INSIGHT: US House in new bid to rescind greenhouse gas regs

21 June 2012 14:54  [Source: ICIS news]

By Joe Kamalick

EPAWASHINGTON (ICIS)--The US House this week launched a new effort to rescind Obama administration efforts to regulate greenhouse gases, charging that they circumvent the constitutional role of Congress and pose a serious threat to US manufacturing and energy.

US refining and utility representatives joined the campaign, warning that the administration’s strict emissions mandates could put some refiners out of business, force a nationwide shutdown of coal-fired electric generation, and raise power costs that in turn would put many manufacturing facilities out of business or offshore.

In a hearing on various ongoing efforts by the Environmental Protection Agency (EPA) to restrict US emissions of greenhouse gases (GHG), Energy and Commerce Committee chairman Fred Upton (Republican-Michigan) said those policies are “acting as one more roadblock to economic recovery and job growth”.

“It’s a sad irony that the very job-creating activities this struggling economy screams out for – things like building a new factory or expanding an existing one, or boosting electric generating capacity to meet demand – are precisely what is being targeted by EPA with these burdensome GHG permit requirements,” Upton said.

Upton was referring to a series of EPA regulations issued since 2009 that limit emissions of carbon dioxide (CO2) and other greenhouse gases from automobiles and trucks and, more recently, strict limits on releases of GHGs by power plants, chemical facilities and other manufacturing industries.

He noted that in 2009 the then Democrat-controlled House narrowly approved a cap-and-trade climate change bill that would have mandated sharp reductions in US GHG emissions, but that even the large Democrat majority in the Senate quietly rejected the measure.

When that failed measure was being debated in Congress, Upton said, “EPA administrator Lisa Jackson asserted that enacting cap-and-trade legislation was a far less costly alternative to piecemeal EPA regulations seeking to achieve the same ends.”

“Administrator Jackson was right about one thing,” Upton said, “as awful as cap-and-trade energy taxes would have been, the agency’s greenhouse gas regulations are looking even worse – and EPA has only begun to roll out this regulatory agenda.”

 Congressman Ed Whitfield (Republican-Kentucky), chairman of the House Subcommittee on Energy and Power, also charged that EPA’s greenhouse gases restrictions “are a backdoor cap and tax policy that Congress has already rejected”.

 “Any action regarding climate change should rest with Congress and not unelected and unaccountable bureaucrats at EPA,” said Whitfield.

The US chemicals sector, along with a broad spectrum of other manufacturers, opposed the 2009 congressional efforts to pass a cap-and-trade GHG emissions control bill, arguing that such a law would force still more US manufacturers overseas.

“At a time of chronically high unemployment, the last thing job creating industries need is more red tape,” said Whitfield.

“But that is precisely what EPA is imposing on the economy with its greenhouse gas regulations,” he said.

Since 2009, when President Barack Obama took office, he said, “EPA has already published ... more than 1,800 pages of final rules relating to greenhouse gases, and more than 700 pages of proposed rules are pending”, he added.

Whitfield noted that EPA was invited to attend the hearing of his subcommittee, but the agency did not send a representative.

The panel did hear, however, from witnesses who were eager to weigh-in against the agency and its GHG reductions plans.

Charlie Smith, president of CountryMark Cooperative refining in Indianapolis, Indiana, warned that the raft of EPA emissions mandates would add critical costs to all refiners, “but especially for small business refiners such as CountryMark”.

CountryMark processes 27,000 bbls of crude oil daily, and Smith said that while his  refinery is small, it plays a critical role in supplying agricultural and institutional fuels in Indiana.

The multiple and layering costs of new climate regulations “put our industry in between the proverbial rock and a hard place”.

As an example of the cost burden, Smith cited EPA’s 2009 rule for mandatory reporting of greenhouse gases, requiring refiners and other facilities to install continuous emission monitoring systems (CEMS) to accurately measure a plant’s greenhouse gases.

“The EPA’s cost estimate for installation of CEMS was $9,500 [€7,500],” said Smith, “but CountryMark’s actual cost to install the required CEMS was $450,000, and first-year set up and compliance costs exceeded $750,000.”

“Over the next 10 years, the cost to comply with this rule alone will exceed $4m,” he said.

Noting that CountryMark and other refiners operate in a highly competitive commodity market, he said that “when refiners cannot pass on these [regulatory] costs to the consumer, or absorb those costs, they go out of business”.

“The result is reduced domestic refining capacity and consequently higher gasoline and diesel costs for the consumer,” he said, adding: “If domestic refining capacity is reduced, EPA regulations will actually increase US demand for imported fuels and consumer prices will increase.”

Similarly, an electric utility official warned that EPA’s new rule reducing GHG emissions from power generation plants could devastate the US economy.

Barbara Walz, vice president at the Tri-State Generation and Transmission Association in Westminster, Colorado, said that “My message is a simple one – if this rule stands, it will effectively ban the construction of new coal-fired power plants in the US and almost certainly will make more expensive”.

The new rule requires coal-fired power plants to match the much lower emissions levels from power generators run on natural gas, a standard that the utility industry contends cannot be met.

“The impacts of banning the construction of new coal-fired power plants will be far reaching and possibly devastating,” she said.

The US chemicals sector also opposes EPA’s new power generation emissions mandate (known as the Utility MACT for maximum achievable control technologies) for fear it would sharply increase electricity rates for heavy power consumers such as chemical makers, and raise demand and pricing for natural gas, the industry’s principal feedstock.

Walz said that Tri-State, which serves rural areas of Colorado, Nebraska, New Mexico and Wyoming, began planning five years ago to build a new coal-fired power plant in Kansas, which so far has cost the firm $70m and had been granted the necessary federal air permits.

But the planned power plant would not meet EPA’s new utility emissions mandate.

“The years of planning and the millions of dollars invested to develop this project may have all been for naught if EPA is allowed to use rulemaking to essentially ban the construction of new coal-fired power plants,” she said.

Upton said that he hoped testimony at Tuesday’s hearing would help build support for a House-approved bill, HR-910, that would roll-back the bulk of EPA’s greenhouse gases initiatives.

That bill would essentially revoke EPA’s authority to regulate GHG, rescind those GHG-related actions already taken, and bar the agency from regulating carbon-dioxide in the future.

The measure passed in the House in April 255 to 172 - largely in a party-line vote but with help from 19 Democrats – and is now pending in the Senate.

But HR-910 is only the latest of multiple legislative efforts in the House and Senate to roll back EPA emissions mandates.

A similar bill, HR-2401, was approved by the House in September last year with a vote of 249-169, also with the support of 19 Democrats.  The measure was handed on to the Senate that same month, but it has received no hearings or debate in that chamber.

As with so much else pending before Congress, nothing is likely to happen with HR-910 until after the US national elections on 6 November and a possible change in majority control in the Senate and the White House.

($1 = €0.79)

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy


By: Joe Kamalick
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