Rules will create jobs, clean air and modernize outmoded utilities

There is great deal of confusion about new EPA regulations affecting coal-fired power plants, and also opposition to regulations that could lead to plant closings or loss of jobs.

Yet, as the business community has argued for years, the merits of regulatory proposals must be judged by comparing their overall benefits and costs to society and by focusing on only some economic effects they might have.

Let’s consider some facts:

First, the Obama administration is not advocating the closure of all coal-fired power plants. It has proposed new public health standards in response to court mandates, and, yes, some could lead to closure of older, inefficient plants.

One of these standards addresses how much toxic air pollutants, such as mercury, can be released from coal-burning plants. Another sets limits on “cross-state pollution,” such as fine particles, nitrogen oxides and sulfur dioxide, generated by these plants that also affect public health.

Actions to lower these emissions have been debated since 1990 when Congress authorized the EPA to regulate them. The Obama rules, issued in 2011 under court order, require more extensive reductions than comparable rules under the George W. Bush administration that federal courts in 2008 found to be unacceptably weak.

Second, these new regulations take effect this year, and they clarify what is expected of electric utilities after years of uncertainty. This is a positive development for the industry.

Third, the EPA anticipates that most plants can meet the standards using available technology, and that these changes are likely to create tens of thousands of jobs in the construction and pollution-control industries. The rules also will improve labor productivity throughout the economy because fewer days will be lost to respiratory illnesses.

Let’s put some numbers on these benefits. EPA reports that each year these two regulations together would prevent as many as 18,000 to 46,000 premature deaths, 540,000 asthma attacks, 20,000 heart attacks, 25,000 hospital and emergency room visits, and 2 million missed work or school says, while providing important health protection for children and older Americans.

Using standard economic analysis, the agency values these benefits at between $150 billion and $380 billion a year; they clearly exceed the estimated $10 billion annual costs of compliance for the industry. Even if one quarrels with the accuracy of these estimates, it is apparent that the health benefits are much greater than the costs to utilities.

In a separate and more controversial proposal, the EPA seeks to set the first limits on greenhouse gas emissions from new power plants, an action required under a 2007 Supreme Court decision. The high court ruled that under the Clean Air Act the agency must regulate the release of greenhouse gases if they endanger the public welfare, which they do.

The Obama administration has long preferred a legislative solution, such as a cap-and-trade policy, over regulation, but Congress could not agree on such a policy. Now the administration is forced to use regulation.

The proposed New Source Performance Standards are indeed likely to end new construction of conventional coal-fired power plants as utilities will choose natural gas over coal or eventually adopt carbon capture technology. However, this new rule does not affect existing facilities, and new plants will have years to comply.

Some utilities do plan to shut down coal-fueled boilers at existing plants. This makes economic sense given the abundance and low cost today of cleaner natural gas.

Critics in Congress and elsewhere have demanded that the EPA back off, but they exaggerate the costs and ignore the enormous benefits for public health.

It’s time for the electrical generating industry to modernize its plants and give us the clean energy we deserve in the 21st century. It should not continue to use outmoded and dirty technologies to produce electricity.

Contact Kraft, professor emeritus of environmental studies at the University of Wisconsin-Green Bay, at kraftm@uwgb.edu.