[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
U.S. ENERGY INFORMATION
ADMINISTRATION REPORT:
ANALYSIS OF THE IMPACTS OF
THE EPA'S CLEAN POWER PLAN
=======================================================================
JOINT HEARING
BEFORE THE
SUBCOMMITTEE ON ENVIRONMENT &
SUBCOMMITTEE ON ENERGY
COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
__________
June 24, 2015
__________
Serial No. 114-26
__________
Printed for the use of the Committee on Science, Space, and Technology
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://science.house.gov
___________
U.S. GOVERNMENT PUBLISHING OFFICE
97-566PDF WASHINGTON : 2016
________________________________________________________________________________________
For sale by the Superintendent of Documents, U.S. Government Publishing Office,
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center,
U.S. Government Publishing Office. Phone 202-512-1800, or 866-512-1800 (toll-free).
E-mail, [email protected].
COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY
HON. LAMAR S. SMITH, Texas, Chair
FRANK D. LUCAS, Oklahoma EDDIE BERNICE JOHNSON, Texas
F. JAMES SENSENBRENNER, JR., ZOE LOFGREN, California
Wisconsin DANIEL LIPINSKI, Illinois
DANA ROHRABACHER, California DONNA F. EDWARDS, Maryland
RANDY NEUGEBAUER, Texas SUZANNE BONAMICI, Oregon
MICHAEL T. McCAUL ERIC SWALWELL, California
MO BROOKS, Alabama ALAN GRAYSON, Florida
RANDY HULTGREN, Illinois AMI BERA, California
BILL POSEY, Florida ELIZABETH H. ESTY, Connecticut
THOMAS MASSIE, Kentucky MARC A. VEASEY, Texas
JIM BRIDENSTINE, Oklahoma KATHERINE M. CLARK, Massachusetts
RANDY K. WEBER, Texas DON S. BEYER, JR., Virginia
BILL JOHNSON, Ohio ED PERLMUTTER, Colorado
JOHN R. MOOLENAAR, Michigan PAUL TONKO, New York
STEVE KNIGHT, California MARK TAKANO, California
BRIAN BABIN, Texas BILL FOSTER, Illinois
BRUCE WESTERMAN, Arkansas
BARBARA COMSTOCK, Virginia
DAN NEWHOUSE, Washington
GARY PALMER, Alabama
BARRY LOUDERMILK, Georgia
RALPH LEE ABRAHAM, Louisiana
------
Subcommittee on Environment
HON. JIM BRIDENSTINE, Oklahoma, Chair
F. JAMES SENSENBRENNER, JR SUZANNE BONAMICI, Oregon
RANDY NEUGEBAUER, Texas DONNA F. EDWARDS, Maryland
RANDY WEBER, Texas ALAN GRAYSON, Florida
JOHN MOOLENAAR, Michigan AMI BERA, California
BRIAN BABIN, Texas MARK TAKANO, California
BRUCE WESTERMAN, Arkansas BILL FOSTER, Illinois
GARY PALMER, Alabama EDDIE BERNICE JOHNSON, Texas
RALPH LEE ABRAHAM, Louisiana
------
Subcommittee on Energy
HON. RANDY K. WEBER, Texas, Chair
DANA ROHRABACHER, California ALAN GRAYSON, Florida
RANDY NEUGEBAUER, Texas ERIC SWALWELL, California
MO BROOKS, Alabama MARC A. VEASEY, Texas
RANDY HULTGREN, Illinois DANIEL LIPINSKI, Illinois
THOMAS MASSIE, Kentucky KATHERINE M. CLARK, Massachusetts
STEVE KNIGHT, California ED PERLMUTTER, Colorado
BARBARA COMSTOCK, Virginia EDDIE BERNICE JOHNSON, Texas
BARRY LOUDERMILK, Georgia
LAMAR S. SMITH, Texas
C O N T E N T S
June 24, 2015
Page
Witness List..................................................... 2
Hearing Charter.................................................. 3
Opening Statements
Statement by Representative Jim Bridenstine, Chairman,
Subcommittee on Environment, Committee on Science, Space, and
Technology, U.S. House of Representatives...................... 7
Written Statement............................................ 8
Statement by Representative Suzanne Bonamici, Ranking Minority
Member, Subcommittee on Enviorment, Committee on Science,
Space, and Technology, U.S. House of Representatives........... 9
Written Statement............................................ 10
Statement by Representative Randy K. Weber, Chairman,
Subcommittee on Energy, Committee on Science, Space, and
Technology, U.S. House of Representatives...................... 12
Written Statement............................................ 13
Statement by Representative Alan Grayson, Ranking Minority
Member, Subcommittee on Energy, Committee on Science, Space,
and Technology, U.S. House of Representatives.................. 14
Written Statement............................................ 15
Statement by Representative Lamar S. Smith, Chairman, Committee
on Science, Space, and Technology, U.S. House of
Representatives................................................ 16
Written Statement............................................ 17
Statement by Representative Eddie Bernice Johnson, Ranking
Member, Committee on Science, Space, and Technology, U.S. House
of Representatives............................................. 18
Written Statement............................................ 19
Witnesses:
Dr. Howard Gruenspecht, Deputy Administrator, U.S. Energy
Information Administration (EIA)
Oral Statement............................................... 20
Written Statement............................................ 23
Mr. Stephen Eule, Vice President for Climate and Technology, U.S.
Chamber of Commerce
Oral Statement............................................... 36
Written Statement............................................ 38
Dr. Susan Tierney, Senior Advisor, Analysis Group, Inc.
Oral Statement............................................... 52
Written Statement............................................ 54
Dr. Kevin Dayaratna, Senior Statistician and Research Programmer,
The Heritage Foundation
Oral Statement............................................... 75
Written Statement............................................ 77
Discussion....................................................... 86
Appendix I: Answers to Post-Hearing Questions
Dr. Howard Gruenspecht, Deputy Administrator, U.S. Energy
Information Administration (EIA)............................... 120
Dr. Susan Tierney, Senior Advisor, Analysis Group, Inc........... 128
Appendix II: Additional Material for the Record
Report submitted by Representative Jim Bridenstine, Chairman,
Subcommittee on Environment, Committee on Science, Space, and
Technology, U.S. House of Representatives...................... 150
Documents submitted Representative Gary Palmer, Committee on
Science, Space, and Technology, U.S. House of Representatives.. 165
U.S. ENERGY INFORMATION
ADMINISTRATION REPORT:
ANALYSIS OF THE IMPACTS OF
THE EPA'S CLEAN POWER PLAN
----------
WEDNESDAY, JUNE 24, 2015
House of Representatives,
Subcommittee on Environment &
Subcommittee on Energy
Committee on Science, Space, and Technology,
Washington, D.C.
The Subcommittees met, pursuant to call, at 10:05 a.m., in
Room 2318 of the Rayburn House Office Building, Hon. Jim
Bridenstine [Chairman of the Subcommittee on Environment]
presiding.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Bridenstine. The Subcommittee on the Environment
and the Subcommittee on Energy will come to order.
Without objection, the Chair is authorized to declare
recesses of the Subcommittee at any time.
Welcome to today's hearing titled ``U.S. Energy Information
Administration Report: Analysis of the Impacts of the EPA'S
Clean Power Plan.'' I recognize myself for five minutes for an
opening statement.
Today's hearing focuses on the EPA's Clean Power Plan and
the tremendous costs that it will place on the economy and the
American people upon final implementation. I am particularly
concerned about how this regulation will affect access to
affordable and reliable electricity, and in fact, today the
House will be voting on H.R. 2042, the Ratepayer Protection Act
of 2015, which would prevent states from having to implement a
state plan, or be subject to a federal plan, in order to comply
with the Clean Power Plan if the Governor determines that such
a plan would negatively affect ratepayers through increased
rates. I am a cosponsor of this bill, and I anticipate its
passage later today and encourage my colleagues to support the
bill.
