The ACE Up the EPA's Sleeve

COMMENTARY Energy Economics

The ACE Up the EPA's Sleeve

Aug 29th, 2018 3 min read
Nicolas Loris

Former Deputy Director, Thomas A. Roe Institute

Nick is an economist who focused on energy, environmental, and regulatory issues as the Herbert and Joyce Morgan fellow.
American families and businesses should not be burdened with costly, ineffective climate change regulations. querbeet/Getty Images

Oh the climate change-inspired regulations imposed on power plants they are a-changin’.

The Environmental Protection Agency has released its Affordable Clean Energy (ACE) rule, a vastly preferable alternative to the Obama administration’s Clean Power Plan (CPP). The proposed rule will be just as ineffectual as CPP in combatting climate change, but its minimalist approach offers many advantages.

For starters, the ACE regulation would actually abide by the rule of law. Both the CPP and ACE seek to reduce carbon dioxide emissions from operating coal-fired power plants. ACE would empower states to set limits on these nonhazardous, nontoxic emissions at their source — the power plant — using the best technology available.

CPP, on the other hand, offered compliance options — such as increased renewable energy — that had nothing to do with coal-fired power plants. Lawyers argued that such an approach blatantly exceeded the EPA’s regulatory jurisdiction.

For example, Montana Public Service Commissioner Travis Kavulla argued that, by eschewing a plant-specific approach, the CPP “essentially ignore[d] the details of a state’s situation, and instead applie[d] a cookie-cutter formula.”

The Obama administration wanted to let government regulators re-engineer America’s energy portfolio. Doing so would have raised electricity bills and done damage throughout the economy. Bullet dodged.

Another significant advantage of ACE over CPP is its willingness to tackle the New Source Review program. Adopted in 1977, New Source Review requires that new energy producing facilities — and existing facilities that make “major modifications” — go through an extensive and costly permitting process and install the best available pollution control equipment.

What constitutes a significant modification is subjective under the rules. Despite multiple administrative attempts to clarify the meaning, it remains murky.

That’s a problem. Plant upgrades can improve efficiency and reduce operating costs, thereby reducing emissions and lowering electricity bills.

But companies will forgo these investments because of the costly and lengthy environmental review it would trigger. Or, if the plant makes a modification it thinks is minor, the EPA could contest that it was a major modification, dragging that company into years of litigation, not to mention millions of dollars in fines.

And this is all supposed to improve plant efficiency.

Apparently, Democrats and Republicans can agree on energy efficiency improvements only when they’re mandated by the federal government. Yet, when a company wants to invest in new, innovative technologies to reduce costs and emissions, it’s suddenly taboo. What gives? The EPA is right to make NSR less of a nuisance.

Despite all of the welcome differences ACE has to CPP, the two rules do have one noteworthy similarity: Neither would make a dent in averting global warming. Even if implemented to perfection for the rest of this century, the change in the earth’s temperatures wrought by either regulatory regime would be practically undetectable.

So why is the Trump administration moving forward with a new approach? Because the Supreme Court demands that it “do something.” In 2007, the highest court declared that carbon dioxide and other greenhouse gases are pollutants and mandated the EPA to regulate them if the agency determined they threatened public health and the environment.

Two years later, EPA Administrator Lisa P. Jackson signed an endangerment finding saying just that. The endangerment finding provides the legal basis for climate change regulations and requires the EPA to act.

Several climatologists have argued that, while the Earth is warming and human-made emissions are contributing, the climate models used to justify the endangerment finding and project catastrophic climate scenarios don’t match up with climate realities. The Competitive Enterprise Institute, a Washington, D.C. based think tank, has petitioned the EPA to reopen and reconsider its 2009 finding.

As elected officials, members of Congress should step up and recognize their role as well. Prohibiting the EPA from regulating carbon dioxide and other greenhouse gas emissions would send the right message: that American families and businesses should not be burdened with costly, ineffective climate change regulations.

This piece originally appeared in The Washington Times