Faithful readers of this column will recall that during FIA’s Annual Lobby Day in April, forgers warned policymakers about looming proposals from the U.S. Environmental Protection Agency (EPA) to regulate greenhouse gases (GHGs) from both new and existing coal-fired power plants that could severely impact the entire U.S. manufacturing economy, including forging. It turns out we were right to be concerned.
In addition to finalizing regulations to address GHG emissions from new coal and gas-fired power plants, the EPA has now proposed far-reaching regulations for existing coal-fired power plants. For the masochists among you, the 600-page proposal can be found by going to the EPA’s website.
The existing power-plant proposal would require states to reduce their power-sector CO2 emissions 26-27% by 2020 and 30-32% by 2030, on average, from 2005 levels. Importantly, those reductions could not be met by regulation of coal-fired facilities alone, so other manufacturers – like steel and forging – would almost certainly be targets.
Under Section 111 of the Clean Air Act, the EPA may create a list of categories of stationary sources that emit pollutants it believes cause or significantly contribute to a public health or welfare danger. Under Section 111(b), the EPA may then promulgate performance standards for new facilities within the source category. Section 111(d) allows the EPA to require states to submit plans establishing performance standards for existing sources within a source category.
However, the EPA’s proposal to control CO2 emissions from existing coal-fueled generators is like no other performance standard it has ever proposed for coal generators or any of the 40-plus source categories it has regulated. In fact, the EPA’s proposed standard would require states to fundamentally alter the way power is generated and made available to electricity consumers. This requirement goes well beyond the EPA’s authority, and it would have significant negative consequences for the U.S. economy, including manufacturing in general and forging in particular.
The EPA’s proposal contains predetermined goals for reducing CO2 in each state and sets forth a suggested “best mix” of electricity generation and energy-efficiency resources to meet those goals. Under the EPA’s best mix of resources, states would need to require that: coal generators improve their efficiency by 6%; natural gas generators run at 70% capacity (a rate achieved by only 10% of gas generators today); utilities significantly expand their use of renewable resources by EPA-determined amounts; and that customers cut electricity usage by EPA-determined amounts.
Although the EPA says states would be free to formulate their own plans to meet the goals – by varying the mix of natural gas, renewable and energy-efficiency resources – one thing is clear: No state could achieve these goals through technological or operating improvements at coal-fired facilities alone. Therefore, any state plan would require wholesale changes to how the state’s utilities provide electricity to the public.
In addition, the proposal allows states to hold “other entities” legally responsible for actions under the plan that will, in aggregate, achieve the emission performance level. This means that not only will energy-related sectors beyond fossil fuels be incorporated into the regulatory regimes, but other sectors beyond energy may be incorporated into state compliance programs. Heavy manufacturers like steel, forging and others will no doubt be first on a state’s list for further action to reach their EPA-set goals.
FIA supports regulations that are cost-effective, technologically achievable and allow for a robust “all-of-the-above” energy strategy. By contrast, the EPA’s proposed GHG regulations for existing power plants are a precedent-setting overreach that would raise energy costs substantially and severely impact the global competitiveness of U.S. manufacturers, including forgers, while providing miniscule impacts on the planet’s climate.
FIA is working closely with the Partnership for a Better Energy Future, a broad coalition of energy producers and consumers urging the current administration to withdraw this proposal in its current form. We are also supporting legislation in Congress that would require the EPA to certify that any proposed GHG regulation on coal-fired power plants is technologically feasible and would not cause undue harm to the economy.
Laurin M. Baker, Founder & President • The Laurin Baker Group, LLC. Washington, D.C. • FIA Washington Representatives
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