I would like to thank Chairman Lamar Smith for requesting
that the Energy Information Administration conduct this very
important study at the heart of today's hearing. I look forward
to hearing from the EIA about what their analysis reveals about
the impacts of the Clean Power Plan.
A few weeks ago, this Committee heard from industry groups
on what will happen should the Clean Power Plan be finalized.
We learned that the total compliance costs of the rule could be
as high as $366 billion by 2030, according to a study by NERA
Economic Consulting.
Additionally, the regulation is projected to cause steep
electricity price increases in 43 states including my own State
of Oklahoma. Moreover, the Committee also heard testimony that
the EPA is using questionable legal authority to promulgate the
Clean Power Plan under section 111 of the Clean Air Act. In
fact, Laurence Tribe, a leading environmental and
constitutional law professor and a mentor to President Obama,
recently referred to the method by which this rule was enacted
as ``burning the Constitution.''
I understand that some of our witnesses here today have
analyzed the supposed benefits of the EPA claims--some of the
benefits that EPA claims the rule provides and have actually
found that the costs outweigh the benefits. Additionally, the
EPA's analysis of the benefits of the Clean Power Plan rely
heavily on the ``social cost of carbon,'' a value determined by
the government to be the cost of carbon in the atmosphere. The
social cost of carbon, as we will hear today, is a value
determined without transparency with a very questionable
economic model. The fact that this Administration would rely so
heavily upon the social cost of carbon for its rulemaking calls
into question the entire purpose of these rules. So we have a
rule that will be extremely costly, relies on dubious
assumptions, and this Committee has also heard testimony at
previous hearings that the results in reductions in carbon
emissions and global temperature decreases which, according to
the EPA's own models, will be negligible on a global scale. So
according to the EPA, the results of this will be negligible on
a global scale, according to the EPA's own models. This is a
continuation of this Administration's war on the poor.
I will once again remind my colleagues that while we might
be able to absorb electricity rate increases, many of our
constituents do not have that ability. This is especially true
in my home State of Oklahoma, which relies heavily on coal for
electricity generation and as a result enjoys electricity
prices which are far below the national average. Coal, and to
an extent even natural gas, are the sources of fuel this rule
will phase out, and this is the true intention of this
Administration's agenda. This rule will impose tremendous costs
on the American people with very few benefits, and it is my
hope this hearing highlights how misguided the Clean Power Plan
truly is.
I thank all of our witnesses for testifying today and
specifically thank the Energy Information Administration for
conducting this important report. The Clean Power Plan and the
impact that it will have on the American people is an important
matter that this Committee should investigate. I look forward
to the testimony of all of our witnesses as we examine the
implications of this regulation.
[The prepared statement of Chairman Bridenstine follows:]
Prepared Statement of Subcommittee on Environment
Chairman Jim Bridenstine
Today's hearing focuses on EPA's Clean Power Plan and the
tremendous costs that will placed on the economy and the American
people upon final implementation. I am particularly concerned about how
this regulation will affect access to affordable and reliable
electricity, and in fact today the House will be voting on H.R. 2042,
the Ratepayer Protection Act of 2015, which would prevent states from
having to implement a state plan, or be subject to a federal plan, in
order to comply with the Clean Power Plan if the Governor determines
that such a plan would negatively affect ratepayers through increased
rates. I am a cosponsor of this bill and I anticipate its passage later
today and encourage my colleagues to support the bill.
I would like to thank Chairman Smith for requesting that Energy
Information Administration conduct this very important study at the
heart of today's hearing. I look forward to hearing from the EIA about
what their analysis reveals about the impacts of the Clean Power Plan.
A few weeks ago, this Committee heard from industry groups on what
will happen should the Clean Power Plan be finalized. We learned that
the total compliance costs of the rule could be as high as $366 billion
by 2030, according to a study by NERA Economic Consulting.
Additionally, the regulation is projected to cause steep electricity
price increases in 43 states.
Moreover, the Committee also heard testimony that the EPA is using
questionable legal authority to promulgate the Clean Power Plan under
section 111 of the Clean Air Act. In fact, Laurence Tribe, a leading
environmental and constitutional law professor and mentor to President
Obama, recently referred to the method by which this rule was enacted
as ``burning the Constitution.''
I understand that some of our witnesses here today have analyzed
the supposed benefits that EPA claims the rule provides and have found
that the costs outweigh these benefits. Additionally, the EPA's
analysis of the benefits of the Clean Power Plan relies heavily on the
``social cost of carbon,'' a value determined by the government to be
the cost of reducing the amount of carbon in the atmosphere. The social
cost of carbon, as we will hear today, is a value determined without
transparency with a very questionable economic model. The fact that
this Administration would rely so heavily upon the social cost of
carbon for its rulemaking calls into question the entire purpose of
these rules.
So we have a rule that will be extremely costly, relies on dubious
assumptions and, as this Committee has also heard testimony at previous
hearings results in reductions in carbon emissions and global
temperature decreases which, according to EPA's own models, will be
negligible on a global scale.
This is a continuation of this administration's ``war on the
poor.'' I will once again remind my colleagues that while we might be
able to absorb electricity rate increases, many of our constituents do
not have that ability. This is especially true in my home state of
Oklahoma, which relies heavily on coal for electricity generation and
as a result enjoys electricity prices which are far below the national
average.
Coal--and to an extent natural gas--are the sources of fuel this
rule will phase out, and is the true intention of this administration's
agenda.
This rule will impose tremendous costs on the American people with
very few benefits, and it is my hope this hearing highlights how
misguided the Clean Power Plan truly is.
I thank all of our witnesses for testifying today and specifically
thank the Energy Information Administration for conducting this
important report. The Clean Power Plan and the impact that it will have
on the American people is an important matter that this Committee
should investigate. I look forward to the testimony of all of our
witnesses as we examine the implications of this regulation.
Chairman Bridenstine. I now recognize the Ranking Member,
the gentlewoman from Oregon, for an opening statement.
Ms. Bonamici. Thank you very much, Mr. Chairman, and thank
you to our witnesses for being here today to discuss the EPA's
Clean Power Plan and the Energy Information Administration's
analysis of the proposed rule.
Just at the outset, I want to explain I have another
hearing today. It does not indicate my lack of interest in this
very important subject but I'll be coming and going.
So the mission of EPA is simple: to protect human health
and the environment. The goal of the Clean Power Plan is
equally simple: to cut carbon emissions from the largest
source, the energy sector, so that we can lessen the effects of
climate change on our states, our country, and on our planet.
The need to reduce greenhouse gas emissions is broadly
accepted, and the consequences of inaction recognized,
including in public comments on the proposed rule submitted by
14 states, including my home State of Oregon. In those
comments, the states highlight the negative effects they are
experiencing from the changing climate. They outline the harm
of increased wildfires, severe drought, heatwaves, rising seas,
and more severe weather events. They state that these impacts
are directly harming the health and welfare of residents in our
states and causing significant economic damage. These 14 states
are supportive of EPA's Clean Power Plan, indicating that the
proposed rule represents the most significant component of our
national effort to reduce carbon emissions throughout our
economy. And the good news is that they have not been waiting
for the federal government to take action. In 2007, in fact,
when I was in the Oregon legislature, the Oregon legislature
set an ambitious goal of reducing statewide emissions 75
percent below 1990 levels by 2050. A companion bill set the
goal of having up to 25 percent of energy generated through
renewable sources by 2025. I'm proud to say that in 2010,
Oregon achieved its first milestone. It stopped the growth of
greenhouse gas emissions and began cutting carbon pollution.
Some contend that environmental regulations might hurt the
economy, and we heard that in the opening statement. This
hasn't been the case in Oregon. Through the implementation of
energy efficiency and renewable energy policies, Oregon has
produced more than 2,000 full-time jobs, added more than $2
billion to the state's economy, and customers have saved on
their energy bills.
