The EPA Train Wreck Scott Manley Director of Environmental & Energy Policy Wisconsin Manufacturers & Commerce Contact: PO Box 352, Madison, WI 53701. Tel:

The EPA Train The EPA Train WreckWreckScott ManleyScott Manley

Director of Environmental & Energy Director of Environmental & Energy PolicyPolicy

Wisconsin Manufacturers & Wisconsin Manufacturers & CommerceCommerce

Contact: PO Box 352, Madison, WI 53701.Tel: 608.258.3400; email: [email protected]

The EPA Train WreckThe EPA Train Wreck A series of environmental regulations targeting A series of environmental regulations targeting

coal-fired electric utility and industrial boilers.coal-fired electric utility and industrial boilers.

New Ozone StandardNew Ozone Standard Cross State Air Pollution Rule (CSAPR)Cross State Air Pollution Rule (CSAPR) Utility MACTUtility MACT Industrial Boiler MACTIndustrial Boiler MACT Greenhouse Gas (GHG) RegulationGreenhouse Gas (GHG) Regulation New SO2 StandardNew SO2 Standard New NO2 StandardNew NO2 Standard PM2.5 Standard ImplementationPM2.5 Standard Implementation Various Water Intake & Effluent RulesVarious Water Intake & Effluent Rules Coal Ash RegulationsCoal Ash Regulations

The EPA Train WreckThe EPA Train Wreck The “Train Wreck” rules individually will add The “Train Wreck” rules individually will add

considerable cost to manufacturers and considerable cost to manufacturers and utilities, but the cascading impacts of these utilities, but the cascading impacts of these rules are likely to be devastating.rules are likely to be devastating. "So if somebody wants to build a coal-powered plant, they "So if somebody wants to build a coal-powered plant, they

can. It's just that it will bankrupt them because they’re can. It's just that it will bankrupt them because they’re going to be charged a huge sum for all that greenhouse gas going to be charged a huge sum for all that greenhouse gas that's being emitted." --that's being emitted." --Barack Obama, January 17, 2008Barack Obama, January 17, 2008

"Under my plan of a cap-and-trade system, electricity rates "Under my plan of a cap-and-trade system, electricity rates would necessarily skyrocket. Coal-powered plants, you would necessarily skyrocket. Coal-powered plants, you know, natural gas, you name it, whatever the plants were, know, natural gas, you name it, whatever the plants were, whatever the industry was, they would have to retrofit their whatever the industry was, they would have to retrofit their operations. That will cost money. They will pass that money operations. That will cost money. They will pass that money on to consumers."  --on to consumers."  --Barack Obama, January, 2008Barack Obama, January, 2008

The EPA Train WreckThe EPA Train Wreck

President Obama’s cap-and-trade President Obama’s cap-and-trade approach for bankrupting coal plants approach for bankrupting coal plants failed in Congress – the Democrat-failed in Congress – the Democrat-controlled Senate would not even bring controlled Senate would not even bring the bill to a vote in the 2009-2010 session the bill to a vote in the 2009-2010 session of Congress.of Congress.

The “Train Wreck” rules appear to be a The “Train Wreck” rules appear to be a surrogate vehicle to achieve the goal of surrogate vehicle to achieve the goal of making the use of coal economically making the use of coal economically untenable.untenable.

The EPA Train Wreck:The EPA Train Wreck:Wisconsin in the CrosshairsWisconsin in the Crosshairs Wisconsin typically produces between 65-Wisconsin typically produces between 65-

70% of its electricity from coal.70% of its electricity from coal. Wisconsin has the second-most Wisconsin has the second-most

manufacturing intensive economy in the manufacturing intensive economy in the U.S.U.S.

Manufacturing accounts for 18% of Manufacturing accounts for 18% of Wisconsin’s annual economic output.Wisconsin’s annual economic output.

Industrial ratepayers are the largest class Industrial ratepayers are the largest class of electricity consumers in Wisconsin.of electricity consumers in Wisconsin.

Manufacturers need affordable energy to Manufacturers need affordable energy to remain competitive.remain competitive.

2000-2010 Industrial Electric Rates: Wisconsin vs. Midwest Average

3.50

4.00

4.50

5.00

5.50

6.00

6.50

7.00

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Ele

ctri

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ate

(cen

ts p

er k

Wh

)

Wisconsin Midw est Average

Midwest Industrial Electric Rate Trends: 2000-2010

0

10

20

30

40

50

60

70

80

WI IN OH MI MN IA IL MO MidwestAvg

Per

cen

t In

crea

se Inflation: Net Change in CPI 2000-2010

Source: U.S. Department of Energy, Bureau of Energy Information

WI Manufacturing Jobs vs. Industrial Electric Rates: 2000-2010

3.50

4.00

4.50

5.00

5.50

6.00

6.50

7.00

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Ele

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c R

ate

(cen

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)

400

425

450

475

500

525

550

575

600

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g J

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Industrial Electric Rate Manufacturing Jobs

New Ozone StandardNew Ozone Standard

Obama Administration EPA proposed a new Obama Administration EPA proposed a new ozone standard between 60-70 parts per ozone standard between 60-70 parts per billion (ppb).billion (ppb).

Current ozone standard of 75 ppb set in 2008.Current ozone standard of 75 ppb set in 2008.

EPA proposal would have placed much of EPA proposal would have placed much of Wisconsin (and the US as a whole) at risk of Wisconsin (and the US as a whole) at risk of being an ozone nonattainment area.being an ozone nonattainment area.

Nonattainment area = nearly impossible for Nonattainment area = nearly impossible for new or expanded power plants or factories.new or expanded power plants or factories.

