“EPA also intends to pursue a legislative proposal for an additional $4 billion in mandatory spending for EPA to enforce its climate change regulations … which 32 states oppose and will result in double-digit electricity price increases in 43 states.”
— Sen. Jim Inhofe (R-Okla.), Senate Environment Committee hearing on Environmental Protection Agency budget, March 4, 2015
Inhofe, chairman of the Senate Environment Committee, is a vocal skeptic of scientific research that climate change is man-made. He also has been critical of the EPA’s Clean Power Plan, which proposes new regulations to limit coal-plant carbon emissions.
Proponents of the Clean Power Plan, a flagship regulatory proposal of the Obama administration, say it will improve public health and the United States would set an example for other countries to curb carbon emissions. Opponents say the plan will have minimal impact on the environment while driving up costs for consumers. The Fact Checker obviously takes no position on the proposal.
Inhofe said 32 states oppose the EPA’s proposal and that it will result in double-digit electricity price hikes in 43 states. He repeated the 32-state figure in a subsequent hearing. Is he correct on these two points?
The Clean Power Plan was introduced in June 2014 as a part of President Obama’s Climate Action Plan. It proposes to cut carbon emissions from existing power plants 30 percent below 2005 levels by 2030.
Inhofe’s staff provided a list by the American Coalition for Clean Coal Electricity of states where governors, attorneys general, legislatures, public utility commissions and departments of environmental quality oppose the rule. The list comprises 32 states, but the actual number of “official” opponents in those states is smaller. There are 15 governors who wrote a September 2014 letter to Obama that the EPA is overstepping its authority. Of the 22 attorneys general in this list, 13 have joined a federal lawsuit against the EPA challenging the rule. State lawmakers in 18 states passed laws or non-binding resolutions against the rule. State officials opposing the rule have expressed frustration that they do not have enough flexibility to comply with the proposal, or that it would burden states.
The 32-state figure does not capture the split in some states, where officials are working on a compliance plan despite broader efforts in their states to challenge the rule. In Kentucky, for example, the attorney general is suing the EPA but the Democratic governor, utilities and environmental groups are are working on a plan to meet EPA requirements while keeping electricity rates low.
Here’s a breakdown:
- States with opposition from all five agencies: 4
- States with opposition from either the governor or attorney general: 20
- States with opposition from both the governor and attorney general: 11
- States with no stance from public utility commission or departments of environmental quality, but with opposition from governor, attorney general and/or state legislature: 10
Much of the opposition against the Clean Power Plan is along party lines, and it is difficult to find prominent sitting Republican state leaders who support it. But rule-making agencies are less likely to vocally oppose it, in part because they are responsible for carrying it out if the legal and political challenges fail.
As for price hikes, Inhofe’s staff cited a study commissioned by industry groups that oppose the Clean Power Plan. It found that if every state complied, energy prices would increase between 9 to 18 percent in every state (with double-digit increases in 43 of them), partly because of up-front utility costs from investing in energy efficiency programs. Inhofe’s aides noted that this study, unlike the EPA’s analysis, considers broader impacts beyond the energy sector.
Clean Power Plan proponents criticize that study, saying it inflates the cost of energy efficiency programs by at least 63 percent, and as high as 150 percent. They say it ignores long-term benefits of energy efficiency programs that ultimately could drive actual energy bills down. It may cost more to produce cleaner energy, but consumers would pay less in bills because less energy would be generated, proponents say. (The Fact Checker previously gave Four Pinocchios to a claim by the National Mining Association that electricity prices will “nearly double” due to clean coal technology.)
The EPA says the benefits ($76 billion) by 2030 will far outweigh the costs of complying with new regulations ($9 billion). The agency estimates electricity bills decrease by 8 percent and Americans would save about $8 on average on their monthly residential bills. (Clean energy advocates say the EPA’s calculations are actually conservative.)
It’s impossible to make accurate cost projections because the rule is not yet final, and states will decide how to meet their emissions goal. Costs can vary depending on state, regional or local policymakers’ decisions.
Resources for the Future, an independent environmental research group, found that electricity prices can range from double-digit increases to as modest as one to two percent on average. “Considerable uncertainty surrounds the structure of future regulations for existing power plants under the (Clean Air Act), but it is possible that a market-based and reasonably cost-effective approach will emerge,” its study says.
Emissions and power plants can cross state boundaries, so states can coordinate with each other to lower costs. “The plan’s considerable flexibility regarding how and where emission reductions can occur is an important feature because it promotes cost-effectiveness. Whether states will fully capitalize on this flexibility is an open question,” a group of environmental economists wrote in an article published by the American Association for the Advancement of Science.
The Pinocchio Test
The Clean Power Plan is a highly politicized issue, and Inhofe’s claim reflects views of many Republican lawmakers and industry groups opposing the plan. There are many competing studies, and whether one is more credible than another largely depends on where one stands on climate change or the Clean Power Plan.
Inhofe’s count of 32 states is an aggregate count of the various governors, attorneys general, state legislatures, public utility commissions and departments of environmental quality that have expressed opposition. When you break it down by states, the 32-state figure is not as dramatic as it sounds — there are smaller groups of governors and attorneys general who have banded together to challenge the proposal.
His claim that electricity prices will increase by double digits comes from a study commissioned by industry groups that oppose the Clean Power Plan. But the claim is misleading. His estimates are on the high end of a range of cost impacts, which are mere projections at this point. [Update: Initially, we concluded Inhofe assumed the worst-case scenario, but researchers of the study pointed out to us there are higher estimates in the report.] A lot of the costs can be driven down by state, local and regional policymakers, and some of them already are working with the EPA to figure out cost-effective plans. This is a highly technical topic with many caveats yet to be sorted out.
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