Fortunately, Oregon does not stand alone in its success of
cutting carbon pollution and strengthening its economy, and I'm
looking forward to learning more from Dr. Tierney about her
examination of the states involved in RGGI, the Regional
Greenhouse Gas Initiative.
Turning back to the focus of today's hearing, EIA's
analysis of the Clean Power Plan, we find additional support
for the idea that we can achieve meaningful carbon reductions
with a minimal effect on the economy. EIA's analysis shows that
under the Clean Power Plan, carbon pollution will be reduced by
34 percent by 2030 and we will reach the same level of GDP just
15 days later than we would if the proposed rule was not
implemented. Furthermore, the EIA's analysis does not take into
account the health benefits associated with the proposed rule.
If those values, the EPA estimates at between $49 and $84
billion in 2030, were factored in, we'd likely see increased
expansion of the economy.
EIA's analysis also highlights the important role that
renewable energy technologies will play in cutting carbon
emissions. Again, contrary to the opinion that regulations harm
the economy, new and innovative technologies are born from
regulatory incentives, and are a key component of achieving
reductions in carbon emissions.
The Clean Power Plan provides flexibility to states. I'm
looking forward to learning more about how states can meet
their obligations under the proposed rule. Additionally, I'd
like to get a better understanding of the assumptions EIA used
in its modeling and what additional information their model can
and cannot tell us about the potential to reduce carbon
emissions under the EPA's Clean Power Plan.
Finally, I'd like to end by reiterating that past attempts
to undermine environmental regulation with inaccurate and
exaggerated claims have been proven wrong time and time again.
We were told the lights would go out and that the economy would
crash. We'll likely hear those arguments again today, but since
the passage of the Clean Air Act in the 1970s, the United
States' economy has tripled in size.
The Clean Power Plan represents a critical first step in
our efforts to reduce harmful pollution and combat the harm
we're seeing because of climate change. American ingenuity will
allow us to be global leaders in these efforts and in the
creation of the clean energy economy. We can and must do better
for current and future generations.
Thank you, Mr. Chairman, and again thank you to our
witnesses for being here this morning, and I yield back the
balance of my time.
[The prepared statement of Ms. Bonamici follows:]
Prepared Statement of Subcommittee on Oversight
Minority Ranking Member Suzanne Bonamici
Thank you, Mr. Chairman, and thank you to our witnesses for being
here today to discuss the EPA's Clean Power Plan and the Energy
Information Administration's analysis of the proposed rule.
The mission of EPA is simple--to protect human health and the
environment. The goal of the Clean Power Plan is equally simple--to cut
carbon emissions from the largest source, the energy sector, so that we
can lesson the effects of climate change on our states, our country,
and our planet.
The need to reduce greenhouse gas emissions is broadly accepted,
and the consequences of inaction recognized, including in public
comments on the proposed rule submitted by 14 states, including my home
state of Oregon. In those comments, the states highlight the negative
effects they are experiencing from the changing climate. They outline
the harm of increased wildfires, severe drought, heatwaves, rising
seas, and more severe weather events. They state that ``these impacts
are directly harming the health and welfare of residents in our states
and causing significant economic damage.''
These 14 states are supportive of EPA's Clean Power Plan,
indicating that the ``proposed rule represents the most significant
component of our national effort to reduce carbon emissions throughout
our economy.'' And the good news is that they have not been waiting for
the federal government to take action.
In 2007, Oregon set an ambitious goal of reducing statewide
emissions 75 percent below 1990 levels by 2050; a companion bill set
the goal of having up to 25% of energy generated through renewable
sources by 2025. I'm proud to say that in 2010, Oregon achieved its
first milestone--it stopped the growth of greenhouse gas emissions and
began cutting carbon pollution.
Some contend that environmental regulations might hurt the economy.
This hasn't been the case in Oregon. Through the implementation of
energy efficiency and renewable energy policies, Oregon has produced
more than 2,000 full-time jobs, added more than $2. billion to the
state's economy, and customers have saved on their energy bills.
Fortunately, Oregon does not stand alone in its success of cutting
carbon pollution and strengthening its economy, and I'm looking forward
to learning more from Dr. Tierney about her examination of the states
involved in the Regional Greenhouse Gas Initiative (REGGI.)
Turning back to the focus of today's hearing, EIA's analysis of the
Clean Power Plan, we find additional support for the idea that we can
achieve meaningful carbon reductions with minimal effect on the
economy. EIA's analysis shows that under the Clean Power Plan, carbon
pollution will be reduced by 34 percent by 2030 and we will reach the
same level of GDP just 15 days later than we would if the proposed rule
was not implemented. Furthermore, the EIA's analysis does not take into
account the health benefits associated with the proposed rule; if those
values, which EPA estimates at between $49 and $84 billion in 2030,
were factored in, we'd likely see increased expansion of the economy.
EIA's analysis also highlights the important role that renewable
energy technologies will play in cutting carbon emissions. Again,
contrary to the opinion that regulations harm the economy, new and
innovative technologies are born from regulatory incentives, and are a
key component of achieving reductions in carbon emissions.
The Clean Power Plan provides flexibility to states, and I'm
looking forward to learning more about how states can meet their
obligations under the proposed rule. Additionally, I'd like to get a
better understanding of the assumptions EIA used in its modeling and
what additional information their model can and cannot tell us about
the potential to reduce carbon emissions under EPA's Clean Power Plan.
Finally, I'd like to end by reiterating that past attempts to
undermine environmental regulation with inaccurate and exaggerated
claims have been proven wrong time and time again. We were told the
lights would go out and that the economy would crash. We will likely
hear those arguments again today, but since the passage of the Clean
Air Act in the 1970s, the United States' economy has tripled in size.
The Clean Power Plan represents a critical first step in our
efforts to reduce harmful pollution and combat the harm that we are
seeing because of climate change. American ingenuity will allow us to
be global leaders in these efforts and in the creation of the clean
energy economy. We can and must do better for current and future
generations.
Thank you, Mr. Chairman, and again thank you to our witnesses for
being here this morning.
I yield back the balance of my time.
Chairman Bridenstine. I thank Ms. Bonamici for her opening
statement.
With unanimous consent, I'd like to submit for the record
the report, the Energy Information Administration report titled
``Analysis of the Impacts of the Clean Power Plan.'' Without
objection, so ordered.
[The information appears in Appendix II]
Chairman Bridenstine. I'd now like to turn it over to the
Ranking--or I'm sorry, the Chairman of the Subcommittee on
Energy, Mr. Weber from Texas.
Mr. Weber. Thank you. Good morning, and welcome to today's
joint Subcommittee hearing examining the EPA's regulation for
existing power plants, known as the Clean Power Plan.
Today, we will hear from the Energy Information
Administration regarding their recent analysis of the EPA's
plan, as well as a panel of expert analysts with experience
assessing EPA regulations. So to our expert analysts, I want to
say thank you for being here.
The Energy Information Administration, or EIA, is housed at
the Department of Energy, and provides economic analysis on
energy use around the world. EIA was designed to serve as a
nonpartisan analytical organization so policymakers could make
sound decisions based on reliable economic data.
Accordingly, after the Obama Administration's Clean Power
Plan was released, Chairman Lamar Smith requested that the EIA
conduct economic modeling to determine the impact the rule
would have on the American economy if it was fully implemented.
The EIA's analysis shows that the EPA's rule could cause
significant damage to the economy, increasing electricity
prices, causing job losses, and limiting economic growth long
into the future. And might I add, at a time when the President
is pushing for TPP in an effort to get on top of the world
economy, this seems to be antithetical that we are actually
going to hurt our own economy. By increasing the cost of
electricity, the Clean Power Plan would make it harder for the
American people to start a business or make ends meet. A family
of four could see thousands of dollars in increased costs per
year as the Clean Power Plan is implemented, with costs peaking
in 2025 when the average family will see an increase in cost of
over $1,700 per year. Now, folks, where is that money going to
come from? It is a little less than 150 bucks a month. They're
not going to spend it in other sectors of the economy.
