[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
EPA'S CARBON PLAN:
FAILURE BY DESIGN
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
JULY 30, 2014
__________
Serial No. 113-89
__________
Printed for the use of the Committee on Science, Space, and Technology
Available via the World Wide Web: http://science.house.gov
______
U.S. GOVERNMENT PUBLISHING OFFICE
89-418 PDF WASHINGTON : 2015
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COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY
HON. LAMAR S. SMITH, Texas, Chair
DANA ROHRABACHER, California EDDIE BERNICE JOHNSON, Texas
RALPH M. HALL, Texas ZOE LOFGREN, California
F. JAMES SENSENBRENNER, JR., DANIEL LIPINSKI, Illinois
Wisconsin DONNA F. EDWARDS, Maryland
FRANK D. LUCAS, Oklahoma FREDERICA S. WILSON, Florida
RANDY NEUGEBAUER, Texas SUZANNE BONAMICI, Oregon
MICHAEL T. McCAUL, Texas ERIC SWALWELL, California
PAUL C. BROUN, Georgia DAN MAFFEI, New York
STEVEN M. PALAZZO, Mississippi ALAN GRAYSON, Florida
MO BROOKS, Alabama JOSEPH KENNEDY III, Massachusetts
RANDY HULTGREN, Illinois SCOTT PETERS, California
LARRY BUCSHON, Indiana DEREK KILMER, Washington
STEVE STOCKMAN, Texas AMI BERA, California
BILL POSEY, Florida ELIZABETH ESTY, Connecticut
CYNTHIA LUMMIS, Wyoming MARC VEASEY, Texas
DAVID SCHWEIKERT, Arizona JULIA BROWNLEY, California
THOMAS MASSIE, Kentucky ROBIN KELLY, Illinois
KEVIN CRAMER, North Dakota KATHERINE CLARK, Massachusetts
JIM BRIDENSTINE, Oklahoma
RANDY WEBER, Texas
CHRIS COLLINS, New York
BILL JOHNSON, Ohio
------
Subcommittee on Research and Technology
HON. LARRY BUCSHON, Indiana, Chair
STEVEN M. PALAZZO, Mississippi DANIEL LIPINSKI, Illinois
MO BROOKS, Alabama FEDERICA WILSON, Florida
RANDY HULTGREN, Illinois ZOE LOFGREN, California
STEVE STOCKMAN, Texas SCOTT PETERS, California
CYNTHIA LUMMIS, Wyoming AMI BERA, California
DAVID SCHWEIKERT, Arizona DEREK KILMER, Washington
THOMAS MASSIE, Kentucky ELIZABETH ESTY, Connecticut
JIM BRIDENSTINE, Oklahoma ROBIN KELLY, Illinois
CHRIS COLLINS, New York EDDIE BERNICE JOHNSON, Texas
BILL JOHNSON, Ohio
LAMAR S. SMITH, Texas
C O N T E N T S
July 30, 2014
Page
Witness List..................................................... 2
Hearing Charter.................................................. 3
Opening Statements
Statement by Representative Cynthia Lummis, Chairman,
Subcommittee on Energy, Committee on Science, Space, and
Technology, U.S. House of Representatives...................... 9
Written Statement............................................ 10
Statement by Representative Eddie Bernice Johnson, Ranking
Member, Committee on Science, Space, and Technology, U.S. House
of Representatives............................................. 11
Written Statement............................................ 12
Witnesses:
The Honorable Jeffrey Holmstead, Partner, Bracewell & Giuliani
LLP
Oral Statement............................................... 14
Submitted Biography.......................................... 16
The Honorable Charles McConnell, Executive Director, Energy &
Environment Initiative, Rice University
Oral Statement............................................... 23
Written Statement............................................ 25
Mr. David Cash, Commissioner, Massachusetts Department of
Environmental Quality
Oral Statement............................................... 78
Written Statement............................................ 81
Mr. Gregory Sopkin, Partner, Wilkinson, Barker, Knauer LLP
Oral Statement............................................... 89
Written Statement............................................ 91
Discussion....................................................... 116
Appendix I: Answers to Post-Hearing Questions
The Honorable Jeffrey Holmstead, Partner, Bracewell & Giuliani
LLP............................................................ 146
The Honorable Charles McConnell, Executive Director, Energy &
Environment Initiative, Rice University........................ 153
Mr. David Cash, Commissioner, Massachusetts Department of
Environmental Quality.......................................... 156
Mr. Gregory Sopkin, Partner, Wilkinson, Barker, Knauer LLP....... 158
Appendix II: Additional Material for the Record
Report submitted by Representative Eddie Bernice Johnson, Ranking
Member, Committee on Science, Space, and Technology, U.S. House
of Representatives............................................. 178
Report submitted by Representative Elizabeth Esty, Committee on
Science, Space, and Technology, U.S. House of Representatives.. 234
Report submitted by Representative Randy Neugebauer, Committee on
Science, Space, and Technology, U.S. House of Representatives.. 245
Graphs submitted by Representative Larry Bucshon, Committee on
Science, Space, and Technology, U.S. House of Representatives.. 297
Article submitted by Representative Randy Neugebauer, Committee
on Science, Space, and Technology, U.S. House of
Representatives................................................ 300
EPA'S CARBON PLAN:
FAILURE BY DESIGN
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WEDNESDAY, JULY 30, 2014
House of Representatives,
Committee on Science, Space, and Technology,
Washington, D.C.
The Committee met, pursuant to call, at 10:07 a.m., in Room
2318 of the Rayburn House Office Building, Hon. Cynthia Lummis
[Chairwoman of the Committee] presiding.
[GRAPHIC] [TIFF OMITTED]
Chairman Lummis. Good morning. The Committee on Science,
Space, and Technology will come to order.
Welcome to today's hearing titled ``EPA's Carbon Plan:
Failure by Design.'' In front of you are packets containing the
written testimonies, biographies, and truth-in-testimony
disclosures for today's witnesses.
And without further ado, I now recognize myself for five
minutes for an opening statement.
Today, we are examining one of the most sweeping regulatory
proposals in American history. The EPA is attempting to take
control of our nation's electric system without legal or
scientific justification. The EPA's Clean Power Plan reaches
well beyond the regulation of power plants. The EPA wants to
control the entire system, right down to the amount of
electricity Americans use in their homes.
The implications of this overreach really are staggering.
The rule has the potential to shut down power plants across the
Nation, raise energy prices, and threaten energy security. And
I submit for what? The EPA admits that the rule will have
little or no impact on global warming. In this case it appears
to be regulation in the name of climate change but it is just
regulation in the name of regulation, Federal control for
Federal control's sake.
EPA's proposal would impose standards on States that turn
power systems on their heads. Each State's reduction mandate
varies widely, based on what the EPA claims can be done through
a combination of costly efficiency technologies, drastic fuel
switching, and unprecedented reliance on intermittent
renewables and energy rationing.
States, companies, and utility commissioners and local
officials are left figuring out how to comply, which will
necessarily involve higher prices and potentially threaten grid
reliability. The EPA claims the rule is flexible and that
compliance is easy. But the EPA's assurances are of little
comfort when the standards are beyond what technology can
deliver and ratepayers can afford.
The ability of the EPA's so-called building blocks, which
are really mandates, to produce the required reductions is
uncertain. The limited analysis in this rule is based on black
box models and untested assumptions. This hides the hard fact
that ratepayers will be left holding the bag on an expensive
overhaul of our electric system to reach theoretical and
unproven targets.
The confusion also hides a more fundamental concern. The
EPA is operating outside the bounds of the law. The Clean Air
Act does not give the EPA the authority to regulate the
electric grid or tell Americans where to set their thermostat.
Instead, EPA is limited to technology-based standards at the
power plants themselves.
As our witnesses will explain, had EPA followed the law and
been straightforward about what technology can accomplish, the
rule might be manageable. But since the law doesn't match this
Administration's agenda, the EPA is now bypassing Congress to
rewrite the statute. The EPA also ignores technology and
reliability concerns. The Administration hasn't fully
considered the potential impacts of this proposal on the
electric system, the economy, and the American people most
importantly.
A scientific look at the proposal reveals major problems.
EPA's claims are backed by flawed technology assumptions. It
relies on unrealistic scenarios about our nation's energy
future. And EPA's conclusions are based on a secret model,
hidden from public view. We see this all too often at EPA. In
fact, serving on Natural Resources Committee and other natural
resource matters, we see it all the time in this natural
resource environment that we are in with this Administration.
This science that is hidden science undermines the
scientific review process and moves straight to regulation. The
law requires a bottom-up review of what can be accomplished at
a power plant. Instead, the EPA has proposed top-down
regulation of the entire electric system. This rule needs to be
withdrawn. It fails to meet even the most basic standards of
objectivity and transparency; it lacks technical analysis on
scientific and economic feasibility, and the American people
deserve to know exactly what the EPA is doing, and that is why
we are having this hearing today. Other than that, my
constituents have no strong feelings about this.
[The prepared statement of Mrs. Lummis follows:]
Prepared Statement of Subcommittee on Energy Chairman Cynthia Lummis
Today, we examine one of the most sweeping regulatory proposals in
America's history. The Environmental Protection Agency (EPA) is
continuing its regulation rampage, attempting to take control of our
nation's electric system without any legal or scientific justification.
The EPA's ``Clean Power Plan'' reaches well beyond just the
regulation of power plants. The EPA wants to control the entire system,
right down to the amount of electricity Americans use in their homes.
The implications of this overreach are staggering. The rule has the
potential to shut down power plants across the nation, raise energy
prices and threaten energy security. And for what? Even EPA admits that
the rule will have little to no impact on global warming.
EPA's proposal would impose standards on states that turn their
power systems on their heads. Each state's reduction mandate varies
widely, based on what EPA claims can be done through a combination of
costly efficiency technologies, drastic fuel switching, and
unprecedented reliance on intermittent renewables and energy rationing.
States, companies, utility commissioners and local officials are
left figuring out how to comply, which will necessarily involve higher
prices and potentially threaten grid reliability. The EPA claims the
rule is flexible, and that compliance is easy. But EPA's assurances are
of little comfort when the standardsare beyond what technology can
deliver.
The ability of the EPA's ``building blocks,'' which might as well
be called mandates, to produce the required reductions is uncertain at
best. The limited analysis in this rule is based on black box models
and untested assumptions. This hides the hard fact that states will be
left holding the bag on an expensive overhaul of our electric system to
reach theoretical and unproven targets.
The confusion also hides a more fundamental concern: the EPA is
operating outside the bounds of the law. The Clean Air Act does not
give the EPA the authority to regulate the electric grid or tell
Americans where to set their thermostat. Instead, EPA is limited to
technology-based standards at the power plants themselves.
As our witnesses will explain, had EPA followed the law and been
honest about what technology can accomplish, the rule might be
manageable. But since the law doesn't match the President's partisan
agenda, the EPA is now bypassing Congress to rewrite the statute. This
comes as no surprise from this Administration. The EPA also ignores
technology and reliability concerns. The Administration hasn't fully
considered the potential impacts of this proposal on the electric
system, the economy and the American people.
A scientific look at the proposal reveals major problems. EPA's
claims are backed by flawed technology assumptions. It relies on
unrealistic scenarios about our nation's energy future. And EPA's
conclusions are based on a secret model, hidden from public view.
Instead of providing useful tools for state and local policymakers,
the analysis appears to be nothing more than window-dressing for a
predetermined outcome.
We see this all too often at the EPA. It undermines the scientific
review process and moves straight to regulation. The law requires a
bottom-up review of what can be accomplished at a power plant. Instead,
the EPA has proposed top-down regulation of the entire electric system.
This rule needs to be withdrawn. It fails to meet even the most
basic standards of objectivity and transparency; and it lacks technical
analysis on scientific and economic feasibility. The American people
deserve to know exactly what the EPA is doing, and that is why we are
having this hearing today.
Chairman Lummis. That is my opening statement and now I
would like to recognize the Ranking Member, the gentlewoman
from Texas, Mrs. Johnson, for an opening statement.
Ms. Johnson. Thank you very much, Madam Acting Chair. And
let me thank our witnesses for being here this morning.
Last month, the Environmental Protection Agency released
its Clean Power Plan, a proposal to cut carbon pollution from
the largest source, power plants. This proposal, like the rest
of President Obama's Climate Action Plan, is the bold step
forward our nation needs to address the impacts of climate
change--impacts that are growing more present in the lives of
every American.
Severe drought, record temperatures, and an increase in the
spread of infectious diseases are just a few examples of what
Americans will have to confront in the coming years. The
scientific evidence confirms that we need to act now to lessen
these impacts. Cutting carbon emissions from the power sector
is critical to any solution that is--and that is why I support
the Clean Power Plan. It sets reasonable limits that take into
account the characteristics of each State. It is based on
strategies already in use such as improving energy efficiency
and power plant operations and encouraging the development of
renewables. And finally, it provides the States with
flexibility.
EPA is not prescribing a specific set of measures. States
will choose what goes into their plans and they can work alone
or as part of a multistate effort to achieve meaningful
reductions. Today, we will hear from some Members and witnesses
that EPA is acting beyond its authority and that EPA
regulations are killing the economy and jobs.
This is not a new argument but one that we have heard time
and time again. Whenever EPA proposes an action that will
protect the air we breathe and the water we drink, industry
raises alarms about the purported negative impact on the
economy. I expect we will hear the same argument trotted out
once again in today's hearing.
