March 10 event: EPA rep, energy regulator clash on impact of agency’s anti-carbon rules

In a preview of an expected legal battle, President Obama’s regional environmental officer and Gov. Scott Walker’s public utility chair clashed over the economic impact of coming EPA regulations affecting carbon pollution from state power plants.

Susan Hedman, EPA’s Midwest chief, and Ellen Nowak, the new PSC chair, came down on opposite sides of the coming rules at a forum in Milwaukee last week.

Hedman said many Wisconsin companies stand poised to gain from the EPA rules because those companies produce products and systems that will be in demand nationwide.

“Wisconsin is well-positioned. Wisconsin industries are well-positioned to take advantage of the implementation of this rule,” Hedman told reporters after the event at the University Club. “If you look at companies that do energy-efficiency work and performance contracting like Johnson Controls, if you look at companies like Quad/Graphics that are leaders in combined heat and power projects, if you look at A.O. Smith, which is developing that kind of technology as well, there are really opportunities for Wisconsin businesses created here — not just in the state of Wisconsin, but to sell the kinds of products they produce to other states.”

She added: “In Wisconsin, there is no coal produced, so reducing reliance on coal is something that keeps ratepayer dollars in state, and that multiplies through the economy.”

But Nowak disagreed, estimating ratepayer costs at north of $3 billion and predicting a “devastating” impact on the state’s economy. Nowak made similar comments the next day before a Senate committee in Washington.

She also responded sharply to an audience member who asserted neighboring states are “eating our lunch” when it comes to use of wind and solar. Nowak said other states have more sunshine and wind than Wisconsin. “We aren’t Iowa; they have a lot more wind,” she said. “It’s not, ‘If you build them, the wind will come.'”

The rules, which will be finalized this summer, call for states to reduce carbon emissions from power plants – in Wisconsin’s case, by 34 percent – by 2030.

After a presentation by Hedman, Nowak and three other panel members responded. The three other panel members were: Clean Wisconsin senior policy director Keith Reopelle; Nicholas Martin, manager of environmental policy for Xcel Energy; and Todd Stuart, executive director of the Wisconsin Industrial Energy Group, which lobbies for businesses that consume large amounts of energy.

Reopelle agreed with the job-creation potential.

“If you look at all the people employed by Facebook, Google and Apple put together, it’s not as many jobs as the solar industry has created in this nation, and we could have many of those jobs in Wisconsin, plus we could see lower energy bills,” said Reopelle.

Reopelle pointed out there would also be costs to not complying.

“It’s really important to recognize that global warming is the greatest environmental threat and greatest environmental challenge to us in this century, so it’s critical to get this right, and it’s critical for our children that we get this right,” he said. “Cost is really, really important. It’s huge, but there is a huge, huge cost to not pursuing or implementing these rules. … The longer we wait to address carbon emissions from the largest stationary sources such as power plants, the more it’s going to cost.”

Panelists said the EPA’s plan ought to credit Wisconsin for investments made in energy efficiency up to now.

“Since 2000, we’ve done over $13 billion worth of infrastructure,” said Stuart. “We already gave at the office.”

Xcel Energy’s Martin offered a mixed view. He stressed that “Certainly, we’re not opposed to the goal of CO2 reduction. We’ve done a lot of that, so I’m not going to sit up here and say that can’t be done.”

But Martin said the EPA’s plan sets up “disparate goals” that “in effect, ask states that have done a lot already to do more, relatively, than states that haven’t done as much, which has the impact that the next unit of reduction is likely to be more expensive than the last.”

That’s not sending the right policy signals, he said.

“We don’t think (the plan’s deadline) recognizes the time it takes to build electricity, transmission and gas infrastructures,” added Martin.

Nowak complained the EPA’s 34 percent target for Wisconsin is “flawed” and was compiled without consulting states or utilities.

Martin, however, complimented the EPA for encouraging “an unprecedented amount of stakeholder consultation and listening to us, the states, to all the stakeholders before the rules were released, during the official comment period and continuing now.” He also praised the EPA for including flexibility in the new rules.

Hedman told the audience that states are not required to adopt the EPA’s suggested “building blocks” to achieve carbon reduction, and that they can ask for deadline extensions. She said the agency is still reviewing the more than 4 million comments it has received on the topic before finalizing the plan.

“We would expect that states would use the building blocks that would be most economically advantageous to their particular state,” she said. “Some suggest that we have to choose between a healthy environment and a healthy economy. That’s just wrong. In fact, a strong economy depends on a healthy environment and a stable climate. We can’t have one without the other.”