Shivers must have run down the spines of some congressmen and energy industry executives when President Obama pledged during his inaugural address to tackle global warming.
Climate change had been dead on Capitol Hill for a few years, even as it continued to bubble dangerously around the world. Senate Democrats could not muster the votes in 2010 to reduce carbon dioxide emissions through cap-and-trade. And later that year, Republicans captured a solid majority in the House and tried—in the name of job creation—to gut environmental safeguards.
So last month, Obama and many of his officials told America that the White House was prepared to go it alone. Storms like Hurricane Sandy and the Midwestern drought last year proved that our climate can introduce tens of billions of dollars in unexpected costs as taxpayers foot the reconstruction bill.
“Some may still deny the overwhelming judgment of science, but none can avoid the devastating impact of raging fires, and crippling drought, and more powerful storms” the president said. “The path towards sustainable energy sources will be long and sometimes difficult. But American cannot resist this transition. We must lead it.”
But what exactly do Obama’s words mean? How much money would these changes take? And can the president possibly succeed?
In short, the answers are: 1.) Crack down on aging power plants; 2.) The cost could swing between $4 billion to close to $100 billion a year but no one really knows, and 3.)Congress might actually be the least of the president’s obstacles.
First of all, the executive branch has significant leeway over power plants. The Supreme Court ruled two years ago that the Environmental Protection Agency (under the decades-old Clean Air Act) could regulate their carbon emissions without consulting Congress. House Republicans attempted last year to pass a law to forbid the EPA from limiting carbon emissions, but the threats against the agency have largely been symbolic moves that died in the Democratic majority Senate.
Roughly 40 percent of greenhouse gasses —which the scientific consensus says stir up volatile weather patterns and increase average temperatures —come from these electricity plants. And the EPA already rolled out regulations for new power plants last April.
“That’s the biggest opportunity the president has right now,” said Bob Deans, associate director of communications for the nonprofit Natural Resources Defense Council, one of 70 environmental groups that urged the administration in a January letter to crack down on power plants and block the construction of the Keystone XL oil pipeline from Canada.
The NRDC proposed a framework in December to slash pollution at existing plants 26 percent by 2020 from the 2005 levels. If the EPA adopted this platform, it would set state-specific emission rates, giving electric utilities the flexibility to reach their targets through greater energy efficiency, moving to renewable sources, and introducing forms of carbon capture and storage.
THE COST OF GOOD GLOBAL CITIZENSHIP
The NRDC estimates that the cost would be $4 billion in 2020, but it doesn’t provide any details on the expense in the preceding years. It estimates somewhere between $25 billion and $60 billion in benefits from lives saved, illnesses avoided, and the diminished effects of climate change.
But past government estimates indicate the price tag would be much higher. The 2009 cap-and-trade bill was far more ambitious than what Obama could achieve on his own, but the Congressional Budget Office projected its annual cost in 2020 would be $890 per household, or $110 billion a year. The net cost—after factoring in the benefits—would be $175 per household.
These projections vary in large part because of how the models are structured. “Models are only as good as the information you put in, only as good as the assumptions you make about your proposal,” said Scott Segal, a partner at the law firm Bracewell & Giuliani involved in the federal regulatory process.
The challenge with Obama’s strategy is that even if he bypasses Congress, he has little leverage over countries like China and India. As emerging economies grow wealthier, they depend more on automobiles and electricity. So the president can curb U.S. emissions—with the higher mile-per-gallon standards he already introduced—and move toward more sustainable energy sources, yet fail to contain climate change.
“It doesn’t matter if the carbon is emitted in China, India or the United States—it affects the climate the same,” Segal said. “If you don’t’ resolve that issue, you’re not going to create any tangible reduction in global warming.”
Environmental groups say the White House can essentially make a down payment on climate change, buy perhaps a little bit more time for Congress and other nations to reach some kind of consensus on the issue.
“If they’re creative, they can take this big first step and keep the situation from spiraling out of control,” Keith Gaby, communications director at the Environmental Defense Fund, told The Fiscal Times.
And it will take a tremendous amount of creativity. The Obama administration may not need to fight a political battle with Congress, but it will be forced to cooperate with state governments on any new power plant restrictions. Thirty of those governors are Republican.
The president has positioned the debate as a quest for jobs in the wind and solar sector, yet many states will be just as eager to protect employment in coal industries and ensure cheap electricity for consumers and businesses.
Nancy Gravatt, spokeswoman for the National Mining Association, noted any actions by the EPA would be a “multi-year effort” and her organization “intends to be actively involved in that discussion due to the impact on electricity reliability and affordability in addition to the impact on coal mining jobs.”