(Part 2 of EPA Carbon Dioxide Rules discussion)

EPA’s proposed rule to reduce carbon dioxide emissions has been covered by the national news media but, more often than not, the reports are somewhat confusing. Let’s start with the different sets of numbers being reported by EPA. The EPA set the national reduction target at 30 percent by 2030, using 2005 as the starting point. A more conventional way of saying the same thing would be to set a reduction target of 20 percent by 2030, using 2012 as the starting point (the latest year with complete data). Oddly, given the reductions from 2005 to 2012, it seems that EPA is attempting to mandate a transition that is already well underway.

Other numbers presented by the EPA are based on a 2012 starting point. These are the state by state goals that vary widely from over 70 percent for Washington to around 10% for North Dakota. The target number for North Carolina is about 40 percent. So why is the carbon dioxide reduction target for NC two times the national average of 20 percent? Why are some states required to do little and other states required to spend billions? As the governor of a state (where little action is required) reportedly said, “The EPA has given our state a wonderful gift and we don’t know why.”

Apparently, the answer lies in EPA’s formula that determines that state’s “ability” to reduce carbon dioxide emissions. The more the state’s “ability” (as determined by the EPA), the more the requirement. In determining “ability”, it appears the formula places a heavy emphasis on a state’s access to interstate natural gas pipelines that might enable new natural gas power plants to be built. There are many other factors as well.

Also, the EPA formula has some unexpected “quirks”. The EPA formula apparently uses the physical location of power plants with no regard to the utility that built them or the location of the load served from that power plant. For example, an $800 million wind farm located in North Dakota but built by a Minnesota electric utility to serve load in Minnesota is apparently credited only to North Dakota. The financial impacts of those “quirks” in the EPA formula could cost a state’s consumers billions of dollars in additional compliance costs.

Even if you agree with the overall goal on reducing carbon dioxide emissions, it’s hard to understand and support the EPA’s state by state formula that results in reduction targets that range from minimal to draconian. It really seems counter-productive, arbitrary and unfair.

Do you have a question or comment about the new EPA rules for carbon dioxide? Suggestions for future topics? Please submit them to MAC@wemc.com.

To read Part 1 and Part 3 of the EPA Carbon Dioxide Rules discussion, click here.

 

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