You know, the Obama Administration admits that these
regulations will not stop climate change. Data produced by the
EPA show that the Clean Power Plan would eliminate less than
one percent of global carbon emissions. Let me repeat that:
Data produced by the EPA show that the Clean Power Plan would
eliminate less than one percent of global carbon emissions. But
what the EIA's report and many other independent assessments of
the Clean Power Plan confirm is that eliminating affordable,
reliable power will increase the energy prices for who? The
American people. Higher energy prices will increase costs
across the Nation from electricity to gasoline to food. To echo
my colleague's comments earlier, the other Chairman of the
Environmental Committee, that's going to hurt the poor. Higher
costs will drive companies out of business, kill good jobs, and
leave even more Americans unemployed.
The Obama Administration claims these regulations will lead
to new, innovative energy technologies but innovation simply
will not occur in an overregulated, lagging economy. And might
I add that where the permits lag, the economy even lags worse.
Driving the American economy over a cliff is not going to kick-
start energy innovation. It's just not going to do it.
I want to thank Dr. Gruenspecht and all of our witnesses
for testifying to the Committee today, and I look forward to a
review of the impact of EPA's proposal. From our witnesses'
prepared testimony alone, it's clear that the EPA's Clean Power
Plan will have a significant impact on the American economy,
and not in a good way. We simply cannot afford to hijack
economic growth by regulating affordable energy out of
business. Instead, the federal government should focus on
investing in research and development, and breaking down the
regulatory barriers that stop the development of innovative
technology in its tracks. Getting the federal government out of
the way will make more affordable, reliable power available to
America's job creators and thereby grow our economy.
Mr. Chairman, I yield back.
[The prepared statement of Mr. Weber follows:]
Prepared Statement of Subcommittee on Energy
Chairman Randy K. Weber
Good morning and welcome to today's Joint Subcommittee hearing
examining the EPA's regulation for existing power plants, known as the
Clean Power Plan. Today, we will hear from the Energy Information
Administration regarding their recent analysis of the EPA's plan, as
well as a panel of expert analysts with experience assessing EPA
regulations.
The Energy Information Administration, or EIA, is housed at the
Department of Energy, and provides economic analysis on energy use
around the world. EIA was designed to serve a non-partisan analytical
organization, so policy makers could make sound decisions based on
reliable economic data.
Accordingly, after the Obama Administration's Clean Power Plan was
released, Chairman Smith requested that the EIA conduct economic
modeling to determine the impact the rule would have on the American
economy if it was fully implemented.
The EIA's analysis shows that the EPA's rule could cause
significant damage to the economy, increasing electricity prices,
causing job losses, and limiting economic growth long into the future.
By increasing the cost of electricity, the Clean Power Plan would make
it harder for the American people to start a business or make ends
meet.
A family of four could see thousands of dollars in increased costs
per year as the Clean Power Plan is implemented, with costs peaking in
2025 when the average family will see an increase in cost of over $1700
per year.
The Obama Administration admits that these regulations will not
stop climate change. Data produced by the EPA show that the Clean Power
Plan would eliminate less than one percent of global carbon emissions.
But what the EIA's report and many other independent assessments of
the Clean Power Plan confirm is that eliminating affordable, reliable
power will increase the energy prices for the American people. Higher
energy prices will increase costs across the nation --from electricity
to gasoline to food. Higher costs will drive companies out of business,
kill good jobs, and leave even more Americans unemployed. The Obama
Administration claims these regulations will lead to new, innovative,
energy technologies. But innovation simply does not occur in an
overregulated, lagging economy.
Driving the American economy over a cliff is not going to kick
start innovation in energy technology. I want to thank Mr. Gruenspecht
and all our witnesses for testifying to the Committee today, and I look
forward to a review of the impact of EPA's proposal.
From our witnesses prepared testimony alone, it's clear that the
EPA's Clean Power Plan will have a significant impact on the American
economy.
We can't afford to high-jack economic growth by regulating
affordable energy out of business. Instead, the federal government
should focus on investing in research and development, and breaking
down the regulatory barriers that stop the development of innovative
technology in its tracks.
Getting the federal government out of the way will make more
affordable, reliable power available to America's job creators and grow
our economy.
Chairman Bridenstine. Well, I'd like to thank the Chairman
of the Subcommittee on Energy for his words at this joint
hearing of our two Committees.
I'd like to now recognize the Ranking Member of the
Subcommittee on Energy, Mr. Grayson, for his opening statement.
Mr. Grayson. Thank you, Chairman Bridenstine and Chairman
Weber, for holding this joint hearing, and thank you to our
witnesses for agreeing to participate this morning.
Today, we will be discussing the Energy Information
Administration's recent analysis of the Environmental
Protection Agency's Clean Power Plan. We've been hearing
already before the witnesses start to testify about economics,
the economy, the American economy, what effect this will have
on jobs and so on. Let's talk about some basic economic
principles.
These power plants that we have now are generating our
power that are not renewable are creating pollution. Pollution
is an externality. It's basically like dumping your trash in
your neighbor's backyard. That's what these plants are doing
right now.
Now, they could be dumping their trash in their own
backyard. That's often what the Clean Power Plan will require
them to do through carbon sequestration and so on. But right
now they're dumping their trash in the neighbor's backyard.
Why? Because they don't want the trash in their backyard, and
it would cost money to them to make any other arrangement
except to dump it in the neighbor's backyard.
What is the effect of that? Enormous. Carbon pollution
causes tremendous difficulties, not only the traditional well-
known difficulty called global warming, climate disruption, and
so on, but also impacts on our health and impacts on our
immediate environment, the neighborhoods. We see heatwaves, we
see droughts, we see smog, we see extreme hurricanes and
flooding more and more. We have more ticks and mosquitoes in
our neighborhoods spreading Lyme disease and West Nile virus.
Already, 126 million Americans live in areas where pollution is
so bad that it doesn't meet the government standards
established 43 years ago. Forty-three years ago.
So I don't think we need to be asking ourselves what can we
do to make it possible for industry to dump more trash over the
fence into the neighbor's yard. I think we should be asking
ourselves what do we need to do to internalize those
externalities? What do we need to do to make sure that
industries that pollute, that damage the environment are forced
to clean themselves up, and there's no study that I can picture
that will tell me otherwise because we're talking about basic
logic and basic principles here.
Now, fundamentally, the Clean Power Plan seeks to protect
the health and safety of our citizens while fostering the
growth of new and emerging sectors of our economy. The Clean
Power Plan incentivizes the development and deployment of
innovative new energy technologies, and seeks to reduce
respiratory illnesses and the onset of disease resulting from
air pollution. According to Bloomberg New Energy Finance's
recent Global Trends report, an estimated 103 gigawatts of
renewable power capacity, including large hydropower projects,
were built in 2014 alone. Furthermore, renewables were 48
percent of the net power capacity added worldwide in 2014
alone. In total, the world invested $270 billion in renewable
technologies. And if we're speaking about the economy and jobs,
this is an economic opportunity that America should seek to
capture, not shun.
Clearly, the world is pursuing clean energy technologies
with us or without us. Any effort to undermine those
investments, including by stopping the Clean Power Plan from
moving forward, is incredibly short-sighted and short-changes
our workers and our health. America needs new energy solutions,
and it should position itself as an industry leader in pursuit
of these technologies. We know that the electricity and power
system is changing even as we speak. America faces a future
with low, or even negative, growth in electricity demand,
resulting in a negative impact on utilities that count profit
by the volume of electricity sold. But that simply means that
Americans don't need as much. That's what that means. It
doesn't mean that jobs are being lost that cannot be recovered.
