Op-EdAppeared in The Hill on August 18, 2015By Sarah K. Magruder Lyle and Alfredo Ortiz

Obama’s ‘Clean Power Plan’ hurts economy

Affordable, dependable energy is crucial to everyone, especially the poor, the elderly, those on fixed incomes, and local institutions like schools and hospitals.  Anything that makes energy more expensive and less dependable should be viewed with disdain.

A case in point is a slightly revised version of EPA’s 111(d) Rule, better known as the Clean Power Plan, that President Obama announced last week will go forward. The administration’s plan to federally manage the electricity system and impose higher energy costs on everyone is bad news for American citizens, the economy, and job creation.

The plan requires states to reduce carbon emissions by nearly one-third from 2005 levels by 2030. States will be left with little choice but to implement a carbon tax, cap-and-trade, or dramatic energy efficiency mandates in order to achieve this target, making this one of the most expensive EPA regulations ever.

The administration says the rule is necessary to reduce carbon emissions that cause climate change. But carbon emissions have already dropped by 10 percent since 2005. This development is largely because of the country’s increased use of natural gas, as a result of the domestic shale gas revolution.

The Clean Power Plan, however, ignores this development and instead includes mandates and quotas to move from traditional energy to renewable energy forms like wind and solar. The problem is that energy sources must be sustainable and while that may be the case in the future, wind and solar make up less than 5 percent of the electricity supply today.

The transfer from productive energy forms to relatively unproductive forms puts the nation at a competitive disadvantage with other countries in terms of creating economic activity. It also threatens the reshoring of manufacturing jobs that has occurred in recent years as companies are drawn to the U.S. to take advantage of our relatively cheap energy.  For instance, as of June of this year, chemical companies have announced 238 new projects in the U.S., valued at over $145 billion dollars, which will create over 383,000 direct and indirect jobs by 2023.  The administration should not be creating policies that will increase costs to manufacturers and deter this much-needed economic growth.

In fact, the U.S. Chamber of Commerce and the National Economic Research Associates estimate that the Clean Power Plan proposed by EPA last year would cost the economy tens of billions of dollars each year. The president’s version, which requires even larger reductions in carbon emissions, is likely to have an even bigger negative economic impact.

The most obvious victim of the rule will be coal plants, many of which will need to shut down in order for states to come close to reaching EPA’s ambitious targets. This is another step towards the president’s 2008 election promise to “bankrupt” the coal industry, despite the fact that millions depend on coal as their main electricity source.

The rule’s ramifications go beyond just impacting the 80,000 Americans who work in the coal industry and the hundreds of thousands more employed servicing them. By leaving states with seemingly no other options than to try and transfer to relatively unproductive energy sources, this rule will jack up the price of electricity – by double-digits in NERA’s estimate.

Given that almost everyone pays for electricity – both directly and indirectly (as an input in other products) – this rule will hit the wallet of nearly every American. And because the economically disadvantaged spend around three times the percent of their incomes on energy as the rich, the law will disproportionately hurt them. So much for the president’s talk of reducing income inequality.

Rather than plowing forward with such a burdensome regulation, the administration and EPA should support the principles behind the reduction in carbon already taking place by allowing energy development to occur under a sensible and transparent regulatory environment.

A flourishing energy sector is a major engine of the economy, providing the country with power, producing hundreds of thousands of good jobs, and keeping the environment clean. The Clean Power Plan is a step backward – moving us farther away from this vision.

Magruder Lyle is vice president of Strategic Initiatives, American Fuel & Petrochemical Manufacturers and member of the Job Creators Network and its National Women’s Coalition advisory board. Ortiz is the president and CEO of the Job Creators Network.