An Energy Plan to Impoverish America

By Daniel McGroarty

After one of the longer political drum-rolls in policy wonkery, President Obama announced this week the proposed new EPA rule for cutting carbon dioxide emissions to combat climate change.

The goal, expressed in 645 pages of eye-glazing detail: to cut CO2 emissions from the U.S. power sector 30 percent below 2005 levels by 2030. The 30-by-30 mantra makes for a nice sound bite, but read through the EPA press releases for a projection on how that reduction will affect average global temperatures, and you'll come up empty. That's odd, for a policy that's justified as essential to save the planet.

So, how much will the new rule prevent Earth from warming? According to modeling done using the EPA's own MAGICC model -- Model for the Assessment of Greenhouse gas Induced Climate Change -- if the U.S. stopped emitting all carbon dioxide emissions today, the impact on projected global temperature rise would be a reduction of 0.17°C by the year 2100.

Using data drawn from U.S. Energy Information Administration, if the U.S. were to reduce all carbon dioxide emissions immediately to zero, the climatological savings would be cancelled out by the rest of the world's carbon dioxide production -- in just seven years.

And that's a 100 percent reduction, not the 30 percent called for under the new rule.

If the impact on the climate is near invisible, the impact on the economy is far larger -- and immediate.

The war has already begun over the accuracy of the cost estimates for the new EPA rule advanced by the U.S. Chamber of Commerce and others, but the notion that the U.S. -- when 40 percent of the country's current electricity production comes from coal -- could weather the imposition of stringent carbon-emission standards without significant economic costs seems fantastic. Indeed, the more candid supporters of the new EPA rule celebrate just that fact: Coal will be priced into oblivion. In this view, rising energy prices will accelerate the transition to a post-petroleum energy future. The fact that ordinary Americans would be forced to cinch their own belts is a small cost to pay for planetary survival.

That leaves it to industry to speak for the average American. "Today, American policy should be guided not by a modeled crisis," said Peabody Energy, which produces 10 percent of U.S. electricity, "but by the real crisis of more than one of every three U.S. households that qualify for energy assistance," a reference to the fact that one-third of all American families now receive federal assistance from LIHEAP, the Low-Income Home Energy Assistance Program. Indeed, federal funding for LIHEAP is up more than 230 percent since 2008. With the new carbon rules in place, get ready for a future in which more than half of all Americans need federal assistance to pay their electricity bills.

Coal state Democrats like Senator Joe Manchin warned that the new rule "makes absolutely no sense and will have devastating impacts to the coal industry and our economy." But the words of a Senator serving the people of West Virginia don't count for much to people who see themselves as serving the Planet.

But to read the responses to the EPA's new rule through the lens of our fractured domestic politics doesn't tell the true story. It's through an international lens where the true costs of the new rule come into view.

Contrary to the impression conveyed in the climate change debate, U.S. and European carbon emissions are decreasing year-over-year. According to the EPA's own data, emissions per kilowatt-hour from coal-fueled electricity generation in the United States have been reduced nearly 90 percent since 1970.

That decline is more than offset by rising emissions in the rest of the world. China is on pace to build a new 500 MW coal plant every week -- for the next 30 years. And with a per-capita GDP that's 1/8h that of the U.S., China is not going to be sympathetic to suggestions that it limit its own energy growth in order to "atone" for a history of high emissions from the U.S. and Europe.

What's true for China is equally true elsewhere among the rising Pacific economies. The U.S. IEA projects that coal will supplant natural gas as the leading source for electricity generation in the 10 ASEAN nations, where energy demand is growing at more than double the global rate. Add in India, where carbon emissions are projected to rise by 60 percent from 2020 to 2040, and it's easy to see why a recent headline in the New Indian Express's editorial read: "Obama's Energy Policy to Benefit India and China."

There is absolutely no evidence that energy self-abnegation -- de-development as one of the President's advisors has called it -- on the part of the United States will spur other countries to slow their own industrialization. There's no leading by example here, if the impact on emerging economies is to stagnate at subsistence-level living.

So by all means let's look for ways to reduce carbon emissions. But we need a better plan than one that keeps tens of millions of Americans in energy poverty, puts the U.S. economy on a low- to no-growth track, and increases our energy-dependence exposure to nations that may use that leverage for political gain: All for a paper-thin reduction in projected global temperature by 2100.

For the next 120 days, the EPA's new rule is open for comment. Here's one: There has got to be a better way.

Daniel McGroarty, principal of Carmot Strategic Group, an issues management firm in Washington, D.C., served in senior positions in the White House and at the Department of Defense.

(AP Photo)

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