More people are generating their own electricity, their own
energy on their own rooftops, and the entire system is shifting
from central power generation to different combinations of
centralized and distributed power generation. Predictive
models, such as the Energy Information Administration's,
provide an important tool for us to explore the possible
impacts of different scenarios and what our energy future will
look like under each. These models don't define the future, but
they do help us to identify actions we can take that will have
meaningful impacts. These insights can be used to focus efforts
to address the energy industry challenges that are happening
with or without the Clean Power Plan.
I thank each of these witnesses for being here today, and
please keep in mind that we're talking about pollution. I
hesitate to think that any of my colleagues would come out and
say they're pro-pollution, but that's essentially what it means
when you say that you're against clean power.
I yield back.
[The prepared statement of Mr. Grayson follows:]
Prepared Statement of Subcommittee on Energy
Minority Ranking Member Alan Grayson
Thank you, Chairman Bridenstine and Chairman Weber, for holding
this joint hearing, and thank you to our witnesses for agreeing to
participate this morning.
Today, we will be discussing the Energy Information
Administration's recent analysis of the Environmental Protection
Agency's Clean Power Plan.
Fundamentally, the Clean Power Plan seeks to protect the health and
safety of our citizens while fostering the growth of new and emerging
sectors of our economy.
The Clean Power Plan incentivizes the development and deployment of
innovative new clean energy technologies, and seeks to reduce
respiratory illnesses and the onset of diseases resulting from air
pollution.
According to Bloomberg New Energy Finance's recent Global Trends
report, an estimated 103 gigawatts of renewable power capacity,
excluding large hydropower projects, were built in 2014.
Further, renewables were 48 percent of the net power capacity added
worldwide in 2014. In total, the world invested 270 billion dollars in
renewable technologies. This is a financial market America should seek
to capture.
Clearly, the world is pursuing clean energy technologies. Any
effort to undermine those investments, including by stopping the Clean
Power Plan from moving forward is short-sighted.
America needs new energy solutions, and it should position itself
as an industry leader in the pursuit of these technologies.
We know our electricity system is experiencing a transformative
moment. America faces a future with low, or even negative, growth in
electricity demand, resulting in a negative impact on utilities that
count profits by the volume of electricity sold. More people are
generating their own energy, and the entire system is shifting from
central power generation to different combinations of centralized and
distributed power generation.
Predictive models, such as the Energy Information Administration's,
provide an important tool for us to explore the possible impacts of
different scenarios and what our energy future will look like under
each. These models don't define the future, but they do help us
identify actions we can take that will have meaningful impacts. These
insights can be used to focus efforts to address the energy industry
changes that are happening with, or without, the Clean Power Plan.
I thank each of our witnesses for being here today, and I look
forward to hearing more about how EIA's analysis will impact the
discussion surrounding America's energy future.
Thank you, Mr. Chairman, I yield back my remaining time.
Chairman Bridenstine. Thank you, Mr. Grayson.
I now recognize the Chairman of the full Committee, Mr.
Smith.
Chairman Smith. Thank you, Mr. Chairman, and also I thank
the other Chairmen who are here as well, Mr. Bridenstine and
Mr. Weber.
The Environmental Protection Agency is seeking to pursue
the most aggressive regulatory agenda in its 44-year history.
One of the many regulations the agency looks to promote is the
so-called Clean Power Plan. The President's power plan is
nothing more than a power grab to give the government more
control over Americans' daily lives. These regulations stifle
economic growth, destroy American jobs, and increase energy
prices. That means everything will cost more, from electricity
to gasoline to food.
Today we will hear from witnesses who have analyzed the
costs and benefits of the EPA's Clean Power Plan. Their
analysis clearly demonstrates that the costs far outweigh any
minor environmental benefits. The EPA claims their regulations
will slow global climate change and reduce carbon emissions.
But heavy-handed regulations and arbitrary emission targets
will do lasting damage to our economy, all for little
environmental benefit. In fact, EPA's data show that the Clean
Power Plan regulation would eliminate less than one percent of
global carbon emissions and it would reduce sea-level rise by
only 1/100th of an inch, the thickness of three sheets of
paper. Even if all of the carbon emissions in the United States
were reduced to zero, world temperatures would decrease by only
.2 degrees Celsius, and the temperature increases avoided as a
result of the Clean Power Plan would be only .003 degrees
Celsius, only three thousandths of a degree.
These measures will impose tremendous costs on every
American. The Clean Power Plan will have an even greater impact
on those who live on fixed incomes, such as the elderly and the
poor, who are the most vulnerable to price increases for some
of our most basic necessities like food and electricity.
I thank the Energy Information Administration for
conducting its analysis of the impacts of the Clean Power Plan,
and for testifying before the Committee today. This important
study shows what many have said since the regulation was
proposed: that regulating carbon emissions in the manner put
forward by the Administration will raise the cost of
electricity and negatively impact our Nation's economy.
Today, the whole House will consider H.R. 2042, the
Ratepayer Protection Act. This bill allows states to decide
whether the so-called Clean Power Plan is in the best interest
of the state, given the tremendous costs it will impose on
American families.
Our panel this morning includes experts who have conducted
extensive analysis of the costs and benefits of EPA's
regulations. I look forward to all our witnesses' testimony on
how the Clean Power Plan will affect the American people.
The EPA should not saddle the American people with
extensive and burdensome regulations, especially if the
regulations have little environmental impact.
Mr. Chairman, also let me apologize to the witnesses. I'm a
member of the Judiciary Committee, and our markup of a bill
that I cosponsored began 30 minutes ago, so I'm going to need
to excuse myself to head over there, but I hope to be back, and
certainly this will be a very informative and necessary hearing
to have. I yield back.
[The prepared statement of Chairman Smith follows:]
Prepared Statement of Committee on Science, Space, and Technology
Chairman Lamar S. Smith
Thank you Chairman Weber and Chairman Bridenstine for holding
today's hearing.
The Environmental Protection Agency is seeking to pursue the most
aggressive regulatory agenda in its 44 year history. One of the many
regulations the agency looks to promote is the so-called Clean Power
Plan.
The president's ``Power Plan'' is nothing more than a ``Power
Grab'' to give the government more control over Americans' daily lives.
These regulations stifle economic growth, destroy American jobs, and
increase energy prices. That means everything will cost more--from
electricity to gasoline to food.
Today we will hear from witnesses who have analyzed the costs and
benefits of EPA's Clean Power Plan. Their analysis clearly demonstrates
that the costs far outweigh any minor environmental benefits.
The EPA claims their regulations will slow global climate change
and reduce carbon emissions. But heavy-handed regulations and arbitrary
emission targets will do lasting damage to our economy, all for little
environmental benefit.
In fact, EPA's data show that the Clean Power Plan regulation would
eliminate less than one percent of global carbon emissions. And it
would reduce sea level rise by only 1/100th of an inch, the thickness
of three sheets of paper.
Even if all of the carbon emissions in the United States were
reduced to zero, world temperatures would decrease by only 0.2 degrees
Celsius. Also, according to an analysis conducted by NERA Economic
Consulting, the temperature increases avoided as a result of the Clean
Power Plan would be only 0.003 degrees Celsius: three one-thousandths
of one degree.
These measures will impose tremendous costs on every American. The
Clean Power Plan will have an even greater impact on those who live on
fixed incomes, such as the elderly and the poor, who are the most
vulnerable to price increases for some of our most basic necessities
like food and electricity.
I thank the Energy Information Administration for conducting its
analysis of the impacts of the Clean Power Plan, and for testifying
before the Committee today. This important study shows what many have
said since the regulation was proposed: that regulating carbon
emissions in the manner put forward by the Administration will raise
the cost of electricity and negatively impact our nation's economy.
Today, the whole House will consider H.R. 2042, the Ratepayer
Protection Act. This bill allows states to decide whether the so-called
Clean Power Plan is in the best interest of the state, given the
tremendous costs it will impose on American families.
