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Great Lakes Metro Chambers Testimony on Proposed Carbon Rules

 

  

 

 

  Statement of the Great Lakes Metro Chambers Coalition

 

FOR:  Statement for the Record on the U.S. Environmental Protection Agency’s Proposed “Clean Power Plan” - Docket No. EPA-HQ-OAR-2013-0602

 

 TO:  U.S. Environmental Protection Agency

 

 BY:  Edward Wolking, Executive Director

 

 DATE:  August 1, 2014

 

My name is Ed Wolking, Executive Director of the Great Lakes Metro Chambers Coalition.  I am speaking on behalf of a mega-regional coalition of nearly forty chambers of commerce.   The twelve-state Great Lakes trading region is the heart of our nation’s manufacturing base, accounting for 35% of U.S. manufacturing output and 40% of U.S. manufacturing jobs.

 

I am here to raise our concerns regarding the proposed regulations on reducing CO2 emissions for existing power plants.  We are concerned that the proposed regulations will greatly disrupt our manufacturing economy through state-to-state disparities, higher electricity prices, price volatility, and grid destabilization.

 

The proposed regulations will have enormous impacts on coal-fired power as we know it today.  Coal provides affordable, reliable base load power, crucial for attracting and retaining our manufacturers.  It provides continuous 24-7 power that can be concentrated in large amounts at individual large sites, again essential for manufacturing. 

 

Manufacturing and coal together are critically important to our region.  Manufacturing makes up a large part of our states’ gross domestic product, from 12% in Pennsylvania to 28% in Indiana[i].  Coal provides more than half of the Great Lakes region’s electricity[ii], up to 84% in Indiana.  Coal has many benefits over other sources of fuel:  it is abundant, easy to transport, energy-dense and again, reliable and affordable. 

 

What can replace coal? Even though wind and solar may be growing, they are less energy-dense, and utilities are still grappling with how to integrate these intermittent sources into the power grid without jeopardizing its stability. Nuclear could provide a stable, affordable alternative – and we favor its safe deployment - but there has been little political will to develop new nuclear plants.  Indeed, the EPA has identified more than 6% of the nuclear power capacity in this country as "at risk of retirement,” and several of those plants are in Illinois.[iii]

 

Like coal, natural gas is also an abundant resource, but has its limitations. Natural gas is not always available for “just in time” delivery during extreme weather events.  We witnessed this last winter during the polar vortex, when firm contracts for home heating took away supplies for electricity generation[iv]. As reliance on natural gas for electricity generation increases, price volatility will also increase, and electricity prices will rise. Rising and volatile prices can be especially detrimental to industrial users, for which electricity is as important an input to production as any raw material. 

 

Although the proposal does not mandate any single method for meeting the CO2 target, it clearly directs states to adopt energy policies that shift electricity generation from coal to other energy sources, such as renewables.  We recognize the role that renewable resources can play in generating a portion of our electricity needs.  In fact, all of our Great Lake states have already deployed renewable resources to support a portion of their electricity generation.  Unfortunately, these early actions are being used by EPA to support more aggressive targets for increasing amounts of renewable energy deployments and generation in states.  Nearly every Great Lakes state will need to at least double its deployment of renewable energy generation by 2029 from its 2012 levels, and two Great Lake States (Ohio and Pennsylvania) will have to increase their renewable energy by nearly eight fold. These targets will be very difficult to meet and illustrate the unfair and uneven impacts of the proposed rule.

 

Moreover, some states, like Pennsylvania, produce more electricity than is consumed[v], exporting it to other states.  Should Pennsylvania be punished for electricity consumption elsewhere?

 

Another troubling area is the 1.5% annual reduction target for energy consumption by state.   EPA apparently believes that a 1.5% savings from efficiency policies is achievable.  EPA seems to be missing the fundamental connection between economic growth and energy consumption.  As a state’s economy improves, so too does its energy consumption, which leads to increased CO2 emissions.  Will a state be penalized if it has worked hard to build a growing economy? 

 

Over time, strong economies produce higher living standards and general improvements in environmental quality – not the regulations themselves.  Our nation’s leaders are publicly committed to a competitive, world-class manufacturing sector.  A critical factor in our manufacturing resurgence is a competitive and improving energy position.  Do we want to sacrifice that advantage? 

 

Our manufacturers need a reliable supply of electricity at stable prices in order to be competitive.  Half of our region is in the PJM Interconnection RTO, which already has the largest amount of planned coal-fired power plant retirements[vi].  These proposed regulations will accelerate this trend faster than the grid can adapt in the current electricity marketplace.

 

For these reasons, we urge the EPA to:

 

  1. Fully utilize all of our energy resources.  Keep the Administration’s pledge of an “all of the above” energy strategy that truly seeks to maximize the net benefits of coal.  Commit to strong, results-oriented funding levels for the National Energy Technology Laboratory, which is leading the way with cutting-edge R&D on clean coal technologies.

     

  2. Fully commit to carbon capture and sequestration (CCS) technologies and workforce retraining.  Meaningful federal investment in CCS technology, as well as beneficial reuse of carbon, must be connected to the implementation of the requirements on coal-fired generation.  We need a skilled workforce to keep up with these significant changes and mitigate likely job displacement.  The EPA must engage all other agencies and all stakeholders to construct a realistic pipeline of technology and people to achieve environmental goals and build a growing economy.

     

  3.  Not penalize states for their success.  This is a national issue.  Our energy production and consumption does not start and stop at state borders.  Compliance must not disproportionately penalize one state at the gain of another.

      

  4. Carefully consider whether the benefits are worth the costs.   The current course of CO2 emission reductions will produce similar positive results as would the proposed regulations over the same time as technology improves and replacement capacity comes on line.  Already, China has made significant improvements in its coal-fired fleet by importing American clean coal technologies.

 

Thank you for the opportunity to share our concerns today.

 



[i] National Association of Manufacturers, “US Manufacturing Statistics - Manufacturing & Trade Data By State” http://www.nam.org/Statistics-And-Data/State-Manufacturing-Data/Manufacturing-by-State.aspx (July 9 2014)

[ii] Energy Information Administration, http://www.eia.gov/state/ (July 9 2014)

[iii] Thomas Content, “Kewaunee closing makes Wisconsin's task to meet EPA rules tougher,” Milwaukee-Wisconsin Journal Sentinel, June 14 2014

[iv] Julie Wernau, "Utility bill spikes caused by lack of electric, gas coordination, experts say," Chicago Tribune, July 9, 2014

[v] Energy Information Administration, “Pennsylvania State Energy Profile,” http://www.eia.gov/state/print.cfm?sid=PA (July 9 2014)

[vi] "Coal Plant Retirements: Feedback Effects on Wholesale Electricity Prices," The Brattle Group, November 2013