For Some States, New Emissions Rules Will Force A Power Shift
Almost as soon as President Obama's new plan to limit carbon emissions was unveiled, opponents were lining up to oppose it. The new rules would require states to lower their carbon emissions by nearly a third over the next decade and a half.
The rules will deal a big blow to some energy sectors — especially coal. But there are also industries that will benefit from the plan.
Right now states are largely free to meet their electric power needs as they see fit. And Dan Kammen, professor of energy at Berkeley, says they tend to do it in lots of different ways.
"We have places that are almost entirely coal, like Wyoming. We have places like Vermont and California that are almost entirely hydropower, gas and renewables. And so it's very diverse," he says.
The rules introduced by Obama on Monday would still allow states to generate power in their own way — as long as they reduce carbon emissions by 32 percent from their 2005 levels over the next 15 years.
That won't be so hard for some states because they are already pretty far along on reducing emissions. But for others it will be more difficult.
States that rely heavily on coal will have to make especially big changes in the way they generate power, says Daniel Simmons, vice president of the American Energy Alliance.
"The way that you achieve the biggest reductions in carbon dioxide emissions is to not use coal and to shift to other fuels, so coal will be the hardest hit," he says.
The coal industry is already hurting in part because of the nation's big switch to natural gas, and there's been a run of coal company bankruptcies. The new rules could accelerate that.
Even as states are forced to pivot away from coal, they will face incentives to use cleaner energy sources such as wind and solar, as well as natural gas and even nuclear power. And renewable energy companies will benefit. Simmons says states will actually have an easier time complying with the new laws if growth slows down.
"If the economy is going very well, it makes it very much more difficult because demand continues to increase," he says.
Simmons says one of the big reasons carbon emissions have fallen since 2007 is that the economy went into a major recession. Whatever the outcome of the regulations, they are certain to be challenged legally.
Michael Wara, associate professor of law at Stanford University, says a lot of states will probably line up to contest the rules in court. But he also notes that a lot of others will support them.
"There are a lot of states that have state climate policies that face higher electricity costs in part because of that and want to see a more level playing field," Wara says.
Whether the new regulations will survive the court challenges is an open question. Wara says the administration is invoking part of the Clean Air Act that allows it to regulate air pollution, but he says critics are likely to challenge the use of the law as overly broad. And it's not clear how the courts will decide.
"I'll tell you, the Supreme Court has sent a series of mixed signals with respect to how they feel about the greenhouse gas regulations that the Obama administration has rolled out over the past few years, and at this point I think it is uncertain," Wara says.
But Kammen says that over time opposition to the regulations will probably dissipate. He says with the very low price of natural gas and the economic incentives provided by the administration to develop renewable fuels, states have a lot to gain from the new rules.
"So I would expect there will be some high-profile cases that emerge, but I think that they're likely to fade," Kammen says.
He says the environmental goals will ultimately align with economic trends.
If that happens, however, it will take awhile. And in the meantime the regulations will require sweeping changes in the way some states generate power — and in the industries they rely on to do so.
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