In addition, some of my colleagues on the other side of the
aisle are fond of saying that those who want to address climate
change are alarmists using scare tactics to frighten the
American people. I would say that the true alarmists are those
who have a history of exaggerating the cost of compliance. For
example, in 1990, electric utilities opposed to the Acid Rain
Program said that the cost of an allowance to emit sulfur
dioxide would be $1,500 per ton. It in fact turned out to be
$150 per ton.
Madam Chair, I could go on but the track record of Clean
Air Act speaks for itself. Since its adoption in 1970, air
pollution has declined more than 70 percent and the American
economy has more than tripled. Now more than ever the American
people need a strong EPA. I firmly believe that we can have a
vibrant economy and a safe and healthy environment. The Clean
Power Plan puts us on the path to achieving both.
Thank you. And before I yield back, I would like to request
that Mr. Kennedy be allowed to introduce Dr. Cash.
Thank you. I yield back.
[The prepared statement of Ms. Johnson follows:]
Prepared Statement of Ranking Member Eddie Bernice Johnson, Committee
on Science, Space, and Technology
Thank you, Mr. Chairman, and thank you to our witnesses for being
here this morning. Last month, the Environmental Protection Agency
released its Clean Power Plan, a proposal to cut carbon pollution from
the largest source--power plants.
This proposal like the rest of President Obama's Climate Action
Plan, is the bold step forward our nation needs to address the impacts
of climate change. Impacts that are growing more present in the lives
of every American. Severe drought, record temperatures, and an increase
in the spread of infectious disease are just a few examples of what
Americans will have to confront in the coming years.
The scientific evidence confirms that we need to act now to lessen
these impacts. Cutting carbon emissions from the power sector is
critical to any solution and that is why I support the Clean Power
Plan. It sets reasonable limits that take into account the
characteristics of each state. It is based on strategies already in use
such as improving energy efficiency and power plant operations, and
encouraging the development of renewables. And finally, it provides the
states with flexibility; EPA is not prescribing a specific set of
measures. States will choose what goes into their plans and they can
work alone or as part of a multi-state effort to achieve meaningful
reductions.
Today we will hear from some Members and witnesses that EPA is
acting beyond its authority, and that EPA regulations are killing the
economy and jobs.
This is not a new argument, but one that we have heard time and
time again. Whenever, EPA proposes an action that will protect the air
we breathe or the water we drink, industry raises alarms about the
purported negative impact on the economy. I expect we will hear the
same argument trotted out again at today's hearing.
In addition, some of my colleagues on the other side of the aisle
are fond of saying that those who want to address climate change are
alarmists, using ``scare tactics'' to frighten the American people. I
would say that the true alarmists are those who have a history of
exaggerating the cost of compliance. For example, in 1990, electric
utilities opposed to the acid rain program said the cost of an
allowance to emit sulfur dioxide would be $1,500 per ton. It, in fact,
turned out to be $150 per ton.
Mr. Chairman, I could go on, but the track record of the Clean Air
Act speaks for itself. Since its adoption in 1970, air pollution has
declined by more than 70 percent and the American economy has more than
tripled. Now, more than ever, the American people need a strong EPA. I
firmly believe we can have a vibrant economy and a safe and healthy
environment. The Clean Power Plan puts us on the path to achieving
both.
Thank you and I yield back.
Chairman Lummis. Mr. Kennedy, we will--when we reach Dr.
Cash's introduction, I will yield to you at that time. Thank
you.
Mr. Kennedy. Thank you, Madam Chair. Thank you, Ranking
Member.
Chairman Lummis. If there are Members who wish to submit
additional opening statements, your statements will be added to
the record at this point.
Chairman Lummis. At this time I would like to introduce our
witnesses. Our first witness today is Mr. Jeff Holmstead. Mr.
Holmstead is one of the Nation's leading air quality lawyers
and heads the Environmental Strategies Group at Bracewell and--
how do you pronounce it--Giuliani. Okay. He previously served
as Assistant Administrator at the EPA for the Office of Air and
Radiation. He also served on the White House staff as Associate
Counsel to former President George H.W. Bush. Mr. Holmstead
received his law degree from Yale.
Our second witness is Charles McConnell, Executive Director
at the Energy & Environment Initiative at Rice University.
Previously, Mr. McConnell served as the Assistant Secretary for
Fossil Energy at the U.S. Department of Energy. At DOE he was
responsible for the strategic policy leadership budgets,
project management, and research and development of the
Department's Coal, Oil, Gas Advanced Technology Programs and
the National Energy Technology Labs. He received his bachelor's
degree in chemical engineering from Carnegie Mellon and an MBA
from Cleveland State.
And now to introduce Dr. David Cash, I will yield to the
gentleman from Massachusetts, Mr. Kennedy.
Mr. Kennedy. Thank you, Madam Chairman.
We are here today in part to examine how States can be
empowered to use an innovative approach to successfully
navigate the challenges they confront. To that end, I am
delighted to welcome Dr. Cash, a constituent and Commissioner
of the Massachusetts Department of Environmental Protection.
Throughout his career in public service, Dr. Cash has
played an integral role in our Commonwealth's efforts to
address climate change, first, as the Under Secretary for
Policy in the Massachusetts Executive Office of Energy and
Environmental Affairs, then as Commissioner at the
Massachusetts Department of Public Utilities. He has been a
leader in developing a Massachusetts Clean Energy and Climate
Plan for 2020 and other legislation that will reduce the
State's greenhouse gas emissions, legislation that has
contributed to a 16 percent statewide drop in emissions since
1990. Beyond the success we have experienced in limiting
emissions, these initiatives have also led to an 11.8 percent
increase in clean tech job growth in the last year.
Dr. Cash, as Congresswoman Clark and I often cite the
success of Massachusetts to others in this room, we are very
happy to have you here today and look forward--I am looking
forward to your testimony.
Thank you, Madam Chairman. I yield back.
Chairman Lummis. I thank the gentleman from Massachusetts.
Our final witness today is Mr. Gregory Sopkin, Partner at
Wilkinson Barkett and Knauer--what is it? Barker?
Mr. Sopkin. Barker.
Chairman Lummis. Okay.
Mr. Sopkin. Thank you.
Chairman Lummis. Got a typo here. Previously, Mr. Sopkin
was the Chairman of the Colorado Public Utilities Commission, a
neighbor here. Thanks. I am from Wyoming.
He has also worked as Assisting Attorney General for
Colorado. He has practiced energy and telecommunications law
for over 15 years and has been a member of the National
Association of Regulatory Utility Commissioners. Mr. Sopkin
received his law degree from the University of Colorado.
As our witnesses should know, spoken testimony is limited
to five minutes after which the Members of the Committee will
have five minutes each to ask questions.
I now recognize our first witness, Mr. Holmstead, for five
minutes. Welcome.
TESTIMONY OF THE HONORABLE JEFFREY HOLMSTEAD,
PARTNER, BRACEWELL & GIULIANI LLP
Mr. Holmstead. Thank you and good morning. I thank you very
much for giving me the chance to testify this morning.
There is a lot to say about EPA's proposal, but this
morning, I would like to focus on just two major points. First,
anyone who believes in the rule of law should be troubled by
EPA's proposal. It goes far beyond the authority that Congress
has given to the agency.
And second, EPA officials have and so distracted with the
notion that they can fundamentally change the electric system
in 49 States that they have failed to do the basic technical
work that they are supposed to do to develop legally defensible
regulations to reduce carbon emissions from existing power
plants.
The Supreme Court has made it clear that EPA has authority
to regulate carbon emissions under the Clean Air Act but the
Supreme Court has not given EPA a roving mandate to do whatever
it thinks best when it comes to regulating those emissions. In
the Clean Air Act Congress created literally dozens of
different regulatory programs with carefully defined limits.
Some of these programs can be used to regulate carbon
emissions, but EPA may only do so in a way that complies with
the limits established by Congress.
EPA has proposed to use Section 111(d) to regulate carbon
emissions from existing power plants. There is a significant
question about whether they can even use that provision, but I
want to set that aside and ask the question if EPA can regulate
carbon emissions from existing power plants under Section
111(d), what would those regulations look like?
And it has been interesting to me. There is all this debate
about this proposal and few people ever actually look at what
the statute says. So let me quote from the relevant provisions
of the statute. It says that ``EPA can require a State to
develop a plan that includes a standard of performance that
requires a continuous emission reduction for any existing power
plant in their State based on the best system of emission
reduction that has been adequately demonstrated for that type
of plant but that States shall be permitted in applying the
standard of performance to any particular source to take into
consideration, among other factors, the remaining useful life
of the existing plant to which such standard applies.'' That is
just what the statute says, and what EPA has done for 37 years
under that regulation is to establish an allowable emission
rate that each plant would have to meet.
But somehow, EPA has discovered a broad new power from
these words, a broad new power in a provision that has been in
place for almost 40 years. After all this time, it turns out
that this provision actually gives EPA the authority to require
States to fundamentally change the way that electricity is
generated and used throughout their States.
Here is what EPA expects States to do: first, require all
existing coal-fired power plants to improve their efficiency by
an average of six percent regardless of how efficient they are
today or whether it is technically feasible to improve their
efficiency by that much. But at least that is close to the
statute.
Second, they want to be States to take business away from
these more efficient coal plants and give this business to the
gas-fired power plants in the State until the gas-fired plants
are operating at 70 percent capacity regardless of the cost or
whether these gas-fired plants were even designed to operate
that much.
Third, EPA believes that it can require States to mandate
more wind and solar power plants be constructed and used.
And fourth, to come up with programs to require people and
industries to use less electricity so that the total statewide
demand for electricity is reduced by 1.5 percent a year every
year for 10 years.
All these things, according to EPA, can be required under a
statutory provision that says the following: ``EPA can require
States to set a standard of performance for any existing power
plant in their States but that a State must be permitted in
applying a standard of performance to any particular plant to
consider the remaining useful life of that plant.''
Simply put, EPA's reading is preposterous. And because the
folks at EPA have been so distracted by the notion that they
can change the electric power system in our country, they have
failed to do the basic technical work they are supposed to do
under the Clean Air Act. What they are supposed to do is
actually go out and study existing power plants to determine
the lowest carbon emission rates that have been achieved by
different types of plants based on size, boiler type, age, and
other factors and then provide technical guidance to the States
so that the state environmental officials have the information
they need to go out and set appropriate emission standards for
the plants in their States. The sooner EPA does what it is
actually supposed to do, the sooner we will have a defensible
program to reduce carbon emissions from existing power plants.
Thank you and I would be happy to answer any questions you
may have.
[The prepared statement of Mr. Holmstead follows:]
[GRAPHIC] [TIFF OMITTED]
Chairman Lummis. I thank the gentleman.
I now recognize our second witness, Mr. McConnell, for five
minutes.
TESTIMONY OF THE HONORABLE CHARLES MCCONNELL,
EXECUTIVE DIRECTOR, ENERGY & ENVIRONMENT INITIATIVE,
RICE UNIVERSITY
Mr. McConnell. Thank you. I am here to talk about EPA's
carbon plan and Clean Power Plan, and unfortunately it is
neither of the two.
So what is it and what is it not? Well, it is certainly not
impactful environmental regulation. In fact, Administrator
McCarthy testified in 2013 to that very effect in front of the
House of Representatives and suggested that it was really being
developed for political leverage in a global climate
discussion.
So let's talk about how much of an impact it really is. It
impacts, if fully developed, .18 percent of the global CO2
that is admitted in the world, less than 2/10 of a percent. It
will impact global warming and climate change by .01 degrees
centigrade. And that, if you do the mathematics and climate
change, technology, would affect the level of sea rise by about
1/3 the thickness of this dime that I am holding. It is hard to
see, I know, but it is 1/3 of that thickness.
It is also not flexible. Administrator McCarthy has
mentioned that it is too flexible in fact in some States and
that we haven't really prescribed it enough. Well, truly, if
you look at the outputs of a coal-fired power plant or even a
natural gas-fired power plant, you will see that it is a
disingenuous comment. In fact, there is no other way for this
to be achieved than to simply mandate more windmills and more
solar panels. It is just that simple.
And at the end of it all, where is the question on
affordability and what have we heard from the EPA? And what you
hear right now is the sound of silence. There is nothing that
has been said. As a matter of fact, the questions have been
dodged, unanswered, and not addressed at all. But if you look
at the mathematics of the way it works and the way technology
is deployed, on average across this country the average
ratepayer will see its rates go up by about two times. But in
the five States that are going to bear 40 percent of the burden
of this CO2 reduction, those ratepayers are going to
see anywhere from 3X to 4X. So if this gets put forth, you
won't have to wonder why your power bill is more expensive; it
is directly related to this.
And the other problem is the inconvenient truths are that
we don't have any studies on reliability; we don't have any
studies on affordability. There is really no evidence of any
interagency collaboration, FERC and the natural gas
availability for all the fuel switching that is being
anticipated. Transmission capacity and capability, the
Department of Energy and the Office of Electricity have that
capability but there is no evidence that there is any
connection there. Operating plant efficiencies by the National
Energy Technology Laboratory and Fossil Energy have copious
amounts of information that have not been tapped into. And of
course the carbon capture and storage and CCS technology
development roadmap has fundamentally been avoided with this.