Our panel this morning includes experts who have conducted
extensive analysis of the costs and benefits of EPA's regulations. I
look forward to all our witnesses' testimony on how the Clean Power
Plan will affect the American people.
The EPA should not saddle the American people with extensive and
burdensome regulations, especially if the regulations have little
environmental impact.
Chairman Bridenstine. Thank you, Mr. Chairman.
I now recognized the Ranking Member of the full Committee
for a statement, Ms. Johnson.
Ms. Johnson. Thank you very much, Mr. Chairman, and thanks
to all of our witnesses for being here this morning.
EPA's Clean Power Plan, 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. Severe drought,
record temperatures, and an increase in heavy rain events are
just a few examples of what Americans are confronting now and
can expect to see more frequently in the coming years. The
scientific evidence confirms that we need to act now to lessen
these impacts.
Leaders in the faith community--and I recently met with all
the heads of the conventions of the African American Baptist,
Methodist and Evangelical sectors of the religious community--
that are crying out for attention to address climate change and
they are starting a national movement. The recently issued
encyclical by Pope Francis notes that climate change represents
one of the principal challenges facing humanity and that the
poor will be disproportionately affected by its impacts. We
know now, and it has been said this morning, that the poor and
elderly will be greatly impacted except that the cost that was
mentioned, I'm talking about the healthcare that they will
suffer these effects. Pope Francis also states that there is an
urgent need to develop policies so that in the next few years,
the emission of carbon dioxide and other highly polluting gases
can be drastically reduced.
I hope that we, in Congress, will stop obstructing EPA's
efforts--they're only functioning to protect the American
people's health--and instead listen to our scientists, to our
religious leaders, and to the American people by supporting
policies that will cut carbon pollution. To that end, power
plants are the largest source of carbon pollution, and cutting
emissions from this sector will be the key to any solution.
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
encouraging the deployment 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 be discussing the Energy Information
Administration's analysis of the Clean Power Plan, and I
suspect that some Members and witnesses will be making the same
old argument that EPA regulations are killing the economy and
jobs. On the contrary. We know that this just isn't true. It
isn't what EIA's analysis shows. Rather, as history has shown
us time and again, stricter pollution limits have invariably
led to innovation and to the creation of new technologies that
end up creating jobs while protecting our environment. I am
confident American industry will continue this record of
innovation and job creation as new environmental standards like
the Clean Power Plan are adopted.
The bottom line is that the costs and risks of inaction are
too high for us to continue to drag our feet or put our heads
in the sand. I'm looking forward to today's discussion and
hearing more about how we achieve the carbon targets in the
Clean Power Plan.
I thank you, and I yield back.
[The prepared statement of Ms. Johnson follows:]
Prepared Statement of Committee on Science, Space, and Technology
Ranking Member Eddie Bernice Johnson
Thank you, Mr. Chairman, and thank you to our witnesses for being
here this morning.
EPA's Clean Power Plan, 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. Severe drought, record temperatures, and an
increase in heavy rain events are just a few examples of what Americans
are confronting now and can expect to see more frequently in the coming
years.
The scientific evidence confirms that we need to act now to lessen
these impacts. Leaders in the faith community have also been calling on
us to address climate change. The recently issued encyclical by Pope
Francis notes that climate change ``represents one of the principal
challenges facing humanity'' and that the poor will be
disproportionately affected by its impacts. Pope Francis also states
that ``there is an urgent need to develop policies so that, in the next
few years, the emission of carbon dioxide and other highly polluting
gases can be drastically reduced.''
I hope that we, in Congress, will stop obstructing EPA's efforts
and instead listen to our scientists, to our religious leaders, and the
American people by supporting policies that will cut carbon pollution.
To that end, power plants are the largest source of carbon
pollution, and cutting emissions from this sector will be the key to
any solution. 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 encouraging the deployment 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 be discussing the Energy Information Administration's
analysis of the Clean Power Plan, and I suspect that some Members and
witnesses will be making the same old argument that EPA regulations are
killing the economy and jobs.
We know that this just isn't true, and it isn't what EIA's analysis
shows. Rather, as history has shown us time and again, stricter
pollution limits have invariably led to innovation and the creation of
new technologies that end up creating jobs while protecting our
environment. I am confident American industry will continue this record
of innovation and job creation as new environmental standards like the
Clean Power Plan are adopted.
The bottom line is that the costs and risks of inaction are too
high for us to continue to drag our feet or put our heads in the sand.
I'm looking forward to today's discussion and hearing more about how we
achieve the carbon targets in the Clean Power Plan.
Thank you and I yield back the balance of my time.
Chairman Bridenstine. Thank you, Ms. Johnson.
Now I'll introduce our witnesses, and then after
introducing all of you, we'll just go to your testimonies.
Our first witness today is Dr. Howard Gruenspecht, Deputy
Administrator of the U.S. Energy Information Administration.
Before joining EIA, Dr. Gruenspecht served as Director of
Economic Electricity and Natural Gas Analysis in the Department
of Energy's Office of Policy. Dr. Gruenspecht received his
bachelor's degree from McGill University and his Ph.D. in
economics from Yale University.
Our second witness is Mr. Stephen Eule, Vice President for
Climate and Technology at the U.S. Chamber of Commerce's
Institute for 21st Century Energy. Prior to joining the
Chamber, Mr. Eule was the Director of the Office of Climate
Change Policy and Technology at the Department of Energy. In
addition, he has served as a Subcommittee Staff Director here
at the Science Committee. Welcome back. Dr. Eule received his
bachelor's degree in biology from Southern Connecticut State
College and his master's degree in geography from George
Washington University.
Our third witness today is Dr. Susan Tierney, Senior
Advisor for Analysis Group, Inc. Under the Clinton
Administration, Dr. Tierney served as the Assistant Secretary
for Policy at the DOE. Dr. Tierney received her bachelor's
degree in art history from Scripps College and her master's
degree and Ph.D. in regional planning and public policy from
Cornell University.
Our final witness is Dr. Kevin Dayaratna, Senior
Statistician and Research Programmer for The Heritage
Foundation's Center for Data Analysis. At CDA, Dr. Dayaratna
instituted the Heritage Energy Model to quantify and help
policymakers understand the long-term economic effects of
energy policy proposals. Dr. Dayaratna received his bachelor's
degree in applied mathematics from the University of California
at Berkeley and his master's degree in business and his
master's degree and Ph.D. in mathematical statistics from the
University of Maryland.
In order to allow time for discussion, please, I would ask
that you limit your testimony to five minutes, and your entire
written statement will be made a part of the record.
I now recognize Dr. Gruenspecht for five minutes to present
his testimony.
TESTIMONY OF DR. HOWARD GRUENSPECHT,
DEPUTY ADMINISTRATOR,
U.S. ENERGY INFORMATION ADMINISTRATION (EIA)
Dr. Gruenspecht. Chairmen Bridenstine and Weber, Ranking
Members Bonamici and Grayson, full Committee Ranking Member
Johnson, Members of the Subcommittees, I appreciate the
opportunity to appear before you today to provide testimony on
the Energy Information Administration's analysis requested by
Chairman Smith of the proposed Clean Power Plan rule issued by
the Environmental Protection Agency in June of 2014.
By law, EIA'S data, analyses and forecasts are independent
of approval by any other federal officer or employee.
Therefore, our views should not be construed as representing
those of the Department of Energy or other federal agencies.
So EIA's analysis considers the proposed Clean Power Plan
rule starting from several baseline cases with varying
assumptions regarding economic growth, electricity demand, and
fuel prices. It also includes several policy sensitivity cases.
