Time for a Reality Check

Last week, President Obama announced he had cut a carbon deal with China that would require the U.S. to take drastic action to reduce emissions while asking little of China in return. While the U.S. would commit to new reductions by 2025, China’s President Xi Jinping did not commit to any emissions reductions and only pledged to try and cap emissions by 2030.

The Wall Street Journal editorial board quickly criticized the president’s unfair, one-sided deal, writing, “So using the Sino-American deal as cover, Mr. Obama will now say he is obliged to impose a new burst of aggressive carbon regulations, no matter the harm to U.S. growth. The difference is that American governance, unlike China’s, is supposed to follow the rule of law; companies can’t refuse to obey regulations because the CEO’s brother-in-law belongs to the Party. Yet most of the rule-makings to enforce Mr. Obama’s promises to China will emerge from his administrative-state tunnels like the Environmental Protection Agency without a vote in Congress.”

Central to the president’s climate agenda is EPA’s so-called Clean Power Plan – a proposal to impose new carbon dioxide mandates on the nation’s electricity sector. The Obama administration intends for this regulation to result in coal-fired power plant closures and higher energy costs – a top and well-known objective for President Obama since he was in the U.S. Senate. But perhaps the administration forgot to fully consider how the proposal would impact electric reliability. The North American Electric Reliability Corporation (NERC), the organization tasked with ensuring the reliability of the nation’s electric grid, recently warned EPA's proposal would threaten reliability and called for further detailed analysis, including of EPA's assumptions and proposed timeframes for compliance. And just last week, NERC put out an additional report outlining concerns over the plan’s reliability impacts – warning the consequences for our grid could be much more severe than any previous environmental regulation, especially when coupled with other EPA rules.

In its 2014 Long-Term Reliability Assessment, NERC concluded, “[T]he proposed Clean Power Plan impacts a larger amount of capacity (over 700,000 MW) in a relatively short time frame, potentially posing greater grid reliability impacts compared to prior environmental compliance programs. Changes in generation resources, dispatch, and delivery require comprehensive local and regional reliability assessment. … Although the Clean Power Plan may not become enforceable until 2020, its effect may overshadow and change large retrofit capital decisions needed to comply with earlier EPA regulations—primarily the Mercury and Air Toxics Standards (MATS). EPA’s base case projections, with existing regulations, indicate that total coal-fired capacity will decline rapidly from approximately 310 GW in 2012 to just 245 GW by 2016 and 243 GW by 2025.”

It’s clear Americans will get the short end of this deal. If the president’s climate agenda is successfully implemented, we will face higher energy prices, layoffs, and potential blackouts while China continues to increase emissions and grow its economy. The president’s green dreams simply do not serve the interests of the American public. Other countries with ambitious climate agendas have since come to similar conclusions. Australia repealed its expensive carbon tax earlier this year and Germany is said to be considering abandoning its climate goals, admitting, “We cannot exit from coal power overnight.” The president needs to have his own reality check.

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