So really this is dangerous and damaging to the American
consumer, to industry, and to our global competitiveness. And
unfortunately, what we are doing is we are wrapping this up as
an environmental victory and there isn't any environmental
victory. It is a disingenuous ``all pain for no gain'' program
and it is difficult to understand. I would suggest that what we
need to do is pivot this conversation to a discussion around
world-class technology so that we can have real environmental
responsibility and a real all-of-the-above approach, not just
CO2 but all the issues associated with environmental
responsibility not only in our country but globally. We need to
study the situation around energy reliability. It is too
important and it needs to tap into the agencies that we had
here in our system to be able to do that.
And finally, we have to drive toward affordability for all
citizens, not just in our country but to think about the global
implications of the developing nations around the world and
their need for advanced technology. The rest of the world
doesn't need our political platitudes and morals. What they
need is our technology that we are so capable to develop that
we need to fund and deploy.
Thank you.
[The prepared statement of Mr. McConnell follows:]
[GRAPHIC] [TIFF OMITTED]
Chairman Lummis. I thank the witness and now recognize our
third witness, Dr. Cash.
TESTIMONY OF MR. DAVID CASH, COMMISSIONER,
MASSACHUSETTS DEPARTMENT OF
ENVIRONMENTAL QUALITY
Mr. Cash. Thank you very much, Chair Lummis and Ranking
Member Johnson and other Members of the Science, Space, and
Technology Committee for the opportunity to provide comments on
EPA's proposed Clean Power Plan.
My name is David Cash. I am the Commissioner of the
Massachusetts Department of Environmental Protection, and prior
to this, I was Commissioner of our State's Public Utilities
Commission and focused on grid reliability and cost for
ratepayers. In total, I have worked in State Government for ten
years, always at the nexus of energy, environment, and economic
development and always with the goal of creating a thriving
State for families, communities, and businesses.
Let me start with a story of dramatic change. Eight years
ago there were three megawatts of installed solar power
Massachusetts. Today, there are over 500 megawatts. Eight years
ago there were three megawatts of installed wind power. Today,
there are over 100 megawatts. Today, there are over 5,000
companies and over 80,000 people employed in the clean energy
economy in our State, and for the last four years, clean energy
job growth has been between six percent and 12 percent per
year.
Today, Fortune 500 companies and mom-and-pop shops,
residential customers in cities and towns are taking advantage
of our energy efficiency and renewable energy programs and
saving billions of dollars. For a company this may mean hiring
new people or expanding R&D or marketing. For a town, maybe new
teachers or firefighters can be hired. For families across the
Commonwealth, they have more money in their pockets that they
are not spending on energy. Over the last several years we have
invested over $1 billion in energy efficiency and expect a
return of $3-$4 billion.
The arc of this story is simple. Wise environmental
protection and robust economic development can and should go
hand-in-hand. In fact, since 1990, our carbon emissions in
Massachusetts have declined by 40 percent while our economy has
grown by almost 70 percent.
[Slide]
Mr. Cash. If you will take a look at the graph that is
shown on the screens now, take a look particularly at the
bottom line, the red line that shows our greenhouse gas
emissions in the power sector declining by 40 percent, most of
that in the last 8 to ten years, but over the last 20 years by
40 percent. At the same time, look at the top line. That shows
our economic growth of over 70 percent. You can see some other
indicators in the middle, but the story is a powerful story
that shows that environmental protection can go hand-in-hand
with economic development.
The Administration of Governor Deval Patrick has launched a
clean energy revolution in our State introducing forward-
looking policies and wide-ranging regulatory reform and
regional partnerships. One of his first actions in office was
to bring all of the energy and environment agencies under one
umbrella and add a mandate to link environmental protection and
economic development.
We have approached EPA's 111(d) rule with exactly this
comprehensive perspective understanding how these regulations
will impact the power sector, energy prices, the environment,
and economic development.
Our conclusion is that implementation of 111(d) will mirror
what has happened in the last eight years in Massachusetts and
other States but on a national scale. The private sector will
respond, sparking innovation, entrepreneurship, energy cost
savings, job growth, customer choice, and opening up global
markets for U.S. products and services.
In preparing the Clean Power Plan, EPA conducted an
unprecedented amount of outreach to States and other key
stakeholders recognizing the need for flexibility in the
diversity of state-led initiatives and programs. One such
successful program is the multistate Regional Greenhouse Gas
Initiative, RGGI. RGGI is a regional market-based emissions
reduction program for the power sector, in other words, setting
a standard and letting the market work. In the Clean Power Plan
EPA recognizes regional market-based programs as acceptable
compliance mechanisms. This is critical because the evidence is
clear. RGGI and the RGGI experience has demonstrated that we
can cost effectively realize environmental and economic goals
while maintaining electricity grid reliability.
The RGGI States have experienced a 40 percent reduction in
power sector emissions since 2005 while our regional economy
has grown by seven percent, adjusted for inflation. Of course,
these significant pollution reductions are due to a combination
of factors including market forces, the greater supply of
natural gas, and other state clean energy policies, but RGGI
has clearly been a driver as well.
A recent independent analysis by the Analysis Group
concluded that investments for the first RGGI control period in
energy efficiency, renewable energy, and other programs are
adding $1.6 billion of net economic value to our region. In the
RGGI region, these emissions reductions and types of strategic
investments by Massachusetts and other RGGI States occurred
while customer rates were dropping. Our original prediction, as
we began developing RGGI, where that electricity rates would
increase by 1 to two percent. Instead, region-wide they have
declined by 8 percent.
I know that we are not Kentucky or West Virginia or other
States that are facing difficult challenges, but I also know
that the low-hanging fruit of energy efficiency is available
everywhere and grabbing that low-hanging fruit means savings
for customers, local jobs, and greenhouse gas emission
reductions.
EPA should be commended for developing the proposed rule
that recognizes the diversity among States and provides a
flexible approach to compliance. By providing the States with
this flexibility, Massachusetts believes the plan will not only
aid in the effort to reduce carbon pollution but will also help
our nation develop an advanced infrastructure that delivers
cleaner air, smarter energy use, and an improved economy and
local jobs.
Thank you and I am happy to answer questions.
[The prepared statement of Mr. Cash follows:]
[GRAPHIC] [TIFF OMITTED]
Chairman Lummis. I thank the gentleman and now recognize
our final witness, Mr. Sopkin, for--is it Sopkin?
Mr. Sopkin. It is Sopkin.
Chairman Lummis. Okay. For five minutes.
TESTIMONY OF MR. GREGORY SOPKIN,
PARTNER, WILKINSON, BARKER, KNAUER LLP
Mr. Sopkin. Thank you. And it is an honor to be here from
the great State of Colorado where we don't always win Super
Bowls but we have a really balanced energy portfolio.
From 2003 to early 2007 I was the Chairman of the Colorado
Public Utilities Commission. I am approaching this testimony
primarily from a State perspective, what States are looking at
and having to implement this EPA rule.
We have written a white paper. My partner Ray Gifford, who
also was a Chairman of the Colorado PUC, and I wrote a white
paper about the logistical political and practical difficulties
States are going to have in implementing this EPA rule.
I also have to give a shout out to our associate Matt
Larson who had a big hand in offering this and had a baby boy
yesterday. And we as a compassionate firm gave him the day off
yesterday.
We wrote this paper because of our experience as State
Commissioners in working with state environmental departments
and state legislatures. Some of the white paper's findings are,
first, the EPA's proposed carbon reduction rule creates a
carbon-driven energy resource planning process that is unlike
any other Clean Air Act regulatory regime. The proposed
building blocks look strikingly like integrated resource
planning, which is a function that has traditionally been
performed by States that have the expertise and manpower to
delve into those matters deeply. Carbon IRPs or their
equivalent will almost certainly require state legislation
regardless of whether a State is vertically integrated or
deregulated States.
The time constraints for States in implementing this rule
are potentially insurmountable. States have little time,
particularly given the need to pass legislation, to make
crucial and far-reaching decisions regarding this proposed
rule. The decision points include whether to act individually
or on a multistate basis and determining what state agencies
should take the lead in implementing and overseeing this
process.
The scope of the EPA rule creates implementation--excuse
me--creates a serious risk of EPA takeover of state resource
planning. If a State implementation plan is a deemed inadequate
by EPA, then it is up to the EPA to then devise the plan for
States to follow.
Next, a carbon adder for environmental dispatch is likely a
necessary implementation feature regardless of market
structure. That means that there has to be something similar to
a carbon tax that is imputed upon the regulatory structure.
Next, all generators must participate in the carbon IRP
process from investor-owned utilities to non-jurisdictional
entities not traditionally subject to regulation. That includes
rural cooperatives and municipal utilities who have never had
to submit a resource plan before are now going to be subject to
regulation of some state agency over their resource planning.
Central resource planning will return to restructured,
competitive States. In restructured States, States have opted
to use competition as the method for lowest-costing electricity
and to determine their optimal resource mix. That will now give
way to carbon planning.
Multistate SIPs are accompanied by legal and practical
hurdles, including the potential need for a congressionally
approved interstate compact. The EPA approval criteria
requiring adequate enforcement mechanisms implicate the United
States Constitution Compact Clause because enforcement can and
should be on an interstate basis to address inevitable
rivalries that will develop in an interstate agreement between
States.
In my view of the EPA's Section 111(d) proposal
fundamentally transforms state commission sovereignty over
resource planning in determining what is best for electric
consumers. I have seen firsthand the effects of electric
reliability problems and high cost generation in my home State,
Colorado. The EPA has repeatedly invoked the refrain
``flexibility,'' meaning we don't care how your State reaches
that prescribed carbon reduction level, but you must get there
and you have one year to submit a plan to do it. This is
analogous to saying you have 6 gallons of gas to get from San
Francisco to New York City in 24 hours but you have the
flexibility regarding your mode of transportation. One could be
forgiven for not thinking that that is flexibility. The problem
here is that EPA has declined to offer flexibility on the all-
important issues of cost, capacity, and feasibility. In fact,
EPA has implicitly declined to offer the State flexibility
inherent in its very own Section 111(d) implementing
regulations.
The remainder of my written testimony is the contents of
the white paper. I look forward to your questions.
[The prepared statement of Mr. Sopkin follows:]
[GRAPHIC] [TIFF OMITTED]
Chairman Lummis. And I thank all the witnesses for their
testimony and for being here today.
We will now begin Member questions. The Chair will at this
point recognize herself for five minutes.
First of all, Mr. Sopkin, you mentioned in your testimony
rural cooperatives, which are a big component of providers of
electrical power in my very rural State of Wyoming, as well as
in Colorado, your home State. Are there unique difficulties for
States with rural electric co-ops in being able to hit a 70
percent gas utilization rate?
Mr. Sopkin. Thank you, Chairman. And if I could have Slide
2 shown, I think that would give you an idea of what rural
cooperatives are up against.
[Slide.]
Mr. Sopkin. This is a--this slide was released by the
Colorado Air Quality Control Commission and it--what it does is
it shows where the EPA's 2030 goal is, which is a limit of
1,108 pounds per megawatt hour and it superimposes that on top
of every electric generating unit resource in Colorado. This
shows you that every coal unit is in violation of the EPA rule
on a pure rate emissions basis. The ones that are under the red
line are all gas units. One gas unit actually exceeds this
limit. And what you can see from this is that many of these
coal plants are operated by rurals and municipals and so they
are going to be affected pretty dramatically by this rule.
As far as the 70 percent dispatch, there are many questions
about that. In particular, the national utilization average for
combined cycle units, gas units, is 48 percent. The EPA
standard pushes that up to 70 percent. In most States the
utilization rate is somewhere around 30 or 40 percent. Now, why
is that? It is because running that gas combined cycle unit is
more expensive than the baseload unit that they traditionally
run on an 80 or 90 percent basis. It also could be because they
don't have the adequate gas line--gas pipeline infrastructure
to do it or the electricity transmission rights to do it. So
EPA just simply did the cookie-cutter approach of every State,
go to 70 percent, without knowing whether a State can actually
achieve that because you have to delve deep into whether those
transmission rights, those--the pipeline infrastructure is
there. But also it is probably going to result in significant
rate increases because it is more expensive to run a gas unit
than a baseload unit.
Chairman Lummis. Thank you. I would also like to ask Mr.
McConnell a question about the EPA targets. How reasonable are
they? Let's look at coal generators. Can they improve their
heat rate by six percent. As the gentleman from Colorado
stated, overall utilization to 70 percent for natural gas
combined cycle; States meeting renewable energy deployment
targets of 13 percent nationwide; end-user energy efficiency
improvements, are these targets realistic?
Mr. McConnell. You know, I am all for regulations and
environmental responsibility. I am having a hard time figuring
out why we are talking about deployment and execution of
something that fundamentally doesn't impact the environment.
The targets that have been set are all about finding a
mechanism to eliminate coal and ultimately natural gas from our
energy mix and require renewables to be deployed.
Now, it is dressed up to look like there is some sort of
technical evaluation behind it, but in fact the targets that
you just cited are not only difficult to achieve but require
advanced technology, advanced development of that technology,
and are not something that people will be able to make that
decision to go to in the time frame that has been proposed. And
so, again, we are in a situation where we are talking about
deployment and yet we are getting no value for it.
Chairman Lummis. I thank the gentleman. My time is expired.
And I do want to allow Mrs. Johnson, the Member from Texas
and Ranking Member, to ask questions for five minutes.
Ms. Johnson. Thank you very much.
