President Obama’s EPA Pick Threatens Market Stability

Tom Borelli

3/26/2013 10:40:00 AM - Tom Borelli

President Obama has made it clear, both in word and action, that climate-change regulation is a top priority for his second term. Putting aside the legitimate questions about the science behind climate-change alarmism, the nomination of Gina McCarthy as EPA administrator is just the latest sign that the president is determined to push a market-subverting, economy-handcuffing energy agenda on the American people.

Obama wasted no time in selecting climate change as a top priority. During his inauguration speech, he played to our emotions with the liberal talking point that failing to address climate change “would betray our children and future generations.”

Obama then went on to escalate his commitment to climate change by delivering an ultimatum that, “If Congress won’t act soon to protect future generations, I will. I will direct my cabinet to come up with executive actions we can take, now and in the future, to reduce pollution, prepare our communities for the consequences of climate change, and speed the transition to more sustainable sources of energy."

Climate-change regulation is the foundation of President Obama’s command-and-control energy policy, which will fundamentally transform our electricity market and put greater pressure on the wider economy.

Regulations targeting greenhouse-gas emissions (such as the carbon dioxide emitted from burning fossil fuels) result in higher prices for coal, oil and natural gas. Coal is by design the biggest loser with climate-change regulations, because it emits twice as much carbon dioxide as natural gas - its primary competitor for generating electricity. By raising the cost of coal through climate change regulations, Obama is forcing utilities to use natural gas and renewable energy.

With Gina McCarthy at the EPA’s helm, President Obama will have a trusted lieutenant eager to execute his command-and-control energy policy through the executive branch. McCarthy has a long history as an enforcer for climate-change regulatory strategy. Serving under then-Massachusetts Gov. Mitt Romney, she formulated the state’s Climate Protection Action Plan and headed Connecticut's Department of Environmental Protection. She headed the state’s participation in the Regional Greenhouse Gas Initiative – a cap-and-trade system for a group of Northeastern states.

Last March, working for former EPA Administrator Lisa Jackson, McCarthy’s group formulated a proposed rule to establish emissions standards for the future construction of power plants. The EPA’s proposal would essentially ban the construction of new coal power plants because the limit set for carbon dioxide can’t be met without utilities taking a huge risk on the cost of implementing unproven carbon capture and storage technology.

As the assistant administrator of the Office of Air and Radiation, McCarthy helped lead the attack against coal by developing a series of EPA regulations to reduce traditional emissions defined by the Clean Air Act.

She’ll have even more power to inflict harm if confirmed to head the EPA. Obama’s emphasis on climate change means McCarthy’s priority will be to crack down on greenhouse gas emissions like carbon dioxide, which the agency declared a dangerous pollutant in 2009. The Utility MACT Rule, in particular, is responsible for forcing a significant number of coal-fired power plants to close. For utilities, it’s cheaper to close older power plants than incur the cost of upgrading to meet new regulatory standards.

In addition to finalizing the new power plant standard this year, the EPA is expected to issue a proposed rule to address existing stationary sources of carbon dioxide, such as power plants and refineries. Utilities, confronted with a regulatory certainty that using coal is going to be prohibitively expensive, will shift more power generation to natural gas and renewable energy sources, and pass the higher costs and lower reliability of those energy sources on to average consumers already faced with high energy bills inflated by the current regulatory burden.

Command-and-control polices from Washington dictating a massive shift away from coal-fired electricity will yield a number of adverse consequences. In testimony before a congressional panel last year, an Ohio EPA official said the closing of 11 coal power plants resulted in future electricity prices that were twice that of another region in the country. He also warned of possible power shortages.

The New York Times reported that New England, which gets over half of its electricity from natural gas, recently faced an energy squeeze. The natural gas pipelines supplying the region could not keep up with a surge of demand from a cold snap. Luckily, the region was bailed out by New York’s Indian Point nuclear power plant. New England is not alone. According to the Wall Street Journal, California is struggling to find ways to avoid energy shortages because the state’s surging use of solar and wind power does not have enough backup energy from fossil fuel sources.

Following Obama’s failure to deliver on his cap-and-trade legislation during his first term, it’s clear that he is determined to keep his promise to bankrupt the coal industry. With Gina McCarthy at the helm of the EPA, he’s poised to do just that at the expense of families nationwide.