EPA carbon rule: Trial balloons or hot air?

While the Obama administration floats the idea that it might trot out limits state carbon emissions as part of a new set of regulations from the Environmental Protection Agency, representatives for coal producers and coal-burning power plants float the idea that, whatever they are, they’re opposed.

The New York Times, among others, is reporting that the long-expected executive order will include a proposed cut in permissible carbon emissions for America’s coal-fired power plants — a cut that could be “up to 20 percent,” according to the Times.

The hope is the rule will spur states to create their own cap-and-trade programs, a market-based plan to reduce carbon pollution.

A national cap-and-trade bill stalled in the Senate in 2010.

The order will be premiered Monday, and the U.S. Chamber of Commerce wants you to know that on Wednesday, they will officially be against it.

"The Chamber is heavily engaged in the rule-making process and is preparing an aggressive response," said Matt Letourneau, a spokesman for the Chamber of Commerce.

The coal industry will have a similar opinion.

"We fully expect that whatever comes out will be overly stringent, and will be something that is not good for American consumers or businesses," said Laura Sheehan, spokeswoman for the American Coalition for Clean Coal Electricity, in a Reuters report.

Sheehan’s group represents both mining concerns and coal-fired power producers, and it has been saying since March that new rules will cost consumers in the form of higher electricity rates, and cost the country well over 2 million jobs.

The National Mining Association, a representative of some of the nation’s largest coal mining companies, has also been at it since March, spending $1 million on radio and web ads in five states to warn America of the economic pain of any additional regulation.

Of course, the industry has been wrong before, like usually. "It turns out that engineers are better at this than the lawyers expect them to be," said Andrew Holland, a former Republican legislative aide who is now an energy analyst at the American Security Project, a nonpartisan, non-profit public policy and research organization. Holland ads that since the rules take years to implement and the effects take even longer to move through the economy, the dire predictions of the industry groups have the “virtue of not being testable” before the November midterm elections.

But if the industry thinks it knows what’s coming, it is because they have been involved in the rule-making process itself. A point neither the lobbyists nor the Obama administration would debate.

But even without a lobbyist in the room, it wouldn’t be that hard to guess the outlines of the EPA’s plan.

Two states have their own cap-and-trade rules, California and Massachusetts, and each plan was signed into law by a Republican governor, Arnold Schwarzenegger and Mitt Romney, respectively. The current head of the EPA is Gina McCarthy, who was Romney’s top environmental official when the then-governor put his cap-and-trade plan in place.

The industry knows what the Romney plan looks like, they have experience working under it, and the more-diversified energy producers aren’t even that afraid of it.

“By trading on carbon credits, we’ll be able to achieve significantly more cuts at a lower cost,” said Anthony J. Alexander, president and chief executive of electric utility FirstEnergy, to the Times. “The broader the options, the better off we’re going to be.”

And speaking of options, there is another interesting trial balloon inside that same Times article.