Recently, three thought leaders from different backgrounds
and political ideologies--Michael Bloomberg, Henry Paulson, and
Tom Steyer--came together to study the impacts of climate
change would have on American businesses. This effort
culminated in the report called ``Risky Business: The Economic
Risk of Climate Change in the United States.'' And, Madam
Chairman, I would like to submit this by unanimous consent for
the record.
Chairman Lummis. Without objection.
[The information appears in Appendix II]
Ms. Johnson. The report didn't parse words stating
unequivocally ``every year that goes by without a comprehensive
public and private sector response to climate change is a year
that locks in future climate events that will have a far more
devastating effect on our local, regional, and national
economies.''
Dr. Cash, as I understand it, many businesses already
include climate risk as part of their business model. Can you
comment on the engagement and interest in businesses in
Massachusetts and the Northeast in achieving carbon reductions?
And the second question, what are the potential impacts to
the economy of Massachusetts and its businesses if we do not
address climate change now?
Mr. Cash. Thank you very much, Ranking Member Johnson. I
will actually take those in reverse order because one builds on
the other.
We think there--and the science shows and the evidence
shows that there is already impacts on climate change and all
you need to do is to be in any part of the country where we see
high-impact weather events happening that are happening much
more frequently than had previously been happening. In the
Northeast we struggled with Super Storm Sandy, Irene, a freak
October snowstorm. All of those happened while I was a PUC
Commissioner and the outages that lasted days and days and days
was certainly something that we struggled with. And there is no
question that a coastal State like Massachusetts is dealing
with sea level rise already.
Businesses are already concerned and are already making
plans to deal with climate change. There is no question that in
the insurance industry they are addressing climate change.
There is no question in the development community they are
looking at extra expenses in development along coastal areas.
And in the public sector we are very concerned about
infrastructure. That is one of the primary reasons that action
on climate change is so fundamentally important because we want
to avoid those kinds of large problems that we are going to see
on a greater scale in the future. And we see huge economic
opportunities to address this problem in terms of clean energy
development.
Ms. Johnson. Thank you.
Now, in your testimony you indicate that significant
pollution reductions achieved in the Northeast were due to a
combination of factors, but the Regional Greenhouse Gas
Initiative has been a driver. You also conclude that
implementation of the Clean Power Plan will mirror what has
happened in Massachusetts over the past five years--last eight
years but on a national scale. Can you please describe in more
detail what has happened over the last eight years in
Massachusetts?
Mr. Cash. I can. One of the most exciting things that
happened is this growth of the clean energy sector in jobs that
go all the way across the value chain that employs people who
have Ph.D.'s, that employ architects, plumbers, electricians,
those who come to your house to weatherize it, to put in
insulation. It is across-the-board value chain job growth that
happened in Massachusetts that can't be put overseas. And it
has been done--the Regional Greenhouse Gas Initiative has been
done using a market-based approach.
And one of the things that I find kind of interesting about
the concerns that are raised is there seems to be a lack of
confidence that our private sector can step up. What we have
done in Massachusetts and across the Northeast is set a clear
target, clear market rules, and the private sector has stepped
up with innovation after innovation after innovation seeking to
capture that world market where we know there is going to be
greater demand for electricity in China, and India, et cetera.
I am not sure why we want to cede that, cede the growth to
India, China, Germany in terms of innovation, entrepreneurship,
and economic development. That is what our country is founded
on and that is what this kind of regulatory package will allow,
the unleashing of that kind of entrepreneurial spirit.
The other piece that I think has been fundamentally
important is our use of energy efficiency, and perhaps at some
later point I can talk more about that because that is savings
across the board, residential customers and business customers
as well.
Ms. Johnson. Thank you. My time is expired. Thank you very
much.
Chairman Lummis. I thank you very much.
I recognize the gentleman from Arizona, Mr. Schweikert.
Mr. Schweikert. Thank you, Madam Chairman.
This is one of those occasions where you have dozens of
questions and only a few minutes to do it in, so let me grind
into a couple things that I fret about. For my panel, who has
actually worked at the EPA? My understanding is in the modeling
that the modeling is ultimately proprietary to the EPA, is that
correct?
Mr. Holmstead. I think it is actually proprietary to an EPA
contractor.
Mr. Schweikert. How do you make public policy and not have
that model available for everyone to vet and make sure that--
because who knows? Is it stringent enough; is it too stringent?
Is there noise in the model? I am trying to understand from,
you know, a discussion at the state level to the industry level
to the activist level, how do you make public policy on a
proprietary model?
Mr. Holmstead. Well, that question has been raised many
times. EPA's answer is, well, you can have your own models and
model the same thing, and in fact if you pay a lot of money,
there is a way to have the same contractor run something
similar. But here is what I would say. For most of these
models, the big issue is the assumptions that go into them and
it is pretty easy to be skeptical of EPA's assumptions without
necessarily--so I agree with your question but just take a look
at the assumptions that they do acknowledge publicly and you
will see how unrealistic they are.
Mr. Schweikert. Yeah. And I want to make it very clear for
my brothers and sisters on the Committee and everyone else in
the room, when I say model, I actually mean from the raw data
sets because we also know if you all remember your basic
statistics class, that is where you get to really, you know,
mess with your inputs.
And this one just sort of eats at me so I might as well
share it and get it off my chest. An article from a couple
months ago, EPA Chief promotes--or, excuse me, ``EPA Chief
Promises to Go after Republicans Who Question Agency Science.''
And in the article it makes it very clear. I love this quote.
``We're coming for you.'' So if you question the data, question
the science, they are going to come for us? And then the
arrogance of the comments of, well, we have real scientists and
if you are not part of the EPA infrastructure, you don't count
as a real scientist. Is this just noise or is this the actual
arrogance that comes out of the EPA? I know it--okay----
Mr. McConnell. We saw it in spades at DOE. We had
opportunities to do interagency collaboration and in fact many
times it was just frankly dismissed.
Mr. Schweikert. Who do I have on the panel that has
actually worked at the Department of Energy?
For Department of Energy, this is your area of expertise;
were you requested to build or participate or do some of the
modeling? Because my understanding being from out West where,
you know, we have this great difficulty trying to explain to
States like Massachusetts and stuff the scale and the distances
we run through and that it is more than just that facility, it
is my pipelines, it is my mileage of, you know, power lines,
the distances we have to cover. So a long way to ask the
question, DOE, were you asked? Were you contracted for--to
model the actual energy side of this?
Mr. McConnell. Well, first of all, I think it is a great
story that has been told here about Massachusetts. I think we
all have to recognize that they are less than one percent of
the total energy generated in the United States so it is a very
unique story to a very small place. And it is a great story but
it is a very small part of our world.
At DOE a simple example we got a 650-page document on
Friday afternoon at 3:00 and were asked for a response back by
10:00 a.m. on Monday. Now if my folks at DOE hadn't worked all
weekend, we wouldn't have had a chance to respond, and after we
responded, we barely got a thank you and many of the
corrections that were made were regretfully accepted but it was
the kind of disingenuous interagency collaboration that often
was very puzzling.
Mr. Schweikert. And so you are saying from a technical
standpoint the relationship DOE and EPA--I mean how did they
react when you provided them those corrections to the data?
Mr. McConnell. Reluctant acceptance, but in fact I think it
was more of a box-checking exercise to show that interagency
collaboration occurred when it really didn't.
Mr. Schweikert. Okay. Thank you, Madam Chairman.
Chairman Lummis. The gentleman yields back.
The Chair now recognizes the gentlelady from Oregon, Ms.
Bonamici.
Ms. Bonamici. Thank you very much, Madam Chairwoman. And
thank you to the witnesses for appearing here today.
This is an issue that is a high priority for my
constituents, and before I go into questions, I just wanted to
say a few words about the economic arguments we are hearing
today. I know that a lot of my fellow Committee Members have
heard me rave about Oregon and I do realize that in some ways
we face different conditions from the conditions experienced by
some of my colleagues. In Oregon, for example, we are currently
phasing out our last coal-fired power plant. We have abundant
hydroelectric power and that means that the reduction target
given to our State by the EPA is quite a bit different from
targets given to States that rely on coal power for
electricity.
But I also want to say that Oregon's economy is uniquely
reliant on natural resources, and hence, our economy is
threatened by the impacts of climate change. My constituents
see the cost of inaction as startlingly high. We consider what
might happen to our wine industry, for example, if the global
temperatures continue to rise, what is happening to our
commercial fishing and shellfish industry as the ocean
chemistry changes because of high levels of carbon dioxide in
the atmosphere.
And so while the EPA's proposed rule is being analyzed by
the State Departments of Environmental Quality, our utility
sector, and others who will participate in its implementation,
they are seeing forward progress in carbon reduction as welcome
news in Oregon.
And I know, Commissioner Cash, you spoke about RGGI. I just
want to mention that our Pacific Coast Collaborative has worked
on a Pacific Coast Action Plan on Climate and Energy, and that
is a collaboration among not only States, the States of
California, Oregon, and Washington, but also British Columbia
to combat climate change. And our region is really becoming a
center of innovation and investment in the clean fuels and
technologies.
And I know, Mr. McConnell, you mentioned the importance of
developing new technologies, attracting private capital for
infrastructure. All of this is turning into jobs, as you, Dr.
Cash, recognized was happening in Massachusetts.
So even though, yes, Massachusetts is just one, as Mr.
McConnell recognized, one State, when we look at the regional
partnerships that are being implemented and moving forward, I
think we see a lot of potential to have the same kind of
results that they have seen in Massachusetts on a regional
scale.
So I wonder, Dr. Cash, could you talk a little bit--it was
an interesting discussion about collaboration or the alleged
lack thereof with the EPA. Can you recommend any improvements
that could have been made to the outreach process but also talk
about whether your agency and others in the RGGI group were
consulted during the development of the proposed rule?
Mr. Cash. Thank you very much. That is an excellent
question and I am glad I have an opportunity to respond.
I think in the development of the rule there was actually a
lot of outreach, and it wasn't just to States like
Massachusetts. My understanding from talking to colleagues when
I was in--a member of NARUC as a Commissioner--Public Utilities
Commissioner, was that the EPA reached out quite a bit all
across the country from the highest level--Commissioner level
down to the staff level, that the inputs into models and to how
they analyze this was done with a lot of input from States,
from other agencies as well. The Department of Energy, et
cetera, was very engaged in this as well.
So I think that kind of process was a very robust one and
has continued to be a robust one since the rule was announced
that EPA has been holding meetings at--through all of their
regions and our staff has been in contact with the technical
staff at EPA almost nonstop. So that outreach has definitely
been there.
In terms of the regional concern, I knew it might be
addressed that Massachusetts is a small State. I get that. But
part of what has happened in RGGI is that it hasn't been just
our State. It hasn't just been the one percent. It has been all
of the RGGI States, the New England States down to the mid-
Atlantic States, down to Maryland and Delaware have been part
of this. And all across that region, which is a significant
amount of population in the country, a significant amount of
the energy use, a significant mix of different energy sources,
we have seen reductions of 40 percent while the regional
economic advances by seven percent. And we have seen this huge
growth in the innovation sector of the--in--all across these
States. And it is actually not just these States. We see this
throughout the--all of the United States.
Ms. Bonamici. Thank you, Dr. Cash.
And in my remaining few seconds, I just want to mention
that, you know, we have had many discussions about the
development of technology in the Committee and also in the
Environment Subcommittee on which I am the Ranking Member. We
have had hearings about this issue. And I want to point out
that historically, if you look at the development of
technology, there is a lot more incentive for the companies to
develop technology and for investment in the development of
technology when there is a requirement that the technology is--
there is a demand for it. So when there is a requirement, then
the technology is developed. If it is not required, there is
not as much incentive for the development of that technology.
So I yield back. I am over time. I yield back. Thank you,
Madam Chairwoman.
Chairman Lummis. I thank the gentlelady.
The Chair now recognizes the gentleman from Oklahoma, Mr.
Bridenstine.
Mr. Bridenstine. Thank you, Madam Chair.
First of all, I would like to thank the whole panel for
being here and thank you for your time and your service. I
would especially like to thank Mr. McConnell for your great
service to my alma mater Rice University and it is--while we
may not win many football games, we have got some amazing
technical research capabilities and I am glad you are there to
help us with those things.
When President Obama was a candidate in 2008, he pledged to
the San Francisco Chronicle that he would bankrupt the coal
industry. These rules from the EPA are nothing more than his
attempt to fulfill this campaign promise. When you look at the
practical effects that this rule will have, no other conclusion
can be made than this president is trying to kill coal.
As several of you mentioned in your testimonies and what I
have heard from utilities and co-ops back in Oklahoma, the
assumptions the EPA made regarding efficiency improvements were
utterly unrealistic. The timeline for implementation was
egregiously short and electricity prices will go up,
particularly in States like mine, the State of Oklahoma, who
rely heavily on coal.
Last year, coal-fired power plants accounted for nearly 60
percent of electricity generation in the State of Oklahoma, and
because of that, we enjoy rates that are well under the
national average. This is why I find the EPA's claims of
unprecedented outreach to stakeholders to be rather egregious,
because if they did, they obviously ignored feedback that they
got from my part of the country in Oklahoma.
Further, as we have heard, this plan amounts to the EPA
remaking the electricity system in each State, something that
has never been under the purview of this agency. There are
other Federal agencies with expertise in this area, namely,
DOE. And I am interested if they were ever approached by the
EPA regarding this aspect of electricity generation.
Mr. McConnell, as a former member of this Administration,
what can you tell me about the nature of interagency
collaboration under this President?
