on the wind and solar scale versus natural gas. But out in the states, they are working together.
KNOYOkay, well, let's take another caller. Again, you can join us at 800-433-8850. Email is welcome, firstname.lastname@example.org. Find us on Facebook, send us a tweet, and up next is Jason in New Braunfels, Texas. Hi Jason, go ahead. You're on "The Diane Rehm Show."
JASONHey, how are you all doing?
JASONI felt bad for the young man that called in from Indiana because he actually believes that this is going to do something to alter the climate when he's my age. I'm 47, and I have a clear and present memory of being in second grade at Kirby Elementary School, writing a paper early in the school year about what I would do in the summertime when it was cold because in those days, in the early '70s, we were talking about global cooling.
JASONI can incontrovertibly prove there is absolutely no such thing as man-made global warming by asking two simple questions. Do you believe that the globe experienced an ice age, and do you think we're still in it?
JASONBecause if we're not still in it, we came of it without coal plants and nuclear plants and big SUVs here in Texas. It is junk science that leads to junk legislation, which is what this is.
KNOYOkay, Jason, thank you very much for being with us. We should address this. Go ahead, Rhea.
SUHWell it, I'm not exactly sure what to say. I mean, I don't think I'm here to debate the science on climate change. I think most people recognize that the science is pretty uniformly in agreement, that climate change is real. I think we know what's causing it, and, you know, thanks to the leadership of the president today, we know what to do about it.
KNOYDo you think most people feel that way? Because you do hear a lot of Republican presidential candidates, for example, saying, you know, this is junk science, and we shouldn't do this. It's a big hit to our economy, and it's not worth it.
SUHI absolutely think that the majority of Americans believe that climate change is real, believe that it is manmade and believe that we should do something about it.
KNOYI can see all three of you want to jump in. Go ahead, Kevin and then Amy.
BOOKI'm certainly not going to debate climate science, but I will talk a little bit about why some Republican candidates might be more inclined to argue against it. If you represents constituents who drive longer distances and lower disposable incomes in more intemperate climates, you're talking about the more exposed energy consumers, who are going to pay a larger share of their income for any carbon surcharge that they face.
BOOKAnd so it is rhetorically appealing to Republicans to be able to say this is the government getting in the way with junk science, but it also economically resonates. There's a constituency that understands.
KNOYGive us an example of a type of person in whatever state, Kevin please, that is what you're talking about there.
BOOKWell, so it's really a matter of mathematics. I mean, if you think about how much money you have in your pocket and how much you're spending on energy, on average the country is spending about six and a quarter percent of disposable personal income on gasoline, home heating and electricity. But in some states, they're spending eight or nine percent, and part of that's because they earn less, part of that's because they have a lot more energy that they have to use.
KNOYYeah, in my region of the country, New England, electricity prices are very high. So people feel it. Go ahead, Amy, and then back to our listeners.
HARDERI have looked through the comments of every -- nearly every presidential candidate, and most of the Republicans, if not all of them, don't even discuss the science of climate change. I think the rhetoric here in Washington and on the campaign trail has shifted in the last couple of years. Most Republicans, though not all, are now not really discussing this, the science. They say something like, well, I'm not a scientist, but I think this regulation will kill jobs.
HARDERNow while that isn't exactly a glowing endorsement of the regulation, it is a subtle shift for those of us who have been covering this for years that actually they're not talking about the science anymore. They're trying to shift the debate to be about jobs and the economy. But by not focusing on the science, it's almost like an implicit acknowledgement of the science. I think Jeb Bush, one of the top contenders in the Republican field, he has said that we need to address climate change somehow. Of course, he opposes the EPA regulation just as much as the other 16 Republican candidates, but I think that's been a shift since, say, the 2012 election.
KNOYYeah, I was wondering when you started to hear that shift. So just over the last couple years, Amy.