New Ozone StandardNew Ozone Standard The EPA proposal would be incredibly The EPA proposal would be incredibly

expensive – up to $1 trillion per year expensive – up to $1 trillion per year between 2020 and 2030, and 7 million lost between 2020 and 2030, and 7 million lost jobs by 2020 (Manufacturers Alliance jobs by 2020 (Manufacturers Alliance Study).Study).

Dodged a bullet (for now): President Obama Dodged a bullet (for now): President Obama recently announced no new ozone recently announced no new ozone standard…standard…

But…Clean Air Act process requires another But…Clean Air Act process requires another review in 2013, so relief may be temporary.review in 2013, so relief may be temporary.

Cross State Air Pollution Cross State Air Pollution RuleRule

Requires severe NOx and SO2 reductions of Requires severe NOx and SO2 reductions of power plants to address air quality impacts power plants to address air quality impacts in downwind states.in downwind states.

Phased compliance horizon beginning in Phased compliance horizon beginning in January of 2012 (impractical timeline).January of 2012 (impractical timeline).

Wisconsin utilities were under-allocated the Wisconsin utilities were under-allocated the amount of emission “allowances” they need amount of emission “allowances” they need to operate, making a difficult rule even to operate, making a difficult rule even worse.worse.

Nationally, expected to cost up to $120 Nationally, expected to cost up to $120 billion by 2015.billion by 2015.

Utility MACTUtility MACT

Imposes very stringent limits on mercury Imposes very stringent limits on mercury and other hazardous pollutants from utility and other hazardous pollutants from utility boilers.boilers.

EPA to finalize the rule in November of EPA to finalize the rule in November of 2011.2011.

Will require compliance within a three-year Will require compliance within a three-year timeframe.timeframe.

Nationally, cost estimates range from $261 Nationally, cost estimates range from $261 billion to $358 billion.billion to $358 billion.

CSAPR & Utility MACT:CSAPR & Utility MACT: Wisconsin Cost Study Wisconsin Cost Study

American Coalition for Clean Coal American Coalition for Clean Coal Electricity commissioned a cost study Electricity commissioned a cost study for these two rules.for these two rules.

Used NERA model – same as U.S. DOEUsed NERA model – same as U.S. DOE

Projected electric rate increase in Projected electric rate increase in Wisconsin of 21.7% by 2016.Wisconsin of 21.7% by 2016.

Estimated 24,500 lost jobsEstimated 24,500 lost jobs

Industrial Boiler MACTIndustrial Boiler MACT Like the Utility MACT rule, requires stringent Like the Utility MACT rule, requires stringent

reductions in mercury emissions from industrial reductions in mercury emissions from industrial boilers.boilers.

EPA rule on hold after major pushback nationally EPA rule on hold after major pushback nationally from industry and lawmakers.from industry and lawmakers.

EPA rule presents virtually impossible EPA rule presents virtually impossible compliance requirements for many facilities.compliance requirements for many facilities.

Nationally, expected to cost more than $100 Nationally, expected to cost more than $100 billion, and result in 800,000 lost jobs.billion, and result in 800,000 lost jobs.

In Wisconsin, paper industry job losses expected In Wisconsin, paper industry job losses expected to hit 7,500, with likelihood of 11 mills shut down to hit 7,500, with likelihood of 11 mills shut down -- $680 million overall cost for the rule.-- $680 million overall cost for the rule.

GHG RegulationGHG Regulation Regulates GHG emissions from “large” Regulates GHG emissions from “large”

facilities under the Clean Air Act.facilities under the Clean Air Act. Applies primarily to power plants and Applies primarily to power plants and

larger factories.larger factories. New regulation with no commercially New regulation with no commercially

available compliance technology – available compliance technology – creates significant regulatory and cost creates significant regulatory and cost uncertainty.uncertainty.

Projected to reduce GDP by $500 billion Projected to reduce GDP by $500 billion by 2030, and result in 2.5 million lost by 2030, and result in 2.5 million lost jobs.jobs.

GHG RegulationGHG Regulation Regulating CO2 under the Clean Air Act is Regulating CO2 under the Clean Air Act is

projected to increase prices:projected to increase prices: Gasoline – 50% increaseGasoline – 50% increase Industrial Electricity – 75%Industrial Electricity – 75% Residential Natural Gas – 75%Residential Natural Gas – 75%

Litigation Pending: If EPA’s effort to Litigation Pending: If EPA’s effort to narrow scope of rule is found to be illegal, narrow scope of rule is found to be illegal, and its GHG regulations must be applied and its GHG regulations must be applied consistent with the plain language of the consistent with the plain language of the Clean Air Act, costs go up to $7 trillion and Clean Air Act, costs go up to $7 trillion and 800,000 lost jobs each year.800,000 lost jobs each year.

EPA Train Wreck: Next EPA Train Wreck: Next StepsSteps

These EPA rules beg for reform of the federal These EPA rules beg for reform of the federal Clean Air Act, and reform of the federal Clean Air Act, and reform of the federal rulemaking process in order to put elected officials rulemaking process in order to put elected officials in charge of decisions involving hundreds of in charge of decisions involving hundreds of billions of dollars and hundred of thousands of billions of dollars and hundred of thousands of jobs.jobs.

Public needs to be vocal with concerns with Public needs to be vocal with concerns with federal elected officials – political solution will not federal elected officials – political solution will not happen if voters remain silent and unaware.happen if voters remain silent and unaware.

Talk to your lawmaker, and urge your friends, Talk to your lawmaker, and urge your friends, family and coworkers to do the same. Be assured family and coworkers to do the same. Be assured that environmental groups are sending loud that environmental groups are sending loud messages in the opposite direction.messages in the opposite direction.