Mr. McConnell. Well, I think, as I had mentioned earlier,
it was an awkward dance because very often the inconvenient
truths of technical evaluation didn't fit the political agenda
and that made it very difficult to actually have any
collaboration, and in fact, as time went on, the communications
became almost zero.
I think the other thing that I would like to respond to as
well earlier about technology is that if we truly have an
administration that believes in an all-of-the-above energy
strategy and we really want to do something about the
environment because we have been talking about that a lot today
about climate change and everything else, I believe it is an
important topic as well, but passing this regulation isn't
going to do anything about the climate change. That is what is
so strange about all of this conversation.
And to the point of if we want to do something about it,
what we have to do is invest in clean technologies to enable
the fuels that we are using that can be reliable and affordable
for not only our country but for the rest of the world, we need
to get on with that task, not defund the fossil energy
organization at DOE while everything else gets the money for
the windmills and the solar panels. It is a difficult
conversation. It is hard to understand.
Mr. Bridenstine. For the record, how much was the fossil
part of DOE? How much was that cut during your time there?
Mr. McConnell. Well, it got to the point where it was on
and all over the--the period of time during my tenure it was
about 40 percent per year, and most recently, some of the
continued work that has come in you see the cuts continuing. So
it is not an all-of-the-above strategy by any stretch.
Mr. Bridenstine. So when you say they were cutting research
opportunities for fossil, were the other opportunities for wind
and solar, were they being cut at 40 percent per year as well?
Mr. McConnell. No, not at all. The DOE budget was
continually increased during that entire time, and so the
fundamentals around the technology that are so important around
carbon capture, utilization, and storage, to promote the
ability to put technology in place that people will want to
use, not to legislatively make them use, is a huge transition.
It drives a market, it drives an opportunity, and it also opens
up global acceptance for technology rather than trying to
moralize with the rest of the world so they will do what we
tell them to do.
Mr. Bridenstine. Thank you, Madam Chair. I yield back.
Chairman Lummis. I thank the gentleman.
The Chair now recognizes the gentlelady from Florida, Ms.
Wilson.
Ms. Wilson. Thank you so much, Chairman Lummis, for holding
this hearing, and thank you to our witnesses for being here
today.
I am from Florida and Florida is ground zero for climate
change in America. Because of our location and geography,
Floridians feel the effect of climate change more than any
other region of the United States. We see firsthand the results
of rising sea levels as seawater floods onto the streets of
Miami. We feel the effects of increasingly powerful,
increasingly common hurricanes and tropical storms that batter
our State every year. On top of these devastating effects,
climate change is quickly eroding Florida's beaches. These
effects of climate change have caused millions and millions of
dollars of damage to Florida's infrastructure, as well as
reducing the number of tourists visiting Florida, further
hurting our economy.
These impacts are here and we feel them now, yet we know
that even more are coming. We have to act now. Pretending this
is not a serious problem and delaying the hard decisions will
make it--climate change more expensive and more difficult to
deal with in the future. Frankly, we owe our children and
grandchildren better than kicking the problem down the road for
them to deal with.
That is why I applaud President Obama and the EPA for
proposing the Clean Power Plan. This plan will prevent 140,000
to 150,000 asthma attacks in children. It will also prevent
thousands of premature deaths. The Clean Power Plan is the
result of unprecedented proposal outreach by the EPA, which
engaged a broad range of stakeholders in developing this plan.
As a result of this outreach, the Clean Power Plan provides
States with broad flexibility to design plans that reflect the
individual policy objectives of the State and reflects its own
unique circumstances.
By implementing this plan, the United States can lead the
international community in efforts to address climate change
while growing our clean energy sector and improving our
economy. Done correctly, addressing climate change will create
jobs and we should be about creating jobs. In fact, jobs, jobs,
jobs should be the mantra of this Congress.
Climate change is no longer just a theory; it is our
reality. So I implore my fellow Members of Congress to support
this plan and help address climate change for future
generations.
Madam Chair, I have a question.
Dr. Cash, can you talk about your experiences in
Massachusetts, what you have done, and I would like to know how
your State's successes could be able to be duplicated in
Florida and around the country. And also talk about the
regional initiatives, what benefits they present and how to
best encourage more States to adopt these initiatives.
Mr. Cash. Thank you very much, Ms. Wilson. A couple of
comments on that.
Again, I want to go back to the comment I made about low-
hanging fruit. Almost without this regulatory package it seems
like there is huge opportunities on energy efficiency. Again,
this is not something particular to Massachusetts. Yes, we have
old housing stock but there is old housing stock all throughout
the country that were not built to high energy efficiency
codes. And so energy efficiency is essentially something that
puts money back in the pockets of ratepayers. I still don't
really understand why that isn't seen as the first fuel. Before
coal, before natural gas, before wind and solar, we should be
looking at energy efficiency as the first fuel and that is
something that I know that in Florida there have already been
advances made, particularly on the demand response side on
those hot, hot summer days when people can opt to turn down
their air-conditioners a little bit and they make money on that
and that reduces cost for everybody in the system.
The other point is I have often wondered about the Sunshine
State and solar energy in the Sunshine State. And you are
talking about jobs, jobs, jobs. If there were policies that
advanced solar in Florida the way that it does in
Massachusetts, in New Jersey, in California, and many, many
other States now, I think that we would see many more
installation jobs, electrician jobs, et cetera, and all of that
would work to decrease the amount of demand that is on the
whole system and make the system more reliable, not less
reliable.
Chairman Lummis. The gentlelady yields back.
The Chair recognizes the gentleman from New York, Mr.
Collins.
Mr. Collins. Thank you, Madam Chair.
Mr. McConnell, you and I share a couple things, both
engineers, both MBAs. I have also spent my life in the energy
industry starting with Westinghouse Electric. My background is
in nuclear, it is in coal, it is in gas. I even owned a wind
company for a while in the late '70s. We were producing
components for the new-found wind energy driven solely by tax
credits where none of the wind turbines even worked. So I have
got extensive--almost 30 plus years in that area.
So let me just start with a sign in my office, ``In God We
Trust, All Others Bring Data.''
So as you have pointed out what you saw in the DOE was a
political agenda. I think that is obvious. So if I could--
before I run through some things, just to address Dr. Cash for
a minute, I just looked up some data. RGGI. I am from New York,
setting aside Alaska and Hawaii, setting them aside--they are
pretty unique--let me tell you the 8 most expensive States in
this country for electricity. They are Massachusetts,
Connecticut, New York, Rhode Island, Vermont, New Hampshire,
New Jersey, and Maine. I think they are all RGGI States. So
let's call it out for what it is.
Mr. McConnell, you have got a lot of experience and I think
some of what I will say is probably rhetorical but I think it
is good to put it on the record. If the United States didn't
produce any industrial CO2, none whatsoever, no
power plants, no nothing, I have heard that that might reduce
the total CO2 produced in the world by about two
percent. Is that correct?
Mr. McConnell. Yeah.
Mr. Collins. So to answer the gentlewoman from Oregon, if
the United States didn't have any coal-producing power plants,
no gas power plants, no automobiles, no nothing, at best it
might help Oregon, even if you accept that, by two percent
maybe, sort of. In other words, this is a political agenda. I
think it is obvious to anyone when you look at the data.
If I look at the different costs of producing electricity,
nuclear, coal, gas, hydro, and then throw in wind and solar,
wind and solar is the most expensive, two times, four times,
eight times. So is it safe to say the only reason we have a
wind and solar energy is tax subsidies? Absent those, you
wouldn't have them?
Mr. McConnell. Yes, that is right.
Mr. Collins. Is it also a statement of fact, rhetorical
question, that every last dollar we spend, whether it is on tax
subsidies or not is borrowed from China? So isn't it fair to
say we are borrowing from China, money, so our neighbors can
put solar panels on their house? Is that a fair statement? You
are chuckling but it is. I mean rhetorically if every last
dollar is borrowed and solar and wind only exist, only exist on
subsidies, if we did not have tax subsidies, there wouldn't be
a single solar panel or wind turbine going up in the United
States of America, and it has been that way since the 1970s and
I was part of that back in the 1970s where the joke was the
wind turbine manufacturers put up the wind turbine. Back then,
they were putting wooden blades on the wind turbines pretending
they would work. They get their tax subsidy and laugh all the
way to the bank. That is how this industry started. It is still
there. They do work today. Technology has come a long way, but
my view is the government exists to help develop technology,
not to pick winners and losers. This is a political agenda. The
States that we just talked about are these RGGI States, the
most expensive in the country, and we talk about jobs, jobs,
and jobs, the cost of energy is a major part of it.
So in the remaining minute, carbon sequester, which I know
quite a bit about, you are going to pump the CO2
into the ground, quite deeply into the ground, and you are
going to cap it, is that a proven technology as in
understanding the potential--we talk about the environment--the
potential environmental consequences of pumping CO2
into the ground?
Mr. McConnell. No, it is not a proven technology inasmuch
as carbon capture and storage as a waste disposal of
CO2. But I can offer you some encouraging thoughts.
CO2 has been used for enhanced oil recovery in this
country for well over 50 years. When it goes into the
formation, it brings up additional oil that otherwise wouldn't
come up, and in the process of doing so, in those geological
formations it also is safely and permanently stored and has
been in many areas across this country and in Canada as well.
It is a market-based opportunity to utilize CO2
and safely and permanently store it. Our challenge is to
broadly deploy this in other places across our country and
frankly the world. The technology behind that is part of what
the Department of Energy has tried to bring forward, and to
declare it ready today is disingenuous. It is not.
Mr. Collins. Well----
Mr. McConnell. But the technology needs to be developed so
it can be.
Mr. Collins. My time is expired but I would make one
closing statement. And as the county executive in Erie County,
when the environmentalists--as the environmentalists talk about
fighting CO2 emissions, and they don't like
hydrofracking because we are creating hydrofracking down in the
earth, these same folks, I don't know how they can support
carbon sequester, pumping gas down in there. And I can tell you
as the county executive, I did not allow that to proceed in our
county right on the Great Lakes, one of the greatest freshwater
bodies in America where they wanted to carbon sequester. I said
not under my watch. But the same environmentalists that seem to
care about the environment don't like hydrofracking sit there
and say let's sequester carbon underground next to the Great
Lakes. It makes no sense to me. I yield back.
Chairman Lummis. The gentleman's time is expired.
The Chair now recognizes the gentlewoman from Connecticut,
Ms. Esty.
Ms. Esty. Thank you, Madam Chairman.
And to Dr. Cash, welcome from a fellow RGGI State in
Connecticut. Glad to have you here.
There are two topics I would like to discuss. One is
electrical reliability, the reliability of the grid for those
of us in the Northeast and what we went through with Sandy and
other storms, that is the first topic. And the other is on the
impact on consumers, again, as has been mentioned by my
colleagues. Connecticut and Massachusetts and New York are
high-cost States for virtually everything, I can assure you.
Electricity is not alone among those.
So first turning to reliability, I know we have found in
Connecticut where I know a little bit about the electrical
situation that by the low-hanging fruit, the economizing
efforts we have been undertaking, we have been able to take
pressure off the grid at precisely those times when there has
been most demand, those August days when thunderstorms roll
through. Could you talk a little bit about the RGGI experience,
your own in Massachusetts and with your colleagues throughout
the RGGI States of how that intersection between what we have
been able to do and how that impacts an aging infrastructure
and frankly national security concerns about reliability of the
grid?
Mr. Cash. Thank you, Representative Esty. Excellent
questions.
On the reliability side what has happened is in part the
RGGI funds that have come from the RGGI program, so from the
generators, has gone essentially to customers who can use those
funds for energy efficiency programs. And that is customers
across the board, residential customers, businesses, commercial
entities, those whose bottom line is very important. And I
forget which Member mentioned that energy costs are a very
important part of the business bottom line for companies. And
what they have done is availed themselves of those revenues and
used them for better lighting, weatherization, getting out old
motors and getting variable speed motors, all getting huge
savings.
And what that has led to is a remarkable thing in the
Northeast, which is we have load growth of 2 to three percent,
would have load growth of 2 to three percent because our
economy is growing, people are buying more laptops, more cell
phones, all that kind of stuff, and what we have essentially
done by our energy efficiency programs--so again giving money
back to the customers to retrofit their homes--is we have come
to zero load growth, so same economic development, zero load
growth. And that means we have avoided building 2,000 megawatts
of new energy, new generation. No more transmission lines for
those, no new generation, 2,000 megawatts, huge savings. So--
and that has made the system more reliable, right? So on the
hot summer day you don't need all that.
And so that is one way, and the other is by the use of
solar, which, as you mentioned, is working at that peak time of
day. And we think that as solar becomes more expansive in the
Northeast, we will see even more and more of that.
Ms. Esty. Well, let's turn to consumers and the cost. We
find I can say in Connecticut where I am working very hard to
bring manufacturing back because I know my colleagues in
Massachusetts are as well, there tends to be an obsession with
the kilowatt hour cost as opposed to the actual--and how much
is your energy costing if you are using less energy than your
overall cost is lower?
And just to give you an example, FuelCell Energy based in
Danbury, Connecticut, is benefiting from some of these targeted
investments on basic R&D. They are finding it is cheaper for
them to produce in Danbury, Connecticut, massive fuel cells
that they are shipping to Korea. They are shipping to Korea
from Connecticut because it is in fact cheaper because our
productivity is so high----
Mr. Cash. Um-hum.
