As momentum toward clean and alternative energy investments in the electric power sector grows, how are states that have chosen to suspend their Clean Power Plan planning balancing the demands of utilities for certainty with calls for the rule to be overturned by the courts? During today's OnPoint, Karen Harbert, president and CEO of the U.S. Chamber of Commerce's Institute for 21st Century Energy, discusses her organization's next steps as litigation on the power plan ramps up.
Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. With me today is Karen Harbert, president and CEO of the U.S. Chamber of Commerce's Institute for 21st Century Energy. Karen, nice to have you back on the show. Thanks for coming on.
Karen Harbert: Nice to be here. Thank you.
Monica Trauzzi: Karen, the chamber has been one of the leading voices opposing EPA's Clean Power Plan. Now that the rule has been stayed, have you shifted your messaging on the plan as litigation begins?
Karen Harbert: Well we are a main opponent of the Clean Power Plan, but we're in good company because there's 159 different organizations and states that have sued the EPA, and now we have -- and there's a number of amicus that have been filed, so I think the momentum continues even with the stay to show why this is wrong, how it is going to affect the economy, and the businesses are really speaking up.
Monica Trauzzi: And the institute recently released a report where you cited unreasonable renewable energy assumptions by EPA when it assigned state targets in the final rule. What do you see as the key calculation issue that the agency made?
Karen Harbert: I think that's probably plural because there's a number of flaws. This rule is interesting in that it is legally flawed, it is technically flawed, it is economically flawed, and now all of the bottom-line assumptions that EPA put into this rule have now been fun to have messy math as we call it. So it is no wonder you have all of this opposition, and now we have 166 chambers that have joined into the fight representing 40 states. That's in my book a plurality of opposition, and it's because it is so messy and incomprehensible.
Monica Trauzzi: By E&E's latest count, 19 states have indicated they will continue planning for the Clean Power Plan, 19 states have suspending planning. Are the states that have suspending their planning, are they missing out on some potential business opportunities in the clean energy space? Because there are so many states who are moving forward.
Karen Harbert: Well I think the Supreme Court got it right when they said not only are we staying it, but if it is upheld in whatever court upholds it that then EPA has to reset the clock. So they're not losing any time, and those that are actually in the planning stage right now are actually giving up some time because they're going to be afforded time later and can make more informed decisions once we understand the outcome of the legal challenges.
Monica Trauzzi: But at that point you're not talking about the EPA's timeline necessarily, you're just talking about business and investments. So are opportunities being lost?
Karen Harbert: Well business looks for certainty rather than uncertainty, and if they don't know what the final rule will look like or even if there will be one, it's hard to make investment decisions along those regards. So I think everybody is holding back waiting to see what these challenges produce. I mean this is the most challenged rule in EPA's history, so there's a lot on the line here and businesses are going to wait and see what comes out of the process.
Monica Trauzzi: But there's no denying that the momentum in the electric power sector is moving towards a changing business model, investments in alternative forms of energy, so even if the power plan is struck down by the courts, won't coal-heavy states still have to start making that pivot and that transition to cleaner energy?
Karen Harbert: Well I think we have a market shift because we have an economic shift. I mean natural gas prices, who would've thought they could be this low, and so people are investing in natural gas. We do have abundant renewable opportunities in this country. The value in this is diversity and so we don't want to back any type of fuel out of the system. We can't just eliminate coal because we can't make it up with these other sources. Everybody's seat at the table is starting to change a little bit, but everybody's still at the dinner table and that's important to realize that coal is not being backed out entirely. It is under duress from market conditions and also from the slew of EPA regulations.
Monica Trauzzi: There are states who are part of the lawsuit who have indicated they will continue planning for the Clean Power Plan. Does that weaken the argument against the plan?
Karen Harbert: Well states are going to make the decision that's right for them, whether it's a plan A or a plan B, but they're going to have to redo the planning process once this is over because things will change if EPA is directed to change things from the court system.
Monica Trauzzi: What do you make of EPA Administrator Gina McCarthy saying that the stay does not slow down the energy transition from the Clean Power Plan, that the Clean Power Plan was underpinning, and that the stay is not slowing the agency down?
Karen Harbert: Well I don't understand that because the court has spoken and I think all of us in the United States live under the legal system. So the court has said "stop, stay," and you don't need to do anything until the court system decides what the outcome of this is. So they have shown repeatedly that they are on an aggressive posture to regulate every form of energy. As late as today they are announcing another slew of regulations on the fossil fuel industry, so they're relentless. That doesn't mean they're right.
Monica Trauzzi: You used the word "relentless." A lot of this has occurred, a lot of this regulation has occurred as a result of Congress not acting. Would that be a better alternative at this point?
Karen Harbert: Well I think we've always said Congress should be involved in this, and quite frankly in this regulation the American people and the business community was left out of it because let's not forget the final rule for the Clean Power Plan is so different than the proposed rule. Nobody had a chance to comment on this. So whether it's the American people, the business community, the utilities, the industries that are being regulated, nobody had a say in this, and Congress at the end of the day will have to be the one to adjudicate this in the future.
Monica Trauzzi: But EPA says that all of those changes in the final rule came as a result of all the comments that were made about the proposed rule.
Karen Harbert: But it's hard to imagine the dramatic change in targets. If you look at North Dakota and the huge increase in reductions, you look at California that actually had a reduction in its targets, there's some things there that were just impossible to explain and EPA has not stepped forward and said "We're going to explain it to you." This is why we released a report that says what's in your target, and you look at how the math adds up. It doesn't add up. That's the problem.
Monica Trauzzi: So heading into litigation, the D.C. Circuit panel is considered to be one that's potentially more favorable to EPA, but we also know that the justices on the Supreme Court are keeping a close eye on the proceedings and the outcome. Any change in calculation or strategy on your end heading into the litigation?
Karen Harbert: Well we're really confident in our legal arguments and increasingly confident that we have shown demonstrable economic harm to a broad variety of industries and a huge swath of the economy. When you have business organizations in 40 states step forward and say "This is bad for my state," the court has to listen to some of these things. It's just unprecedented with this amount of opposition.
Monica Trauzzi: It's expected of course that after the D.C. Circuit takes this up, we'll see the Supreme Court also taking up this role, and clearly the president's pick to fill Justice Scalia's spot on the court will be a game changer in terms of the prospects of the rule. If someone like Sri Srinivasan is the pick, how good are your chances then before the Supreme Court?
Karen Harbert: Well again I think the court has demonstrated an interest in this case already by issuing the stay. It's like forecasting oil. I can't forecast the Supreme Court. That's a dangerous business, but we have supreme confidence in the Supreme Court taking this case very seriously and listening to the business voice that is so important in this argument.
Monica Trauzzi: All right. We'll end it right there. Always nice to have you on the show.
Karen Harbert: Nice to see you.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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