Consistent with EIA's statutory mission and expertise, our
report focuses on implications for the energy system and the
economy and does not consider any potential health or
environmental benefits. It is not a cost-benefit analysis. EIA
also recognizes that there's considerable uncertainty and many
challenges involved in projecting the impacts of the proposed
Clean Power Plan. So the final rule may differ from the
proposed rule in material ways.
The proposed rule applies to individual states. However,
the electricity system doesn't respect state boundaries. EIA's
modeling generally uses 22 regions in our framework as
compliance regions for the analysis. Actual compliance
mechanisms will be defied by state compliance proposals and may
have different characteristics than what we've done.
The long-term projections system used for this analysis
does not contain a power flow model or assess the reliability
of bulk power transmission systems in detail. And lastly,
because of the shift away from coal towards intermittent
renewables and natural gas generation in our analysis, natural
gas-fired capacity will increase in importance for providing
grid reliability. The analysis does not consider how
deliverability of natural gas to power plants might be impacted
by extreme cold conditions in regions where natural gas is used
for heating during the winter months.
So let me now turn briefly to some key results. So the
proposed Clean Power Plan would reduce projected power sector
carbon dioxide emissions. Reductions range from 484 to 625
million metric tons relative to baseline. That's a reduction of
about between 29 and 36 percent relative to the 2005 emission
level of the power sector.
Switching from coal-fired generation to natural gas-fired
generation is the predominant compliance strategy as
implementation begins but renewables play a growing role in the
mid-2020s and beyond. That's shown in figures 1 and 2 of the
testimony.
The Clean Power Plan has a significant effect on projected
retirements and additions of electric generation capacity,
shown in figures 3 and 4. Projected coal plant retirements over
the 2014-40 period, which were 40 gigawatts in the reference
case, and that's mostly before 2017, increase to 90 gigawatts,
nearly all by 2020 in the base policy case.
Turning to additions, projected renewable capacity
additions increase in all cases with the proposed rule. Under
favorable natural gas supply conditions, the proposed rule also
increases additions of natural gas capacity. Nuclear capacity
is also added in the sensitivity case where new nuclear
receives the same treatment as new renewables in compliance
calculations. So coal production is significantly reduced by
Clean Power Plan implementation as shown in figure 5.
Retail electricity prices and expenditures rise under the
Clean Power Plan, as shown in figure 8. The price increases
mostly occur in the early 2020s with national average prices
averaging three to seven percent higher from 2020 to 2025 in
the Clean Power Plan cases versus respective baseline cases.
Electricity bills, which reflect both the electricity price
and the amount of electricity purchased, also rise with Clean
Power Plan implementation but those increases are smaller in
percentage terms than the price changes as a combination of
energy efficiency programs pursued for compliance purposes and
higher electricity prices tend to reduce electricity use.
Economic activity indictors including gross domestic product,
industrial shipments and consumption are reduced relative to
baseline under the Clean Power Plan. Across the cases that
start from the reference case, the reduction in cumulative
GDP--that's over all the years, 25 years--ranges from .17
percent to .25 percent with the higher end reflecting a tighter
policy beyond 2030.
So let me conclude, while EIA does not take policy
positions, its data analysis and projections are meant to
assist policymakers in their deliberations.
Mr. Chairman and distinguished Members of the
Subcommittees, this concludes my testimony, and I'd be happy to
answer any questions you might have.
[The prepared statement of Dr. Gruenspecht follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Bridenstine. Thank you, Dr. Gruenspecht.
Mr. Eule, you are recognized for five minutes.
TESTIMONY OF MR. STEPHEN EULE,
VICE PRESIDENT FOR CLIMATE AND TECHNOLOGY,
U.S. CHAMBER OF COMMERCE
Mr. Eule. Thank you, Chairmen Bridenstine and Weber,
Ranking Members Johnson, Bonamici and Grayson, and Members of
the Subcommittees, as the 17th French mathematician Blaise
Pascal famously observed, ``The justest man in the world is not
allowed to be a judge in his own cause.''
Chairman Smith is to be commended, therefore, for
requesting EIA to take an independent look at the impacts of
EPA's Clean Power Plan.
The study just issued by EIA is the most recent
contribution to a growing list of analyses that tell a very
different story from the one EPA has been telling. The details
are in my written testimony, but in short, using the
Administration's own numbers and methods, EIA's analysis shows
that over the 2020-2030 compliance period, the Clean Power Plan
will, one, cost the economy well more than $1 trillion in lost
wealth, an amount that exceeds the Administration's own
estimated social cost of carbon benefits; two, cause consumers
and businesses to spend hundreds of billions of dollars more
for electricity; and three, jeopardize reliability of the
Nation's electricity system, all for no discernible
environmental benefit.
While the United States is supposed to be cutting its
emissions, China, India, and other large economies will
continue to burn fossil fuels with abandon. With well over a
billion people still lacking access to electricity, who can
blame them?
As much as EPA might like to think otherwise, its new rule
won't change this reality but it could put U.S. industry at a
severe competitive disadvantage. Even green Europe is learning
that sky-high energy prices, largely policy-driven, are ruining
its competitiveness and turning energy-intensive industries
into endangered species. Now EPA wants to do the same thing
here.
Let's start with the economy. After nearly 400 pages of
analysis, EPA's economic analysis amounts to this: compliance
costs of the Clean Power Plan will be less than $10 billion a
year. End of story. What EPA fails to address is the rule's
impacts on the broader economy. This is really an inexcusable
oversight. EIA's analysis provides needed contact. It estimates
that the cumulative economic costs to achieve the emissions
cuts proposed by EPA will reach $1.2 trillion, or about $110
billion each year. That works out to a cost of about $200 for
each ton of CO2 reduced, an astonishing amount when
you consider that today you can buy a ton of CO2 in
Europe's carbon market for about 8 bucks. The Administration
argues that the environmental value of these emission cuts
would turn such economic losses into gains. Does it? EIA's
analysis shows the answer is a resounding no. Even when taking
into account the alleged social costs of carbon benefits the
U.S. would receive, the net drag on the economy over the
compliance period slips hardly at all from $1.23 trillion to
$1.16 trillion. In short, the Clean Power Plan fails and fails
badly. The Administration's own test is a climate policy.
EPA also boasts that while the price consumers pay for
electricity may increase under its plan, by 2030, the
electricity bills would be about eight percent lower than
otherwise. EIA's analysis does not support this claim, finding
instead that large rate increases will leave consumers with
bigger electricity bills. As a result of these rate hikes,
consumers will pay an additional $140 billion more for
electricity over the compliance period. With no environmental
benefits to speak of, the Clean Power Plan would place entirely
needles economic burden on businesses and families, especially
low-income families struggling in the sluggish economy.
One area where EPA and EIA agree is that in just five
years, the Clean Power Plan will wipe out about 30 percent of
the Nation's current coal-fired generation fleet. Such a
draconian shutdown of existing generating capacity is
unprecedented and raises serious concerns about the ability of
the electric power system to handle such a rapid loss of
baseload generation. The North American Electric Reliability
Corporation recently concluded that replacing this lost
capacity would present a significant reliability challenge. And
as Federal Energy Regulatory Commission Member Phillip Moeller
recently pointed out, grid reliability should not be left to an
agency, EPA, with limited expertise on the subject. Thirty-two
states echo these sentiments in their comments to EPA. In light
of all this, EPA's continued refusal to look more closely into
grid reliability is extremely troubling.
In conclusion, no matter how one slices and dices the data,
EIA's analysis leaves little room for doubt that EPA's Clean
Power Plan is fatally flawed as a climate policy and as an
energy policy, even on the Administration's own terms. Maybe
the idea of hijacking well-established state authority, turning
the entire U.S. electricity system on its head, jeopardizing
the reliability of the grid, raising energy costs on struggling
families, and causing a trillion-dollar loss in wealth is
appealing to EPA. For the rest of the country, it's a decidedly
bad deal.
Thank you.
[The prepared statement of Mr. Eule follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Bridenstine. Thank you, Mr. Eule.
