This month President Obama unveiled the final version of the Clean Power Plan, the centerpiece of his climate legacy. Now that the rule is final, the president has offered states two paths forward: submit state plans or have a federal plan foisted upon you. Either path leads states to the same place: higher energy prices and lower living standards for zero climate benefits.
This is a false choice. A third path exists: states could band together and refuse to implement the rule before its legal fate is decided. This is the path our state leaders have taken. It is also the only way forward to protect the American people from the harmful effects of the president’s carbon agenda.
The final rule, which President Obama called “a historic step” to address climate change, requires states to slash carbon dioxide emissions from existing power plants by 32 percent in 2030. If the regulation does end up being memorable, it will be for how much it harms our economy and how little it helps the climate.
With a price tag of at least $366 billion, the regulation is expected to raise electricity prices by double digit percentages in 43 states. Poor families, who spend a higher share of their income on energy, will suffer the most, leaving them with less money to spend on food, housing and health care.
For all that pain, Obama’s “historic” climate rule doesn’t actually affect climate change. According to the Environmental Protection Agency’s (EPA) own climate models, the rule would limit global temperature rise by just 0.02 degrees Celsius in the year 2100.
Another critical problem is that the rule fails to recognize the work states like ours have already done to cut emissions. Greenhouse gas emissions in the power sector have fallen by 15 percent since 2005, which is halfway to EPA’s goal—and we did this on our own, without federal bureaucrats dictating to us. This shows that Obama’s carbon agenda has more to do with consolidating power in Washington than improving the nation’s air.
Given the huge costs and negligible benefits, it’s no surprise leaders in our states want nothing to do with this scheme. Each identifies key flaws with the EPA’s rule: Gov. Scott Walker points to its “staggering costs” for Wisconsin families, the Jindal administration explains how the rule “undermines the role of states,” and Ohio EPA Director Craig Butler says, “It is irresponsible to implement these rules until the courts decide if EPA has the authority.”
This last point is important. Given the shaky legal ground on which the rule rests, President Obama knows that success or failure hinges on whether states submit plans or wait. To that end, in its final rule EPA promises to “reward” states that submit early plans with emission credits they can bank or sell in a cap-and-trade system.
One effect will be to transfer wealth from coal-heavy states in the South and Midwest to Northeastern states and California, which already have carbon-trading systems—and, unsurprisingly, also have higher electricity prices.
It will also commit states to costly investments that cannot be reversed, even if the courts invalidate the rule down the road. Once utilities begin to shut down affordable power plants and build expensive wind and solar facilities, there is no going back. Any future legal victory will be Pyrrhic.
EPA claims this and other changes to the final rule result in a “fair, flexible” framework for states to craft plans. They were even nice enough to extend the deadline for “final” state plans by two years. For states that still resist, the EPA is dangling over their heads a federal plan that requires interstate carbon trading.
States should reject this good cop/bad cop routine. Any claims of flexibility and extra credit for early action is a trap to lure states into making decisions they might later regret.
Meanwhile, states should view EPA’s federal takeover as an empty threat. The president asked a Democrat-majority Congress for cap and tax authority in 2009, but lawmakers refused. Now he is attempting to seize it through the regulatory state, which legal scholars across the political spectrum agree he has no authority to do.
Many states are concerned about the president’s overreach, but have stopped short of refusing to submit plans. This wait-and-see approach is understandable. But now that the final rule is out, we see that it is in many ways even stricter and thus more expensive than the proposal, especially for Midwestern states—and it still will have no effect on global temperatures.
In the coming months, states will face pressure from EPA and special interests to sign on the dotted line, as if they have no other choice. But it doesn’t have to be this way. As our leaders have shown, refusing to submit a plan until the courts weigh in is a state’s legal right under the Clean Air Act. Divided the states fall, but united in opposition to Obama’s costly carbon agenda, the states can protect their citizens from federal overreach and higher utility bills.
Brett Healy is president of the John K. MacIver Institute for Public Policy in Wisconsin.
Rea Hederman is executive vice president of The Buckeye Institute for Public Policy Solutions in Ohio.
Kevin Kane is president of the Pelican Institute for Public Policy in Louisiana.