Ms. Esty. --and they can produce a product that the Koreans
are very happy to reduce their reliance on other fuel sources.
So I think it is just an example of again it is the all-in
cost.
Can you talk a little bit--first, I would like to introduce
into the record if I can, Madam Chairman, the Analysis Group
report that you referenced in your testimony. I would like to
submit that for the record because I think that provides more
detailed--could you describe on the consumer's end communities
in Massachusetts how this has impacted the bottom line of the
bills they pay, not the kilowatt hour cost but the bills they
end up paying?
Mr. Cash. Well, actually, the story is really good on both
those counts. As I mentioned before, our rates have dropped by
about eight percent in the RGGI region. Even if they had gone
up by the 1 to two percent that was predicted, it would have
meant lower bills. So higher rates, but because less is being
demanded and the price of energy would be lower and less energy
being used, the bills across the region would be lower as well.
And I absolutely concede the point that Mr. Collins was
raising before about the RGGI States having the most expensive
electricity in the country, that is absolutely true. And by the
way, you and I share something. I was--born and grew up in New
York, more downstate, and that was one of the driving reasons
that we got engaged in this, for the cost savings. And as I
mentioned, it has led to cost savings, not cost increases. We
have seen across the board these cost increases even with
renewable energy, which at the beginning has been more
expensive. Onshore wind, though, is not more expensive now. We
see that throughout the country. We see that in Texas where it
is competitive. And we see that in New England where it is
competitive. And solar has been dropping by 30 to 40 percent.
And while you mentioned the subsidies that are now
received, of course we have historical subsidies to fossil
fuels that go back 100 years. So clearly the playing field is
not level for renewables at this point, and these subsidies at
both States and the Federal Government are doing, or trying to,
get that level playing field so we can see the kind of cost
reductions both on rates and bills that this kind of regulation
and what state activities are doing throughout the country are
reaping for their customers.
Chairman Lummis. The gentlewoman's time is expired.
Ms. Esty. Thank you.
Chairman Lummis. And without objection her submission will
be entered in the record.
[The information appears in Appendix II]
Chairman Lummis. The Chair now recognizes the gentleman
from Texas, Mr. Weber.
Mr. Weber. Thank you, Madam Chair.
Earlier, one of you all said in your testimony that these
rules were applying to 49 States I think. Was that you, Mr.
Holmstead?
Mr. Holmstead. Yes, that is right.
Mr. Weber. And what State is it they don't apply to?
Mr. Holmstead. You know, I can't--I think it may be
Vermont----
Mr. Weber. Is that right?
Mr. Holmstead. --because Vermont doesn't have any coal-
fired power plants, any even legacy plants. So I think it is
only 49 States and the District of Columbia that are covered.
Mr. Weber. I got you. I got you. Well, I was hoping you
were going to say Texas because, you know, Texas has its own
grid and we get things right in Texas and we are part of that
lower--the rate that I think Chris Collins beat me to the punch
on. I was going to bring that out.
You were talking about CO2 carbon capture
sequestration. Do any of you all know where the only really
huge facility with the carbon capture sequestration is?
Mr. Sopkin--is it Sopkin--where would that be?
Mr. Sopkin. I believe you are referring to the Kemper
facility in Mississippi or not?
Mr. Weber. No.
Mr. Sopkin. Okay.
Mr. Weber. They are in the process of a building that----
Mr. Sopkin. That is right.
Mr. Weber. --right now at huge cost overruns incidentally.
It would happen to be in Port Arthur, Texas. Would you like
to guess whose district that is in? That is in my district. It
was at a cost of about $400 million; 60 percent of that was
supplied by the DOE. You want to talk about a nice subsidy?
Sixty percent of that 400 and something million so it was like
200 and--what would that be, 240 or 50 million dollars by the
Department of Energy through the American Reinvestment and
Recovery Act.
How many of you all think that is duplicable in the private
industry? Anybody? Mr. Cash?
Mr. Cash. Are you asking does the Federal Government
subsidize the private industry----
Mr. Weber. I won't----
Mr. Cash. Is that what you mean? I am unclear on your
question. I am sorry.
Mr. Weber. I thought that was pretty clear.
Mr. Cash. Okay.
Mr. Weber. How many of you think it is duplicable in the
private industry without the subsidies?
Mr. Cash. No, there are clearly some things that are not
ready for the market----
Mr. Weber. Right.
Mr. Cash. --and there is no question that throughout the
history of this country the Federal Government has stepped in
to----
Mr. Weber. Okay.
Mr. Cash. --provide subsidies, and fossil fuels----
Mr. Weber. Right.
Mr. Cash. --is one of them.
Mr. Weber. And I want to point that out that in my district
we have firsthand experience of that. EOR, enhanced oil
recovery, there is a company down in our area that does a lot
of that. They do an absolute lot of that enhanced oil recovery,
so we know how it works, Chuck, in our area.
I do want to go back to some of the data and the stuff, the
rules, and I--Mr. McConnell, you said you worked for the DOE?
When the rules were being formulated by the EPA regarding this,
did they seek--were you able to give input in that?
Mr. McConnell. The point that I am trying to make is that a
true collaborative effort would have been considerably
different than what I observed.
Mr. Weber. Okay.
Mr. McConnell. And I observed what was a box-checking
exercise to say that it occurred but in fact was de minimis.
Mr. Weber. But were you personally able to give input in
there or were you prevented from doing that?
Mr. McConnell. We were able to make inputs and never able
to actually observe whether they were received and entered. It
was simply a communication and then at that point the EPA was
fundamentally in charge with whatever they wanted to report.
Mr. Weber. So that is what you are calling you just checked
the box and you never knew what they did with that?
Mr. McConnell. Well, I didn't check the box; the EPA did
because they were required to do ``interagency collaboration.''
Mr. Weber. And that was their method?
Mr. McConnell. Yes.
Mr. Weber. And so they signed off on doing interagency
collaboration.
I want to respond to some comments made from the gentlelady
from Connecticut. And, Mr. Cash, you said you went after the
low-hanging fruit. You wanted energy efficiency to be the first
form of energy. And then of course Chris Collins brought out
that you all have the most expensive electricity in the
country. Is it true that in producing anything manufacturing
that the more of it you produce, the greater the economy of
scale and the greater cost savings you ought to have?
Mr. Cash. Often, that is the case.
Mr. Weber. Often or most of the time?
Mr. Cash. I don't know but I know that often that is the
case, that economies of scale will mean better use of----
Mr. Weber. So if we had less burdensome and unnecessary
regulations in permitting and in production, we could actually
produce more electricity and it might even be at a lower cost.
Would you agree with that?
Mr. Cash. I would agree that there are situations where
that is true.
Mr. Weber. So when that impacts the elderly and those on
fixed incomes or, as one of my colleagues said, well, just
everything in New England is higher, it makes me realize why
1,500 people a day are moving to Texas, okay, in our area----
Mr. Cash. Um-hum.
Mr. Weber. --which all the while if you looked at our
government charts, there with the TCEQ, we are actually
reducing not only our CO2 but our noxious gases.
Mr. Cash. Um-hum.
Mr. Weber. And by the EPA's own admission--or should I say
emission--70 percent of noxious gases come from non-stationary
point sources or what we would call vehicles.
Mr. Cash. Yeah.
Mr. Weber. How do you think those 1,500 people a day are
getting to Texas? Cars and trucks? I am just thinking, you
know. So maybe a reduction of those rules would help us
actually produce power more efficiently and less costly for
some of our constituents.
Madam--oh, Mr. Chair now, I yield back.
Mr. Neugebauer. [Presiding] I thank the gentleman and now
the gentleman from North Dakota, Mr. Cramer, is recognized for
five minutes.
Mr. Cramer. Thank you, Mr. Chair. Thanks to all the
panelists. And it is hard to know where to begin.
I might just state for the benefit of my Texas friend that
while 1,500 people move to Texas, the fastest rate of growth is
in North Dakota where the price of electricity at the end of
May is $8.62 a kilowatt hour, the lowest in the country, and
I--while I appreciate--and by the way, I love any technology
that would expand the lifespan of our coal mines and coal
plants while at the same time expanding the lifespan of the
Bakken crude oil so carbon capture for tertiary oil recovery is
a very good technology that I hope someday is truly ready for
prime time.
But we have talked about interagency or the lack of
interagency collaboration, which concerns me, the lack of it,
in a big way. But we have really rarely talked so far about the
other obvious agency that has been ignored here and that is the
Federal Energy Regulatory Commission or the FERC, who I am not
even sure why we would need if we have a rule like this, not to
mention the NERC and the others.
I spent, as Commissioner Sopkin may know, nearly ten years
as the--as a Public Service Commissioner in North Dakota, and
multistate integrated resource planning was hard enough just
being multistate, but now to have to throw this into the mix,
it boggles my mind how we even could do it. I am very proud of
the fact that--and I am one that has resisted many times to
call for a comprehensive national energy policy. We have a
really good energy policy. It is called lowest cost. The
dispatchers dispatch the lowest-priced electricity. It works in
a market-based economy quite well. How in the world would we
expect a utility like Basin Electric, for example, a rural
electric cooperative, G&T, that has its own multistate
challenges that doesn't answer to a state regulator, how would
we--what are we to tell them? What are we to tell the States of
North Dakota, South Dakota, Minnesota, and all of the others
about their own integrated resource planning and how is this
going to impact them, and North Dakota being an export State,
major export State of electricity?
And I am going to begin with Commissioner Sopkin because
your white paper, by the way, and Commissioner Gifford's work
is very, very good, but maybe if you could just help me
understand how I would explain a rule like this to those that
are multistate and multi--by the way, multi-resource planners?
Mr. Sopkin. Well, I think it is difficult to explain
frankly. We have looked at the rural and municipal providers
across the country and they are very reliant on coal.
Mr. Cramer. Yeah.
Mr. Sopkin. And they have made the decision to self-
determine their own resource plan. That is part of the reason
to be a co-op or muni. And now they are going to have to cede
their authority to the EPA and to some state agency that will
then tell them how they have to plan their resources. And the
big problem here is not having a balanced portfolio.
I would point to a study that just came out this week
called ``The Value of U.S. Power Supply Diversity'' by IHS
Energy. This is no right wing think tank here. This is a
respected international organization that studies electrical
issues. And this I think gives everybody a good idea of what is
going to happen with this EPA plan. It looks at a base case,
2010 to 2012, and it compares to what will happen if we go to a
lot of reliance on gas and renewable energy. And the cost of
generating electricity will increase $93 billion per year
because of that and consumer pockets are going to be lighter by
$2,100 per year. I won't go through the rest of the report, but
this details the direction we are headed.
Mr. Cramer. Well, and I know some of you are anxious, and
Dr. Cash, but I want to get to the efficiency issue as well
because we talk about energy efficiency like it is free, and I
mean we have a lot of legacy sunk investment that is going to
be--the costs are going to be recovered. If we don't use it, it
is still going to be recovered. And if we add another resource
to it, the legacy stuff still has to be recovered. How do we
deal even with energy efficiency and ignore the requirement to
recover costs? I mean, you know, I listened to my colleague
talking about, yes, the price per kilowatt hour is much higher
but the bills are lower and you have said the same thing. We
still have to recover costs for things that are being built,
don't we? Are we ignoring that in this rule?
Mr. Cash. I don't think that we are ignoring that, and I
think that there are a lot of lessons to be gained from two
past historical things. One is the acid rain program, which
then layered this other thing on top of least cost, and the
grids, whether they be state only or regional like PJM or state
only like Texas, et cetera, modified the market so that least
cost bid stack took into account whatever requirements were
required for acid rain, and likewise in the RGGI region where
we have ISO New England, NISO and PJM, we layered that on top,
and what we have seen is the market respond. The market has
responded with innovation, with better technologies, with
energy efficiency that even has happened in the requirement
for----
Mr. Cramer. I don't want the rule to get ahead of the
technology, and that is what I am afraid we are----
Mr. Neugebauer. I ask unanimous consent that the report
that Mr. Sopkin was referring to in his testimony be a part of
the record. Without objection, so ordered.
[The information appears in Appendix II]
Mr. Neugebauer. We now go to the gentleman from Indiana.
Mr. Bucshon is recognized for five minutes.
Mr. Bucshon. I thank all of you for being here. Eighty-five
percent of the electrical power in Indiana comes from coal, and
every coal mine in the state is in my district as well as most
of the oil and natural gas. My dad was a coal miner, and that
is why I am here today because of the high-paying job in the
coal industry. Mom was a nurse.
I want to first of all say I was also a medical doctor
prior to coming here, and I know some of the scare tactics I
heard from the other side about health issues related to
emission, and that is exactly what it is. It is scare tactics.
You know why? Because we look at a medical study, and the first
thing you look at is who paid for it. Well, the studies that
are showing this type of information all paid for by left-
leaning global warming advocates based on a model created by a
left-leaning global warming advocate who has a financial stake
in the model and shamelessly published by a nationally known
organization, which I actually talked to about this and told
them I was ashamed of their information. From a health care
standpoint, there is no clear data. It is scare tactics to
scare the American people, and every time I hear it, it makes
me very mad.
The discussion here today is not about whether the
temperature of the Earth is changing. Of course it is. It is
always changing. When you look back at the history of the
Earth, it has changed for hundreds of years, and you know, the
other thing is, the EPA admits their current regulations will
have no effect on this.