HARDERRight, in 2008, John McCain, running against Obama, now he put forth a cap-and-trade plan. He wanted to address climate change. Between 2008 and 2012, you saw this skepticism of the science come up. 2012 you saw some of that. But I see it coming back now. Now I don't say that to mean that they're going to come out in full force supporting these regulations or really any plan, but I think it's a notable shift that they're at least not denying the science, most of them, of course I should clarify.
KNOYWell, thank you for that call. And here's an email from Shayna, who says, too often when discussing regulations, we only cite the costs to industry. But Shayna says the economic impact of coal pollution is borne by taxpayers. Coal pollution kills an estimated 50,000 Americans each year. The cost of their health care treatment and lost productivity, especially when these individuals are the primary breadwinners in their families, is never factored into the conversation. These costs are enormous, making regulation a common-sense, money-saving decision.
KNOYNow I'm guessing, Amy, that that's the argument that the Obama administration made, as well, that we can talk about electricity costs going up, or not, but then there's these health care costs that also come up.
HARDERRight, the administration in its final EPA rules said that there'll be about $8.4 billion in annual costs in 2030 compared to between I think it was about $34 to $54 billion in benefits. Now I haven't crunched the numbers to see exactly how they got those big differences. I think it's definitely worth digging into. But a lot of those come back to the public health benefits of reducing other kinds of pollutants, not just carbon dioxide but things like particulate matter and things like that. And so I think that's something the administration talks about a lot.
HARDERPresident Obama's speech yesterday was less on public health and more just about the urgency of climate change and people being able to survive and having, you know, Obama's grandkids being able to go swim off the beaches of Miami and things like that. So I think -- but that's something that I think will resonate with some of these people who have traditionally thought a lot about air pollution.
KNOYYeah, go ahead Kevin, and then we'll go back to our listeners.
BOOKI think that the idea that you're talking about conventional pollutants being reduced is something that everyone can understand. On the other hand, the premise for this rule isn't really about conventional pollutants. It's a nice side benefit. Reducing coal-fired emissions of any kind, probably a good thing.
KNOYBecause of the particulates that Amy talked about, yeah.
BOOKIt seems like a strange thing to premise this on the basis of that. Most of the benefits that are being quantified, if you're talking about a climate policy, should come from climate change mitigation and the social cost of carbon, which is itself a complex and problematic debate here in Washington. Nowhere else in the country -- probably many of your listeners are, like, what is the social cost of carbon? The answer is it's a number that tries to express what the cost of climate change will be, and it plays a very big role in justifying this rule.
KNOYWell, and here's another question from a listeners about this cost issue, an email from Tony, who says, it seems to me that these proposed regulations are very regressive. It is easy to glibly dismiss rising energy bills and lowered standards of living when all basic needs have been met. This is an elitist position that ignores working people's problems. Tony, thank you for the email. Do you want to comment, Rhea?
SUHSo I really want to disagree with that point, particularly because in the final regulations, the president unveiled a plan specifically targeted at low-income communities. You know, this is -- this is a plan that makes common sense for everyday people across the country and in particular low-income communities that see their, you know, monthly electricity bills represent almost 20 percent of their annual income. I mean, that's a significant cost on a monthly basis.
SUHYou know, this plan, these incentives will actually do more than anything else we have on the books to reduce those costs, to create opportunities that not only ensure that we're reducing dangerous carbon pollution but also opportunities that actually will create good, American jobs.
KNOYOne of the items in this plan that jumped out at me, and I'll ask you about this, Rhea, again it's up to the states to meet these targets. And all of you talked about the credits and incentives that states will get. How else does the federal government envision states really taking the lead on this, and do you think that that's the right way to do it?
SUHYou know, I think this plan was ingenious in that it gave the states maximum flexibility, and I think we see even more flexibility in the final rule than we did in the proposed rule. But in addition to that flexibility, in addition to the fact that there are already states and regions of this country that are taking leadership stances around their efforts to reduce greenhouse gas emissions, you know, we are going to see now, for the first time, a framework across our country to create again a much more achievable front that we all collectively can be a part of. And each state can make up its own mind on how they would actually like to get there.
