Louisiana policy and business leaders have only just started to review the Obama’s administration’s plan to reduce carbon emissions from the nation’s power plants by 30 percent from 2005 levels by 2030. But the 645-page proposal is already drawing mixed reaction as to how it will impact the state.
The new rule released on Monday (June 2) places the nation’s 600 or so coal-fired plants directly in its crosshairs as one of the largest sources of carbon pollution.
If implemented, experts predict the standard could lead to widespread closures of coal plants and reshape how and where the country gets its power. They’re also expected to prompt a wave of legal and legislative opposition in coming months.
The rule has a more nuanced implication in Louisiana, where coal plants support only about 13 percent of electricity demand.
While that demand is vast, particularly along the Mississippi River industrial corridor, the state gets the majority of its power from cleaner burning natural gas plants with a small share of nuclear power.
It is also a leading producer of natural gas, a commodity that’s expected to become the fuel of choice as power producers wean themselves from coal.
Chuck Barlow, vice president of environmental policy and strategy for Entergy Corp., which provides power to 2.8 million customers in Louisiana, Mississippi, Texas and Arkansas, said the EPA proposal sets “stringent” targets for carbon emissions reduction, but it is not expected to lead to debilitating costs or closures for the company. The New Orleans-based utility only generates about 10 percent of its power from coal plants.
Barlow said the company is still reviewing the regulations to ensure that goals for reducing carbon pollution are rational. For example, Entergy wants power produced by its nuclear plants, which have no carbon emissions, to cancel out pollution from power produced by dirtier plants under the new standards.
“We feel like we’re in a good position to go forward here,” Barlow said. “But the targets still have to be reasonable.”
The EPA rules sets pollution goals at the state level, rather than for each power plant. States are given a number of routes to meet the new standard, including adjusting their power generation mix to include emission sources such as solar and wind, and joining regional programs where they can buy and sell permits to pollute, so called “cap and trade” programs.
Louisiana congressional members were quick to condemn the new plan. The regulation represents President Barack Obama’s decision to use his authority under the Clean Air Act to reduce emissions linked to climate change after his legislative proposals failed to make it through Congress during his first term.
Sen. Mary Landrieu, D-La., chair of the Senate Energy Committee, reiterated her view that Congress, not the EPA, should set carbon emission standards.
Louisiana Republicans, including Sen David Vitter, Rep. Bill Cassidy of Baton Rouge, Steve Scalise, R-Jefferson and Gov. Bobby Jindal, all criticized the proposed regulation.
Local policy leaders echoed that criticism.
Eric Skrmetta, the Republican chairman of the Louisiana Public Service Commission, which oversees electric power utilities statewide, said he’s doubtful the EPA will take a hands-off approach to the way states plan how they meet the new standards.
Skrmetta said the U.S. risks losing hundreds of thousands of jobs and economic loss in exchange for a marginal reduction in the air pollution. In a report released last week, the U.S. Chamber of Commerce claimed the rule could result in 224,000 jobs lost and $50 billion in annual costs.
“These rules are economy killers and it will affect the economy of Louisiana one way or another,” Skrmetta said, adding he will support any decision by the state to fight the new rule in court.
Louisiana may not have many coal plants, but it is connected to the national power market, which will see rising electricity prices as hundreds of coal plants close, he said.
He said Louisiana’s natural gas power plants could be called on to support demand in other parts of the country, straining local supply, particularly for industrial users.
He noted many industrial users sign contracts that allow utilities to switch off their power when demand peaks among residential users in exchange for lower rates. That could become more common, he said.
Ratepayer advocates say such concerns are overblown.
Casey Demoss Roberts, executive director of the Alliance for Affordable Energy, a New Orleans-based advocacy group, said the Obama administration’s plan calls for a gradual phase out of coal plants, not immediate closures.
“If every coal plant shut down today there would be an issue. But if we can plan this out, which is what this rule is doing, then it’s phasing out” coal power, Roberts said.
Roberts added states have flexibility to plan what power plants are the cheapest to run and to use methods such as investing in energy efficiency to meet standards. That benefits customers, she said.
The EPA has “a very good way of reducing the nation’s carbon emissions in an affordable way,” she said.
State environmental groups largely welcomed the EPA’s proposed guidelines, which they see as a key step in reducing greenhouse gases linked to global warming.
Marylee Orr, executive director of the Louisiana Environmental Action Network, which includes more than 50 local environmental organizations among its members, said the new program is long overdue.
“We are at a time in the history of our country and our world where we must no longer talk about the impact of climate change, but take concrete actions to reduce greenhouse emissions to help the health and the economy of our state, nation and world,” Orr said.
If the new rules take effect, power producers are expected to rely increasingly on natural gas to fuel new and existing power plants in coming years.
That’s good news for Louisiana oil and gas companies that produce natural gas, but a concern for manufacturers that rely on the commodity.
Dan Borne, president of the Louisiana Chemical Association, said the industry “uses natural gas like a baker’s shop uses flour.”
Borne said a historic low in natural gas prices afforded by the U.S. fracking boom has given the industry an unprecedented advantage over the rest of the world, one that could last for decades if supply and demand remain balanced.
He said the EPA rules threaten to shift the scales and prompt a spike in gas prices.