I want to follow up on what Mr. Collins was discussing
about energy subsidies. First of all, I believe in an all-of-
the-above policy. I think we should pursue absolutely
everything. But let me tell you and Mr. Chairman, I was
unanimous consent to introduce a few graphs from the Energy
Information Administration and the Institute for Energy
Research into the record.
Mr. Neugebauer. Without objection, so ordered.
[The information appears in Appendix II]
Mr. Bucshon. Here is what the facts are, and you can see
it--everyone can see it on this chart from where you are
sitting--that the solar industry per kilowatt-hour is being
subsidized at 1,100 times more than coal, oil and natural gas,
and wind is being subsidized at over 80 times more than these
others. So all of the states in the Northeast, you are welcome
because the taxpayers in Indiana are paying for what is
happening in your state.
In the electrical generation sector, renewable energy, 55
percent of the subsidies generated ten percent of the
electricity. Wind, 42 percent of the subsidy, 2.3 percent of
the electricity generated. Fossil fuel--it is true fossil fuel
gets subsidies, and it has for a long time. Sixteen percent of
the subsidies but generated the largest share of electricity,
70 percent. And in this chart, solar per kilowatt-hour,
$775.64, coal 64 cents. So I do think economics is part of the
mix here, and we do need to look at economics. And the fact of
the matter is, is that as we pursue new technology, the Federal
Government should support these technologies, but we also need
to recognize what the facts are about what we are doing and
whether or not we can sustain this.
Mr. Cash, how close to you were brownouts in the Northeast
in the cold winter we just had? And be very short because I
know what the facts are.
Mr. Cash. We were not. We were not close to brownouts.
Mr. Bucshon. Okay, because that is interesting because all
the energy people in the Midwest tell me that you were within
hours of brownouts based on the fact that you had plenty of
natural gas, you just didn't have any pipelines to get it to
where it needed to go.
Mr. Cash. We had constraints. I don't know if we were
hours, but we had constraints and there were concerns.
Mr. Bucshon. Okay. So you know, when you eliminate 40
percent of the electrical power generation in the entire United
States, which is coal, which is the goal of the Administration,
get used to it, American people. You are going to not have
power 24 hours a day. You are going to have brownouts because
the infrastructure is not there.
Mr. Sopkin, do you want to answer that question?
Mr. Sopkin. Yeah. What happened with these polar vortices
in January and February, many of the baseload plants that are
soon to be retired because of EPA regulations came to the
rescue. Don't take my word for it. The New York Times headline
was ``coal to the rescue but maybe not next winter,'' and I
offer this as well for the record.
Mr. Neugebauer. Without objection, so ordered.
[The information appears in Appendix II]
Mr. Sopkin. And what happened is that 89 percent of AEP's
coal fleet that is going to be retired next year had to be
operated to avert brownouts, and on the subject of energy
efficiency, Murray State College had signed up for
interruptable program and found out to its dismay that actually
you do get interrupted, and they were interrupted with five
minutes' notice. Students had to be displaced and there was
flooding at the school.
Mr. Bucshon. Mr. Chairman, I yield back.
Mr. Neugebauer. I thank the gentleman, and now the
gentleman from Massachusetts, Mr. Kennedy, is recognized for
five minutes.
Mr. Kennedy. Thank you, Mr. Chairman.
Mr. Cash--Dr. Cash--excuse me--I want to touch base back
with you about the interstate compact and the need for one from
your opinion.
We have heard testimony today about several assumptions
about the operations of multi-state implementation plans, but
your testimony seems to indicate that many, if not all of them,
are unfounded. Specifically, I believe it was Mr. Sopkin that
indicated that enforcement can and should be on an interstate
basis and that states should and will insist upon it. I wanted
to get your thoughts as to that, and if you can tell us a
little bit about what is going on in Massachusetts and RGGI.
Mr. Cash. Thank you very much, Congressman Kennedy.
Certainly, states can take actions by themselves. There is
no question, and many, many states across the country have on
energy efficiency and other programs. There are many states
that avail themselves to solar programs, not just the
Northeast, in fact, many in the Southwest. But what is
advantageous to an interstate compact, it allows the program to
move forward in the most cost-effective way. If it is very
costly to reduce emission in Massachusetts but there are plants
in New York that can be dialed back more cheaply, you can have
a tradable program to do that. That is what the neoconservative
economists said before the acid rain debates in the 1980s and
1990s, which incidentally many environmentalists were very
concerned about letting the market play here. It has worked
perfectly well in acid rain, and is has worked perfectly well,
that the market works in the lowest-cost way to get emission is
what comes to the fore, and so by having more and more states
in an interstate compact, you can have a broader market, a more
liquid market that allows that kind of cost-effective economics
to work.
Mr. Kennedy. Thank you, Doctor. And building off of those
comments, can you discuss a little bit--again, from your
opinion and your experience with Massachusetts--about how EPA's
proposed rule helps Massachusetts and will allow other RGGI
states to build off the successes that you have already seen.
Mr. Cash. Sure. So it is kind of interesting. When we were
developing RGGI ten years ago when it started, we always
thought of it as a potential model for something that could
happen at the national level. Again, acid rain was one of the
models that had worked on the acid rain side. We thought on
carbon this would be a very good approach.
Clearly, as the market gets larger, if there are more and
more states that are playing this, when more and more states
playing it, it means that there is going to be more innovation
and more competition to get that next new energy efficiency or
solar product or advancement that is going to drive the cost
down and reduce emission, and we see that already. The states
that are very engaged in the clean energy sector, there is
enormous growth and innovation, and so the larger the market
is, the more advantageous it is and the lower the cost will be
for emissions reduction. In fact, the cost is negative. In
other words, we are saying money.
Mr. Kennedy. Thank you, Doctor.
Mr. McConnell, thank you for your testimony earlier today.
My in-laws actually live right down the street from your
university so I have been to Houston more times than I ever
thought I would be over the past several years.
Mr. McConnell. You are always welcome.
Mr. Kennedy. Thank you very, very much.
Sir, you talked about a bit earlier the lack of
coordination between--communication between interstate
agencies. If I am correct, you finished up your stint at the
Department of Energy back in January of 2013, so you haven't
actually been part of those official communications back and
forth for over a year. Is that right?
Mr. McConnell. Resigned in February of 2013, yes.
Mr. Kennedy. So is it fair to say that you wouldn't be as
involved and your knowledge about the extent of those
communications over the course of the past year would be less
than they would have been before?
Mr. McConnell. That is absolutely true.
Mr. Kennedy. Okay. Thank you, sir.
Chairman, I yield back.
Mr. Neugebauer. I thank the gentleman, and now the
gentleman from Alabama, Mr. Brooks, is recognized for five
minutes.
Mr. Brooks. Thank you, Mr. Chairman.
Mr. Sopkin, Alabama Attorney General Luther Strange
recently testified to Congress that `Since 1915, the Alabama
Public Service Commission has guided intrastate electricity
development so as to protect ratepayers and ensure reliability.
Under EPA's proposed 111(d) guidelines, however, the Commission
could continue these efforts only insomuch as they comport with
EPA's greenhouse gas agenda.'' What is your opinion on whether
the EPA or a public utility commission can do a better job of
protecting ratepayer interests?
Mr. Sopkin. I certainly think a public utility commission
is the expert agency that performs the resource planning
function best. This is something that most state public utility
commissions do all the time, and their highest calling is for
reliability and cost. They need to make sure that service is
adequate and safe and rates are just and reasonable. That is
found in virtually every statute in the state.
The problem with the EPA plan is, those issues now become
secondary to carbon reduction, and as far as EPA flexibility on
that subject, it appears that EPA is rejecting exceptions to
the carbon reduction rule if a state says we have a problem
with feasibility, we have a problem with cost, we have a
problem with the age of the units, we have a problem with how
this is going to affect our state. Section 111(d) of the
statute that EPA is operating under specifically provides that
states should have a flexibility to come to the EPA and ask for
a case-by-case exception but page 520 of the EPA's proposed
guidelines appears to reject that and say that these case-by-
case exceptions should not be considered as a basis for
adjusting the state emission performance goal or for relieving
a state of its obligation to develop and submit an approvable
plan that achieves that goal on time. To me, that means that
states have no choice but to submit to these carbon caps
regardless of these issues of cost and reliability.
Mr. Brooks. Thank you, Mr. Sopkin.
The next question is going to for Mr. Holmstead, but if
anyone else has any insight, please feel free to share it after
him.
I think we can all agree that overpopulated poor countries
are some of the world's worst polluters and that prosperous
economies empower economies and countries like America to pay
for expensive pollution control equipment. That being the case,
what weight does the EPA give to jobs creation and jobs
destruction when the EPA imposes its rules and regulations? And
I mention that in particular because in our state, Governor
Bentley has made some rather strong comments recently talking
about how the EPA and its rules and regulations are basically
an attack on jobs in the State of Alabama and are costing us
thousands of jobs that our people in the State of Alabama need.
So Mr. Holmstead, what insight can you share?
Mr. Holmstead. EPA is supposed to do studies of job losses
caused by Clean Air Act regulations. They have not done that so
far. But here is what they do: They count the jobs that they
want to create and don't look at the jobs that are destroyed,
so we have heard about all the people who are employed
installing wind turbines and solar panels and all of those
things, and those jobs that are created by government subsidies
and government mandates. But they don't look at the jobs that
are lost in other sectors and in particular the jobs that are
lost because of higher energy costs. So the bottom line is, EPA
doesn't really consider that.
Mr. Brooks. Anybody else want to share any insight?
Mr. Cash. If I may, Congressman Brooks, I think that the
EPA, again, like many other states that have taken on these
kinds of issues, not just climate but clean energy, see job
growth as a very important part of this, and whether it is
primary like in the growth in our field of--in our area of
solar jobs, wind jobs, or it is a secondary growth, that is,
savings through energy efficiency that now stays in the pockets
of customers, which stays in the pockets of businesses that can
now use that for additional job growth. We see this as a big
step forward in that regard.
Mr. Brooks. Thank you. Any other comments?
Mr. McConnell. I think there is a big difference between
jobs in the service industries and real manufacturing and heavy
industry, whether it is the petrochemical industry, refining,
and some of the burdens of that. The states of Texas, Florida,
Illinois, Alabama, your state, this is where 40 percent of the
burden of this regulation will be borne, in those states where
there is heavy manufacturing and heavy industrial use, and that
is the real critical issue here is that many of the other
states that are involved with this don't feel that pain near as
much.
Mr. Brooks. Well, thank you. I would just follow up on that
just for one or two comments. I would submit that manufacturing
and industry are the golden eggs, and if you destroy those
golden eggs, there won't be service jobs because those people
who are in industry and manufacturing, their incomes are what
ultimately are consumed by those who are providing services.
And then finally, inasmuch as the EPA is not--well, I am
getting hammered down. I thought last I would have an extra 30
seconds. I don't. Thank you. Have a good day.
Mr. Neugebauer. I thank the gentleman, and now the
gentlewoman from Maryland, Ms. Edwards, is recognized for five
minutes.
Ms. Edwards. Thank you very much, Mr. Chairman, and thank
you to our witnesses today.
You know, it is so interesting when you are in Congress how
people have different perspectives depending on the state and
the district that they come from and represent and here you
heard a number of different perspectives, and I guess the way I
looked at this EPA rulemaking is that it offers states some
flexibility to develop a plan that matches the needs and
opportunities of its state, considering the kind of industry
and the challenges that that state faces. I know in Maryland,
we have taken on this challenge put forward by our Governor to
reduce our energy consumption by 15 percent just in a very
short time by 2015.
Now, I don't know whether we are going to meet that goal.
It is a really big goal. But I think it is important here when
we are talking about preserving and protecting the environment,
creating jobs for the 21st century, leaving a planet that our
children and their grandchildren can enjoy and get the benefit
of, then we should set a big goal. Maybe at the end of that
time we don't meet those goals but we should try to do that.
And so I have looked at this rulemaking as about flexibility.
Dr. Cash, I want to ask you about that because in his
testimony, Mr. Sopkin mentions that the proposed rule places
severe time constraints on states that are potentially
insurmountable, given the need for state legislation, and I
think we all recognize that these kind of things don't happen
overnight, especially legislation, but it does appear to me
that Massachusetts and other RGGI states have been able to
accomplish much of what is described in the building blocks in
a relatively short amount of time.
So as someone who has been instrumental in developing that
legislative basis in Massachusetts that mirrors the intent of
the proposed rule, I am curious about hearing your perspective
and what lessons we can learn from the successes that have been
achieved by RGGI states in overcoming some of these hurdles.
Mr. Cash. Thank you very much, Congresswoman Edwards, and
it has always been a pleasure to be working with Maryland and
RGGI on other projects in this area.
First of all, I believe that there will be flexibility even
on the legislative versus regulatory side. In RGGI, for
example, not every state had to pass legislation. There were
already states as Massachusetts was one of them that had the
regulatory authority to become part of the market base program
that is RGGI.
The other, I think, thing that is interesting is that
during the RGGI process, it was a bipartisan approach, and it
changed during the--there were different gubernatorial
elections during the time but there were both Republican and
Democratic governors during that time who saw the economic
advantages and there were legislatures that were interested in
moving the ball forward.
