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Opinion Why the EPA’s new power plant rules are a diversion from serious climate policy

Today the Environmental Protection Agency will unveil proposed regulations to limit greenhouse gas emissions from existing coal-fired power plants.  According to news reports, the proposed regulations will require a emission reductions of 30 percent by 2030 and give states a significant degree of flexibility in how to meet the targets, allowing the creation of regional cap-and-trade regimes as an alternative to direct regulation of sources. Should states fail to cooperate, EPA will impose regulatory controls directly.  

This proposal represents the most far-reaching and aggressive effort to curb GHG emissions since the EPA was given authority over such emissions by the Supreme Court in Massachusetts v. EPA.  It will spur fights in Congress, as Republicans and red-state Democrats seek to block it, and (once finalized) faces uncertain prospects in court.  Yet even if these rules survive the inevitable challenges, they promise to do very little about the underlying problem of climate change.  Indeed, this proposal demonstrates the difficulty of enacting meaningful climate policies — and how most of today’s climate policy efforts are off course.

Requiring existing coal-fired power plants to reduced their emissions by 30 percent (technically, 30 percent from 2005 levels) is significant, but it’s a tiny fraction of the emission reductions necessary to achieve atmospheric stabilization, and could actually make achieving this ultimate goal more difficult.

The Obama administration’s stated policy goal is to achieve 80 percent reductions by the year 2050.  Consider that coal-fired power plants are responsible for approximately three-quarters of the GHG emissions from the power sector.   Yet as ambitious as the EPA’s proposed regulations are supposed to be, the proposal does not even cut these emissions by a third, and coal plants modified to meet these standards will remain in place for years, potentially decades.

Over time, existing plants will be replaced with cleaner facilities — in many cases, coal will be replaced by natural gas, potentially making EPA’s other proposed rules on new plants irrelevant — but this still only cuts emissions in half.  Replacing all coal power plants with natural gas would still fall short of the 80 percent goal — and would do nothing about emissions from existing gas plants that are part of the emissions baseline.  Energy conservation and efficiency improvements can help reduce emissions further, but news reports say that EPA is already anticipating letting states fold such emission reductions into the 30 percent target.

Why is meeting the 80 by 50 target so difficult?  Reducing emissions 80 percent below 2005 levels requires reducing emissions to their lowest point in a century.  This is an “exercise in unreality.” Specifically, it means reducing emissions to the approximate level of 1910, when the nation’s population was only 92 million people and per capita income was below $6,200. By 2050, however, the population of the United States is expected to exceed 400 million, meaning that per capita emissions will need to be more than 75 percent below their 1910 level—somewhere in the neighborhood of 2.4 tons of carbon-dioxide-equivalent per year—or to levels not seen since the end of Reconstruction. Even nations that derive much of their electricity from carbon-free sources, such as nuclear power, come nowhere close to this level. 2.4 tons per year is close to the per capita GHG emissions of nations such as Grenada and Botswana.  Such emission reductions require nothing short of a technological revolution — the sort of revolution today’s regulations will do little if anything to help bring about.

Yet as difficult as it is to meet the 80 by 50 goal, much more is required to stabilize atmospheric concentrations and stem global warming.  We cannot lose sight of the fact that global climate change is a “global” problem.  The climate changes about which we are concerned are the result of increases in the global concentrations of carbon dioxide and other greenhouse gases.  What matters for future warming is the overall level in the atmosphere.  So if global emissions are not reduced, and the global atmospheric concentrations are not stabilized, warming will continue apace.

Historically, the United States was the largest GHG emitter, but it’s not anymore.  The U.S. has been overtaken by China, and emissions will increase dramatically in less-developed countries as they industrialize.  Well over a billion people around the world lack access to electricity, and much of this demand will not be met with carbon-free technologies.  Addressing emissions worldwide is essential to atmospheric stabilization, and this requires developing technologies that will enable people around the world to have access to affordable electricity without increasing GHG emissions.  This is a tall order.  Alternative energy sources will play a role, but renewable sources account for little over ten percent of all energy generation in the world today, and existing technologies are a long way off from being able to substitute for a substantial share of fossil fuel generation.

The stark reality is that the world will not come close embarking on a course toward stabilizing atmospheric concentrations of GHGs until it is heap and easy to do so.  And this, even more than meeting the 80 by 50 target, requires a technological revolution in energy production 0r carbon mitigation.  Such transformations are possible — consider how fiber optics and then satellite and wireless replaced traditional copper wire for telecommunications — but they are rarely driven by regulatory mandates.  And although tradeable emission credit schemes are supposed to incentivize innovation, there’s little empirical evidence that such programs have actually achieved this goal.

Clean-energy innovation cannot be imposed, but it can be encouraged  If policymakers are serious about meeting the climate challenge — and  are more interested in atmospheric stabilization than expanding EPA control over energy use — they should focus their efforts on policies that will encourage the development and deployment of clean energy technologies.  Among the policies I’ve endorsed are technology inducement prizes, as a supplement to or substitute for traditional R&D funding, policies that remove regulatory and other barriers to technology deployment (such as those that have plagued Cape Wind), and a revenue-neutral carbon tax.  Such policies would be just a start, but what they have in common is that they would increase the economic incentive to develop and deploy clean energy technologies.

Encouraging technological innovation does not guarantee atmospheric stabilization, but neither does the current regulatory course.  What it does, however, is at least create the possibility that stabilization could be achieved — something that piling on round-after-round of regulatory mandates can’t even promise.  The bottom line is that if we want to achieve atmospheric stabilization, we have to make it possible — and it will only be possible with dramatic technological innovation.  Thus encouraging and accelerating such innovation must be the dominant focus of any serious climate policy.  Today, however, innovation is nothing more than an afterthought.

Postscript: Some readers may object that climate change is not a serious problem. Given my libertarian leanings, it would be convenient to hold this view, but I do not.  While some environmental activists exaggerate the certainty or severity of some climate-related threats, I believe climate change is a serious policy concern, albeit one that policymakers do not take seriously. Those on the right pretend its not a problem, while those on the left pretend as if old-fashioned regulatory strategies have a prayer of addressing the problem.  Both are mistaken, and as a consequence little of any import gets done.