What are the prospects for Sen. James Inhofe's (R-Okla.) proposed measure to scrap U.S. EPA's mercury and air toxics rule? During today's OnPoint, Myron Ebell, director of energy and global warming policy at the Competitive Enterprise Institute, explains why he believes the Utility MACT rule should be voted down and why giving utilities extra time to comply with the regulations is not a sufficient response.
Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Myron Ebell, director of energy and global warming policy at the Competitive Enterprise Institute. Myron, thanks for coming on the show.
Myron Ebell: Thanks for having me, Monica.
Monica Trauzzi: Myron, the Senate is expected to take up a measure this month that would change the future of EPA's mercury and air toxics rule. There are two proposals that are actually being discussed on the Hill right now and the first is by Senator Inhofe and that would scrap the rule entirely. The second is by Senators Alexander and Pryor, and that would give utilities a little extra time to comply with the rule. What's your take on the proposals and the overall impact on industry?
Myron Ebell: Well, first, the House has already passed legislation with a quite significant majority to block the utility MACT rule. Senator Inhofe's resolution is brought under the Congressional Review Act and, therefore, it only requires a majority of those voting and it cannot be blocked by the Majority Leader or require a 60 vote, procedural vote. So, his is actually doable in the Senate. The Alexander Pryor legislation, I think Senator Alexander, who we might think of as the next Dick Lugar, is trying to provide cover for Democrats in tough election races to say that they're voting for something that has absolutely no chance of passage, because their bill would take 60 votes, whereas Senator Inhofe's much better resolution, which would block the rule entirely, only takes 50. The Alexander-Pryor legislation would only delay the implementation by a couple of years. So, instead of giving utilities four years, they would have six years in order to shut down their coal-fired power plants essentially.
Monica Trauzzi: But isn't that a good thing? I mean couldn't that help industry if they had a little extra time to comply and apply some of these technologies?
Myron Ebell: Sure, it could, but the fact is that there is no technology that will help these coal-fired power plants comply. So, we're just essentially extending the killing off of coal-fired power plants. This bill has no chance of passage. That's the key thing. It's only being introduced to try to peel votes off of the Inhofe resolution.
Monica Trauzzi: So, you're talking about the Alexander-Pryor bill?
Myron Ebell: Yes, it has, it would require 60 votes and there aren't, if there aren't 50 votes for the Inhofe resolution, there certainly aren't going to be 60 for the Alexander bill.
Monica Trauzzi: Senator Alexander has faced some heat for his decision to move forward with this legislation and to sort of overall support utility MACT and just give companies a little extra time to comply. What do you think the political impacts are for supporting utility MACT, for someone like Senator Alexander?
Myron Ebell: Well, I think, as I said, I would call him the next Dick Lugar potentially. I think he is setting himself up, particularly with this opposition to Senator Inhofe, to be targeted by conservatives and tea partiers in the next Republican primary in Tennessee. Perhaps he intends to retire and so he doesn't care. I think he is essentially helping some Democrats who are in very tough races in states that depend on both coal mining and coal-fired electricity. So he is doing essentially the Democrats work here.
Monica Trauzzi: He's also from a state where utilities are actively doing work on their own without these regulations, regulations aside, to sort of comply with some of these measures. So, is it really a war on coal if industry across the board is taking steps?
Myron Ebell: Well, I think his particular position, situation in Tennessee is that TVA has mostly hydropower and nuclear power. They don't have much coal-fired power. What I would suggest though it is that this is not about one particular locality, this is about our entire economy. If you want to raise electric rates for the entire economy, maybe it won't hurt your state, but if you want to raise electric rates, we are going to see job losses in manufacturing. We are going to see consumers that have less money in their pockets to spend on things like medical care and going out and traveling to Tennessee for holidays. And so I think this has to, senators need to be looking at the big economic picture. This utility MACT rule as part of a very broad effort to raise electricity prices by getting rid of coal-fired electricity and that is not good for the U.S. economy. This is going to help put us back into recession if we're not already headed back into it. And, you know, ultimately, this utility MACT rule does more harm to people's health than it does good.
