Economy

Kentucky, fearing impact of carbon power rule, urges EPA to rethink proposal

Steam rises from the stack of the scrubber at a coal-fired plant
Steam rises from the stack of the scrubber at a coal-fired plant MCT

Officials with the state of Kentucky say the U.S. Environmental Protection Agency needs to rethink a carbon-pollution rule announced earlier this year that could have the “most significant and far-reaching impact to environmental and energy policy that we have seen in 40 years.”

In the state Energy and Environment Cabinet’s official comments to the EPA, Secretary Leonard Peters – writing also for Gov. Steve Beshear – took the EPA to task for underestimating the impact of the proposed rule to an energy-intensive state such as Kentucky, and for bringing confusion, not clarity, to the regulatory process.

The rule would have a significant impact on jobs in Kentucky, as well as on energy prices paid by manufacturing companies and individual homeowners, the state said.

John Lyons, assistant secretary for climate policy in the Energy and Environment Cabinet, said that Kentucky was the most electricity-intensive state in the country in terms of the amount of energy used to develop $1 of state-level gross domestic product. That’s a function of the state’s heavy manufacturing sector that includes the automotive, steel and aluminum industries.

But the EPA didn’t properly account for that, he said.

“You need to do a robust economic analysis, and we point out to them that we don’t think they’ve done that,” Lyons said in an interview. “They do a national average. A rule like this has such a potential to impact the state that they needed to dig deeper.”

The formal comment submitted by the Beshear administration was just one of more than 1.6 million that came in before the EPA’s deadline earlier this week. The EPA was overrun with mass comments from environmentalists who applaud the rule and opponents who say the EPA is overstepping its authority.

Scattered among the masses of often-repetitive comments were detailed submissions from trade and environmental groups, as well as state governments, such as Kentucky’s 28-page analysis.

The proposed “clean power” rule is a centerpiece of a major push by the Obama administration to help the United States – and the planet – attack climate change by reducing the amount of carbon pollution pumped into the air.

The rule was announced amid fanfare in June, and President Barack Obama and EPA Administrator Gina McCarthy have repeatedly talked up its benefits, saying it would be a net plus for the economy and a boon to public health, helping to reduce asthma and other respiratory ailments.

The administration also has rebutted charges from Republicans in Congress and officials in many states that the EPA doesn’t have the legal authority it needs to push the rule. Kentucky Attorney General Jack Conway is one of a dozen attorneys general from across the country who are challenging the rule on legal grounds.

All of that could make for a showdown between the president and Republicans, who come January will control both sides of Congress and are intent on pushing the EPA back on this and other rules. The EPA hopes to finalize the rule in June.

The comments from the Kentucky governor, a Democrat, and his cabinet follow a different path.

Despite what it says are “legal uncertainties” surrounding the issue, “we felt it necessary to provide constructive comments in case the rule remains intact as proposed,” the state said.

David Doniger, director of the climate and clean air program at the Natural Resources Defense Council, an environmental group, reviewed the Kentucky submission. And while he didn’t agree with all of Kentucky's analysis, he found the comments to be “from a state government that is trying to be constructive.”

“Unlike some states that are just positioning themselves as standing in the school-house door, Kentucky’s comments are intended to work within the program and raise issues that would lead to adjustments – but not throw the whole thing out,” Doniger said. “I don’t want to sound over-confident, because this will be a big fight next year. But I do think the president will prevail, and that’s why it makes sense for the state to assume it will go forward.”

The Kentucky comments were highly detailed, and revolved around the impact of the proposal on the state’s economy and its power sector, as well as on the EPA’s rule-making process.

For example, the state said the EPA “has likely under-estimated the costs to many states’ economies.” That includes what the state says would be heavy coal-related job losses in Kentucky, as well as rising electricity costs. The effect “will be a worsening of the poverty already dominant in eastern Kentucky.”

“Kentucky’s eastern coal region is suffering already, and we will experience even greater loss of employment and production as other states take action to comply with the proposed rule,” the state said. “We urge EPA to conduct a proper and thorough analysis of the economic impacts of the rule on local communities.”

On the state’s power sector, there are already 23 coal-fired boilers – roughly a third of the state’s total – that are scheduled to be shut down between now and 2020, the state said. Those are generally being shut down to comply with new federal regulations on mercury emissions.

Their closure will result in real greenhouse gas emission reductions that should be factored in when considering whether the state is in compliance with the EPA’s long-term carbon targets, the state said.

Kentucky also asked the EPA to use a different set of numbers in calculating its carbon targets. The EPA used 2012 as its base year for calculating carbon emissions – but that year’s numbers were skewed by weather issues and low natural gas prices; using 2012 could result in higher costs of compliance. Kentucky is asking the EPA to use a three-year average figure as it calculates its targets.

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