Clean Power Plan: How might it work?

The Environment Protection Agency set in motion today a plan that aims to reduce the amount of carbon pollution released into the atmosphere by power plants to 30 percent of 2005 levels by the year 2030.  

"Climate change that is fueled by carbon pollution is supercharging risks — not just to our health but to our communities and to our economy and our way of life," said Gina McCarthy, the Environmental Protection Agency's administrator, during the debut.

Using the power of a White House executive order, the proposal forces change but leaves the implementation of the new measures to the states, allowing each state to find its path.  

Even before today's announcement, resistance from lawmakers and businesses alike was stiff. Some critics say the new rules go too far; others say they don't go far enough. 

However, the loudest denunciations come from the coal industry. There are about 600 coal plants in the U.S., many aging out of beneficial use, and natural gas has increased its importance in our nation's energy portfolio.  

"The administration has set out to kill coal and its 800,000 jobs. If it succeeds in death by regulation, we'll all be paying a lot more money for electricity — if we can get it," said Sen. Mike Enzi, R-Wyo. 

How can the U.S. implement these guidelines?

Will the proposed rules stand up to challenges in court and resistance from Congress?

Are the concerns over consumer prices for energy a legitimate concern?

Will this effort spur other nations to act in the fight against climate change?  

We consulted a panel of experts for the Inside Story.

Tell me about your study showing how the new EPA rule would affect access to electricity and stability of the grid.

Sue Tierney: My analysis found heavily that the nature of the rule invites flexibility. Now we know the rule has a very long timeline for compliance. I thought it would be faster. I thought that there would be milestones that would have to be met by 2020. The EPA has said the milestones are phased in over 2020 to 2029. On average over that period, there will have to be progress, and then they will have to reach the 30 percent line in 2030. This allows states a lot of flexibility.

How will these targets affect the broader economy? Will electricity prices go up?

There is likely to be a near-term increase in electric prices and a long-term decrease, leading to a net decrease over time. Here is why: Gas prices are really low, and they are likely to remain attractive. We have already seen owners of energy companies running their gas plants more and coal plants less. We are likely to see retirements of the least efficient and dirtiest coal plants because of natural gas prices being so low. Electricity prices have dipped down because of that.

It is a moment when there are a lot of serious options for companies to respond creatively. We have seen the price of renewable power like wind and solar coming down. One of the things that is essential in this portfolio is making sure that low-carbon sources like nuclear stay part of the mix. And finally, one of the reasons the EPA’s analysis shows price decreases over time is that the rule stipulates that every state has the opportunity to make end-use consumption more efficient. That will bring demand down, which also lowers prices.

What are your thoughts on the feasibility and economic impact of the new EPA rules?

Marc Morano: My take it on it would be, not only is it unnecessary — they imply that somehow this would limit hurricanes and droughts, when it would not have a global temperature impact — it would not even have an impact on global CO2. Our emissions are being dwarfed by the developing countries like India and China.

What do you say to those who argue it will spark innovation?

In the U.S., emissions are down to '90s levels due to natural gas breakthroughs. We've made bigger gains than European countries that have ratified the Kyoto Protocol. The natural gas fracking breakthrough could not have been imagined years ago. That was market innovation. The idea that we need central planning to achieve those same goals is absurd. The last thing we want to do is give people regulatory schemes that can misallocate resources. Why impose that on our economy when it cannot even lower global temperature and lessen storms?

I understand some of the environmental left is upset because there is too much flexibility and it is not as hard on companies as previous cap and trade proposals. But understand that whatever Washington does today will be different two years, three years from now. They can make everything sound nice and flexible now, but once implemented, it can expand and morph. They have expanded bureaucratic power of the unelected, and once they have it, it only grows from there.