So while I think that this may be difficult for some
states, I think there may be states that have regulatory
authority already and I think in the face of this EPA
regulation, I think legislators will see the potential
opportunities and build in flexibility in their own state
rules, which is another thing that we have done in RGGI. For
example, each state can apportion the allowances, the revenue
that comes from allowances, in different ways. There isn't a
cookie cutter way to do it. Different states have done
different regulations and different laws that allow themselves
to comply with what we have agreed upon to be RGGI but to do it
in very different kinds of way. And so that has been a big
advantage and one I think that adds to the kind of flexibility
that we see here in the EPA rule.
Ms. Edwards. Let me just ask about that, because, I mean,
there is also some criticism and we have heard it already today
about the job creation potential or the negative impact on
jobs, and again, I have always thought of this as, you know,
here we are, we are in the early parts of the 21st century. The
kind of jobs that we have now are not the kind of jobs that we
had in the early part of the 20th century. So the fact that we
lose jobs in some areas doesn't close off the opportunity in
this new sector and a growing sector to create those jobs. Has
that been part of your experience as well?
Mr. Cash. That has been part of our experience, and I just
want to say very, very clearly, when any of these changes
happen and the economic shifts, whether they are because of
regulation or just the market, the global market changes, it is
very, very difficult and in no way do we minimize the changes
that may happen in states that are more dependent on fossil
fuels, et cetera. We do not minimize that at all. We have dealt
with that in our state. We have had coal plant closings in our
state and throughout the region, and we have actually used part
of your RGGI funds to assist communities in the transition as
those plants have closed down, whether they are in retraining
or loss of revenue to the municipality that had the plant as a
tax base. So that is something that I think needs to be taken
into account.
Ms. Edwards. Thank you.
Mr. McConnell. I would like to add a comment to----
Mr. Neugebauer. I am sorry. The time of the gentlewoman is
expired.
We will now go to the gentleman from California. Mr.
Rohrabacher is recognized for five minutes.
Mr. Rohrabacher. What would you like to add?
Mr. McConnell. I would like to add that I have been
somewhat stunned that we have spent so much time today talking
about the states that generate five percent of the energy for
the entire United States as a model for the rest of the United
States, and I think that is the most troubling aspect of this
is looking at that small subset as the model for the rest of
the country, which doesn't look anything like the rest of the
country.
Mr. Rohrabacher. And I think you mentioned earlier that the
same states actually have higher costs of energy than the rest
of the states.
Let me just note that when jobs are really destroyed in our
country and whether they are in Maryland or anywhere else, if
what is being mandated is a use of what we have as wealth in a
country and now it takes more wealth to do something, that
means there are fewer jobs because there is not the wealth to
create the jobs. That is one of those basics that we know
about. One excuse would be for doing that, if you want to
eliminate wealth that doesn't need to be eliminated and have
the jobs there would be if public health was involved in this,
and what I would like to know basically what we are talking
about today are regulations that are not really aimed at public
health. They are aimed at CO2 reduction. Is CO2
a threat to public health?
Mr. Cash. It is a threat to public health.
Mr. Rohrabacher. CO2 actually is harmful to
humans?
Mr. Cash. Not breathing it in but the impacts of climate
change.
Mr. Rohrabacher. Okay.
Mr. Cash. It is harmful to public health.
Mr. Rohrabacher. That is enough of that. Let me----
Mr. Cash. And it is also----
Mr. Rohrabacher. That is totally absurd, so CO2
is not harmful to human beings, right? But all these other
things that we can just conjure up in CO2 become
hazardous to the health of human beings. Frankly, that one
extra step is a big step because some people don't believe that
CO2 actually is a major factor in climate change for
our planet.
Let me just ask, earlier on we had a--so CO2 is
not harmful to human beings' health itself. Earlier on, Mr.
Collins, my colleague, asked about all of these regulations
would even in the reduction of CO2 would only result
in a two percent reduction in the production of CO2.
I remember that. I am not sure who----
Mr. Holmstead. Can I just put this in context?
Mr. Rohrabacher. Yes.
Mr. Holmstead. A study came out not that long ago that said
if you assume this regulation is fully implemented by 2030----
Mr. Rohrabacher. Yes.
Mr. Holmstead. --what would this regulation do, this
massive shift in our economy. That would be equal to about 21
days of current emission from coal-fired power plants in China,
and by 2030, it is projected that it would be something like 12
days.
Mr. Rohrabacher. And we are talking about CO2
production.
Mr. Holmstead. Right, CO2 production.
Mr. Rohrabacher. Which by the way is not harmful to
people's health. The byproduct of manufacturing it can be
conjured up but CO2 itself is not harmful, but this
reduction of CO2 that we are talking about, this two
percent, is not two percent of what mankind is producing or is
it a two percent reduction of what CO2 represents as
part of our atmosphere the two percent reduction, is it not? We
are not talking about two percent of the reduction of what
CO2 in the whole atmosphere. We are only talking
about a two percent reduction in mankind's addition. Is that
correct? Right.
Mr. Holmstead. Yes, it is, and to be clear about it, this
specific regulation is .2 percent of the overall
CO2.
Mr. Rohrabacher. And let me note that CO2 then,
we are talking about a two percent reduction of what some
people think will have a draconian effect on our economy. That
is two percent less than one-half of one-tenth of one percent
of the atmosphere, not 2 percent--people will think it is two
percent of what it is in the atmosphere of CO2. That
is not what we are reducing. We are reducing the one-half of
one-tenth percent of the atmosphere, okay, is CO2,
and we are reducing the mankind's percent of that, which is
only one-tenth of that. Is that correct? So what we are really
talking about is one-tenth of one-half of one percent of the
atmosphere that would be affected by this at all.
In order to--let me just state, CO2 again is not
harmful to people's health. Reducing it by this teeny weeny
microscopic amount and hurting people's jobs, et cetera,
throwing us into turmoil and restructuring our business is
absurd. Thank you.
Mr. Neugebauer. I thank the gentleman, and now the
gentleman from Illinois, Mr. Hultgren, is recognized for five
minutes.
Mr. Hultgren. Thank you, Mr. Chairman. Thank you all. I
want to thank the witnesses for being here. This is certainly
an important hearing as we try and understand what legal
authority under Section 111(d) EPA has to promulgate these
rules.
With unemployment rates still disproportionately high in my
State of Illinois, what my constituents are worried about is
jobs. Manufacturing is a vital part of my district's economy,
and this sector is one that will always be energy intensive.
They have every incentive to find efficiency gains, which the
industry has been actively doing, but many now fear that this
was all for naught, considering that increased energy costs,
especially in the short term, will end up making them pay more
even though they are using less.
Mr. Holmstead, I wonder if I could address my question not
you. The Clean Power Plan is comprised of two main parts, to my
understanding, one, the state-specific goals to lower carbon
pollution from power plants, and guidelines to help the states
develop their plans for meeting those goals. According to EPA,
this framework provides states with the flexibility to choose
for themselves, the best set of cost-effective reductions. How
does EPA guidance under this plan compare with previous agency
guidance for similar performance standards? Is it more or less
flexible than the guidance EPA has provided for other sources,
and what boundaries for state interpretation has EPA set for
its guidance?
Mr. Holmstead. This is fundamentally different from
anything EPA has ever tried to do before, so in the past when
they have done guidance, the guidance says here is the kind of
plants that you need to regulate, here are the things that you
can do to improve the emission rate of those plants, and then
states, you go out and you need to develop the standards for
these individual plants. I think it is true that this provides
much more flexibility than EPA has ever done before but it is
flexibility to achieve a goal that can only be accomplished by
making these dramatic changes in many ways. So is it flexible?
Sure. But it is--someone used the analogy before, you know,
they give you six gallons of gas to make it from here to
California and say, you know, you are completely flexible, do
that any way you want.
Mr. Hultgren. Mr. McConnell, if I could address this to
you, you spoke about the lack of communication between DOE and
EPA when putting forward new rules. Earlier this year I asked
EPA about their consultation with DOE regarding the technology
readiness assessment for your former agency of science to
technologies they develop. Their answer was alarming, and
echoes your complaints. I wondered at what technology readiness
level would you consider a technology to be adequately
demonstrated? All of the CCS technologies were at six or below.
That is my understanding.
Mr. McConnell. I came here last November and testified
about the new coal standards, and in fact, what is absurd about
it is that EPA is taking a stance where plants that are either
in construction or in engineering development have actually--
are examples of demonstrated commercially available technology
and declared that that technology would be commercially
available in 2016 for new coal-fired power plants.
We have a roadmap and have had a roadmap for a number of
years that said it was going to be available in 2020, and that
also--it also required that continued funding of the program
would be maintained at the then-current rates and then
subsequent to that, the government and the Administration has
defunded that effort, and so what we have done is, we have
taken the money out of the technology development, declared it
ready ahead of time. It is a somewhat disingenuous process that
says you can use it, you should use it, but you really can't,
and then consequently, you are required to make another choice.
It is flexibility but it really isn't flexibility.
Mr. Hultgren. I think you kind of touched on this, but
since climate is a global problem, I wonder if you could into a
little bit more specifics of what technologies are we not
developing right now that nations such as China would be
willing to purchase? I am thinking of some of the combustion
technologies that provide significant efficiency gains, which
seem to be, you know, something this President is not
supporting. So I wonder if you could talk a little bit more
about that.
Mr. McConnell. Well, many people would use--would say that
clean coal and clean fossil technology is an oxymoron, and that
is absolutely not true. It is demonstrated in our country we
have made enormous progress, and that is when the government
has worked with industry to provide that pathway forward, not
to eliminate something but to actually invest in the technology
so that it can be deployed.
The world's energy is going to double in the next 50 years.
Ninety percent of that doubling will occur in developing
countries. Those developing countries are going to use fossil
fuels. EIA has already projected that 85 percent of the world's
energy will be fossil energy by 2060. So we have an obligation
to the rest of the world to develop those clean technologies so
we can really make an impact, not do this that doesn't impact
anything while we hobble our economy.
Mr. Hultgren. Good point. Thank you.
Thank you, Chairman. I yield back.
Mr. Neugebauer. I thank the gentleman. I guess the Chair
has a question then.
Mr. Holmstead, by the year 2030, EPA believes that the
proposed plan would allow the United States to reduce carbon
emission from the power sector by 30 percent below the 2005
levels and roughly 17 percent cut from the 2013 levels. To
achieve these reductions, EPA calculated a specific emission
rate for each state, as you are aware of, by totaling the
CO2 emissions produced by each state's EGUs and
dividing it from the total amount of electricity generated by
the EGUs. My home State of Texas is looking at a 39 percent cut
in emissions by 2030. Is that achievable?
Mr. Holmstead. It is hard to know. We don't really have
kind of good data on that. People are trying to figure that
out. But what we do know is that it will be very expensive, and
I think that is the--and again, there been some estimate of how
expensive that may be. I think people are still trying to
figure it out. This is an enormously complicated proposal. But
the one thing we can say is, it certainly will put reliability
at risk in some areas, and it will be very expensive.
Mr. Neugebauer. This may be a harder question. Do you
believe EPA has a sound legal and technical basis for these
emission rates and reduction targets for each individual state?
Mr. Holmstead. Well, that is actually an easy question. I
think it is quite clear that this proposal goes far beyond
anything EPA is authorized to do under the Clean Air Act, and I
just think that is troubling that a regulatory agency would
essentially ignore what Congress has given it authority to do.
Mr. Neugebauer. And this weighting formula that EPA came up
with for these reduction goals, was that done fairly? If you
were going to do it that way, that is a pretty big burden on
some of the states that are actually producing electricity.
Mr. Holmstead. Again, this question is a hard one because
EPA went state by state and they said here is how we believe
you should change your electric system, right, and they said on
a state-by-state basis, we think you should, you know, shift
generation this way and you should do energy efficiency
programs and you should mandate renewable energy. So it is hard
to know if it is fair. What we do know is, EPA went state by
state and said here is the way we believe you should change
your electricity system.
Mr. McConnell. And I think in our State of Texas, we ought
to be concerned because we generate 11 percent of the energy in
this country and we are going to bear better than 20 percent of
the burden for this, and specifically, the only way Texas can
do this because of the pounds per megawatt-hour that have been
mandated are going to require us to double the amount of
renewable energy we have in our portfolio, approaching 35
percent in our state. So we are being punished because we are
the leading renewable state in the country. The formula goes to
making that a baseline for ability to move forward. So in our
state, we should be very concerned.
Mr. Neugebauer. I thank the gentleman. Unfortunately, the
Chair has to close this hearing. I want to thank the witnesses
for their valuable testimony and the Members for their
questions. The Members of the Committee may have additional
questions for you, and we ask that you respond to those in
writing. The record will remain open for two weeks for
additional comments and written questions from the Members.
The witnesses are excused and this hearing is adjourned.
Thank you.
[Whereupon, at 12:14 p.m., the Committee was adjourned.]
Appendix I
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Answers to Post-Hearing Questions
Answers to Post-Hearing Questions
Responses by The Honorable Jeffrey Holmstead
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Responses by The Honorable Charles McConnell
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Responses by Mr. David Cash
Responses by Mr. Gregory Sopkin
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Appendix II
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Additional Material for the Record
Report submitted by Ranking Member Eddie Bernice Johnson
[GRAPHIC] [TIFF OMITTED]
Report submitted by Representative Elizabeth Esty
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To view the report in its entirety please visit: http://
www.analysisgroup.com/uploadedFiles/Publishing/Articles/
Analysis_Group_EPA_Clean_Power_Plan_Report.pdf
Report submitted by Representative Randy Neugebauer
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[all]