Monica Trauzzi: OK, explain that, because we're talking about mercury here, which has been tied to some serious health risks.
Myron Ebell: Right.
Monica Trauzzi: So, how can you say that this is not actually going to help the health of Americans?
Myron Ebell: Well, mercury is toxic at certain levels, there's no doubt about it and it will have health impacts. This rule, however, claims almost no direct benefits from reducing mercury, because it reduces so little mercury and there's such a very small population of people who may be adversely affected by high mercury levels, not in the air, but in the water. By burning coal, you put some mercury into the air and that eventually, through chemical and biological processes, some of that gets into the water supply and that gets into fish. So the EPA has said that there is a population of subsistence fisherwomen who catch at least and eat at least 100 pounds, so maybe 200 pounds of self-caught fish each year in our most, in our waterways that have the most mercury and that this may impact their children, their intelligence for example. The direct impact, they themselves admit, is 0.6 to $5 million a year, I believe. Well, what they're claiming is this rule has some indirect benefits or co-benefits by reducing particulate matter and that those are billions and billions of dollars. I think they range from, their estimates, from $33 to $89 billion a year. But these co-benefits are what we call illusory in this new paper that CEI has brought out by my colleagues Marlo Lewis, William Yeatman and David Bier. We call it "All Pain and No Gain," because the costs are enormous. EPA estimates that there are $9.6 billion a year, but the co-benefits are already being taken care of with particulate matter by other regulations. Particulate matter is regulated by the EPA and, in fact, they are under a court order to propose new regulations and I think they were supposed to come out last week. And I don't think they did, I think they blew off the court order. But the fact is that these co-benefits are already being taken care of by other EPA rules and so this whole thing is, I think, a scam.
Monica Trauzzi: All right, so an unprecedented number of plants are expected to retire in the Northeast. But isn't that just a natural market dynamic as a result of things like low natural gas prices and many utilities actually making the voluntary or taking the voluntary steps to incorporate more renewables into their portfolios?
Myron Ebell: Well, most of those renewables are not voluntary, they're mandated by states, and they are raising electric rates. So, if you want to raise electric rates some more, let's get rid of coal-fired power plants. Yes, the fact is that some coal-fired power plants are being retired because of their age and if they don't meet EPA standards, but this means that they're not going to be building any new coal-fired power plants. And what EPA has said is, well, we'll just build a lot of gas turbines. Well, yes, but we don't know that gas is going to be cheap forever. Over recent decades gas has fluctuated quite wildly in price and I doubt that it's going to stay as low as it is now. So, if you're an American consumer that's concerned about electric reliability and about prices, you should want to keep coal in the mix. It's important and low cost and it's stable. Coal is sold by long-term contracts. It doesn't go up and down in price for utilities. They know how much it's going to cost and it's the lowest cost power, unless gas stays at these historically low levels forever, which it can't because ...
Monica Trauzzi: And EPA would argue that it is still keeping coal in the mix.
Myron Ebell: Well, that's - they're not telling the truth. They know that this whole thing, President Obama has been very clear from his campaign on that he wants to get rid of coal. The environmental groups want to get rid of coal. Sierra Club has a whole big campaign. And this, I think the key thing is people should understand it's going to raise their rates, it's going to make electric power less reliable, that is brownouts and blackouts, and it's going to undermine people's health because ...
Monica Trauzzi: All right, I want to get one final question in.
Myron Ebell: Yes.
Monica Trauzzi: If neither measure passes in the Senate, what would you consider the next steps for the utility MACT naysayers?
Myron Ebell: Well, we're going to have to keep working against several of these regulations. There isn't, it isn't just the utility MACT rule. I think if we win this vote, then we'll have a better chance. We'll have some momentum to take on the others. But we're going to have to keep fighting along several fronts.
Monica Trauzzi: All right, we'll end it there. Thank you for coming on the show.
Myron Ebell: Thank you.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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