SUHI think that's -- you know, that's always been the key to these proposed regulations, and I think that will also be the key to its success.
KNOYI'm Laura Knoy. You're listening to the Diane Rehm Show. Go ahead and jump in there, Amy, on the idea that states are being empowered to take the lead on this and whether that's the right way to do it or not.
HARDERWell, one reason why EPA has put so much power to the states is because the states can do more than EPA can do under the law. I think that's one of the biggest sticking points in this regulation, is how much power EPA can do versus what the states can do. A state legislature can pass a renewable portfolio standard to help encourage renewable energy to meet that EPA regulation. EPA can't go into that state and pass a renewable portfolio standard.
HARDERSo I think that's one reason why EPA has given so much power to the states, because it can't do that much. Even in the final regulation, it dropped on part of its formula in setting that 32 percent reduction of end-use energy efficiency basically because EPA cannot guarantee that you, Laura, will turn off your lights at night and therefore save energy. It can't -- it cannot mandate that under the law, and that's why it took it out. Now, the administration won't say it quite like that, but that was one big reason why it did that. And so that's why states have been empowered to do this.
KNOYWhat does EPA do when a certain state doesn't want to do it? Because there are plenty of states that say we can't afford it, we don't want to do this.
HARDERRight, and that brings us to the politics. Senate Majority Leader Mitch McConnell, who hails from the coal-intensive state of West Virginia, has taken the unusual step of sending a letter to all governors urging them not to comply with the regulation, in part because he thinks it's on such legal shaky ground. And so you have about maybe half-a-dozen-or-so Republicans, most governors, mostly Republican governors, saying that they won't comply or threatening not to comply.
HARDERI think in the end, most will because otherwise they're going to be the ones holding the water at the end of the day if the regulation is upheld in court. But I think we will definitely see a pretty heated political battle over that.
KNOYAnd how big an if is that? I'll turn to you, Kevin. How big an if is that, if the regulation is held up in court or not?
BOOKWell, I want to touch on Amy's point about the just-say-no campaign that Majority Leader McConnell has started. I remember when that was about something else. And the...
BOOKThe argument that states should just say no means that the federal government will have to impose its own regulatory process on those states. Now, I'm a big Gina McCarthy fan, Tufts graduate, you know, I love her to death, and she found a genius way around a very difficult regulatory process, but this may be one of the weaknesses of the plan. There's now 20 states that have said either limit or refuse the compliance with the EPA plan.
BOOKIf you take the 19 states that are still in the program, because Alaska has now been sort of shunted out, you're talking about 62 percent of the emissions reductions the administration wants to get. If they said no, it's a no go. So I agree with Amy, they probably won't say no, but the fact that they can exert so much leverage over all program -- over the overall program outcomes is potentially a weakness.
KNOYWell, and Rhea, I wonder if this plan gets so tied up in the courts that nothing really happens, if ever.
SUHWell, so yesterday I was reading reports that there were a number of energy companies that were -- had already either filed lawsuits or about to file lawsuits, and, you know, I think that's quite interesting. We were talking before the show about going through the pages and pages. I mean, it's reportedly about 1,500 pages altogether. The fact that they're filing lawsuits before they've even read the actual, final rule I think gives you some indication that this is not about the rule, right.
SUHAnd I think, look, we're going to see all sorts of mischief happen on the other side, and it just is a continuation of a do-nothing approach to again our central environmental crisis of our time, and I believe that EPA has gone through an incredible painstaking process, and they've done it to the letter of the law, and this will be upheld by the courts, and it will stick.
KNOYAll right, all of you, we have to wrap it up there. Thank you very much for being here. I really appreciate it.
SUHGreat to be here.
BOOKThanks for having us.
KNOYAmy Harder, a reporter covering energy and climate policy at The Wall Street Journal, Kevin Book, managing director of research for ClearView Energy Partners, and Rhea Suh president of the National Resources Defense Council. I'm Laura Knoy, sitting in for Diane Rehm. Thanks for listening.
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