Dr. Tierney, you're recognized for five minutes.
TESTIMONY OF DR. SUSAN TIERNEY,
SENIOR ADVISOR, ANALYSIS GROUP, INC.
Dr. Tierney. Good morning, Chairmen Bridenstine and Weber,
Ranking Members Johnson and Bonamici, it's great to be here
today, and thank you very much, Members of the Subcommittee.
I want to talk for a minute about the EIA's model and give
you several points about the context in which policymakers can
take its results into consideration.
First, as you know, the EIA's model is not a comprehensive
macroeconomic model of the economy; it is an energy model. It
does not incorporate the costs associated with public health.
It does not incorporate the costs associated with addressing
climate change for many--for all of the communities around the
country. It does not address impacts on human health.
Therefore, it can't be viewed as an assessment of the Clean
Power Plan's impacts on the economy.
Second, EIA's longstanding practice is to look at
environmental laws only that are in final form. As a result of
that, there are many aspects of the changing outlook for the
economy which are not reflected in this, including the EIA's
overstating in its base case the emissions from coal plants and
understating the power generation contributions from natural
gas, nuclear and renewable energy. Therefore, in some ways the
EIA's Clean Power Plan policy assessment could be considered
the baseline as the Nation moves to address greenhouse gas
emissions from the power sector.
Third, like many long-term assessments, EIA's method does
not do a particularly good job of addressing innovation and
disruptive technologies. Based on historical experience, we
know that before the fact estimates of environmental compliance
programs have consistently under--overestimated the cost
associated with such compliance. Once environmental regulations
are in place, the ingenuity of the American economy kicks into
gear and delivers those results much more economically than
anticipated.
Additionally, we know that disruptive technologies occur.
In the Chairman's State of Oklahoma, we know that EIA did not
anticipate the effect of fracking and its lowering of costs of
natural gas, so we know that EIA's outlook understandably does
not anticipate disruptive technology changes. Those always
introduce changes into the cost of energy, and we can expect
them here associated with such things as renewables, storage,
and smart grid technology.
EIA's assumptions about energy efficiency understate its
value in mitigating cost impacts of the Clean Power Plan. In
practice, we have seen that in the ten-state region of the
Northeast that adopted the Regional Greenhouse Gas Initiative,
energy efficiency was a core strategy that enabled customer
bills to go down as a result of adopting a carbon-control
program in that area. I'm happy to talk more about how that
occurred.
Just several other points. The EPA's proposed regulation
will allow flexibility that states will use to address impacts
on consumers. It is entirely reasonable to expect that EIA's
final rule will be more flexible and lower the cost compared to
what the proposal has been.
As a former state utility regulator, I know that states are
very well equipped to address the cost impacts and to use a
variety of tools to encourage utilities to minimize costs and
to protect low-income consumers. That's part of their core job
and they do it well.
Third, market-based mechanisms including multistate map-
based approaches are ones that we can count on for reducing the
cost of compliance. States are looking at how to adopt such
approaches. They work seamlessly with the electric industry's
structure. They can be adopted without the reliability changes
that many have anticipated.
Let me just mention that last point. People have identified
reliability as a problem. I have just written three different
reports on different parts of the country analyzing the
implications of the Clean Power Plan for reliability. Clearly,
this industry is equipped, well equipped to use its normal
tools, its day-to-day tools to assure that the lights will not
go out as a result of this. Many of the reliability concerns
that some observe are based on worst-case scenarios and assume
that no one will take action to address issues before problems
occur, and there is absolutely no historical basis for that.
Thank you very much.
[The prepared statement of Dr. Tierney follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Bridenstine. Thank you, Dr. Tierney.
Dr. Dayaratna, you are recognized for five minutes.
TESTIMONY OF DR. KEVIN DAYARATNA,
SENIOR STATISTICIAN AND RESEARCH PROGRAMMER,
THE HERITAGE FOUNDATION
Dr. Dayaratna. Chairman Bridenstine, Ranking Member
Bonamici, Chairman Weber, Ranking Member Johnson, and Members
of the Subcommittee, thank you for the opportunity to discuss
the Clean Power Plan.
My name is Kevin Dayaratna. I'm the Senior Statistician and
Research Programmer at The Heritage Foundation here in
Washington, DC. The views I express in this testimony are my
own and should not be construed as representing any official
position of The Heritage Foundation.
For years, it has been a primary goal of the Obama
Administration to fundamentally expand regulations across the
energy sector of the economy. The Administration's primary
justification for doing so is to limit carbon dioxide emissions
as they believe that such emissions contribute to global
warming.
There is broad economic consensus that any governmental
policies to limit carbon dioxide emissions will have
detrimental impacts throughout the economy. These negative
impacts have not only been discussed by myself and colleagues
at The Heritage Foundation but also notably by other experts in
Washington, D.C., on both sides of the aisle.
As you know, the EIA's analysis of the Clean Power Plan is
based on their use of the National Energy Modeling System.
Likewise, over the course of my work at The Heritage
Foundation, I've used the very same National Energy Modeling
System to rigorously conduct a variety of simulations looking
at similar policy proposals. Unfortunately, their policies will
almost surely do far more harm than good by killing jobs,
stifling the American economy, while having only negligible
environmental benefits.
Let's take a closer look at these negative impacts. First,
the plan kills jobs. Now, just using the results that the EIA
has published, one can see the significant disruption that a
Clean Power Plan will have on American jobs. According to their
very own study, the economy would begin to lose jobs shortly
after the plan's implementation and over the course of the
following decade. The results also admit that by 2025, the plan
will kill nearly 150,000 manufacturing jobs as well as nearly
200,000 jobs nationwide including in many of your own
districts. I've conducted similar simulations of other policy
proposals and have found that in many cases, all districts
suffer, especially the Midwest.
Second, the plan stifles the American economy, hitting
ordinary households quite hard. Because of the plan's
regulations limiting the use of the least expensive and most
efficient forms of energy, the mix of energy sources used would
change dramatically toward more expensive and less efficient
forms. As a result, the plan would increase annual electricity
expenditures by up to $70 per household and perhaps by even
more in coal-dependent areas of the country.
In terms of GDP, if you take the report's own computations
and calculate the average income for a typical family of four,
you notice a significant impact. By the middle of the next
decade, the Clean Power Plan would cost a family of four nearly
$2,000 in a single year, which is close to a full semester's
worth of tuition at a local junior college.
Third, the plan has only negligible environmental benefits.
The whole goal of this plan is to reduce carbon dioxide
emissions. What's interesting, however, is that by using the
EPA model for the assessment of greenhouse gas-induced climate
change and making the unjustifiably optimistic assumption of
eliminating all carbon dioxide emissions from the United States
completely, the result will be a reduction of around .2 degrees
Celsius in global temperatures. As a result, even if the plan
to actually meet the Administration's goals for CO2
reduction, the impacts on global temperatures would be
undeniably negligible. So all together, the negative impacts of
the Clean Power Plan are significant, and the impact on the
climate is trivial.
Thank you. I look forward to your questions.
[The prepared statement of Dr. Dayaratna follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Bridenstine. I'd like to thank all the witnesses
for their testimony. Members are reminded that Committee rules
limit questioning to five minutes. The Chair recognizes himself
for five minutes.
Dr. Gruenspecht, you talked about the retirement of coal-
fired electric generation units. When you talk about the
retirement, is that different than just shutting them down?
Dr. Gruenspecht. I think those are synonyms in this
context.
Chairman Bridenstine. So we could claim that this does shut
down coal-fired power plants, which of course is happening in
my State of Oklahoma.
Dr. Gruenspecht. Well, yes, and it's happening--I mean,
again, we had some retirements of coal-fired power plants
already----
Chairman Bridenstine. Right.
Dr. Gruenspecht. --in part because of the mercury and air
toxics standard, in part because, you know, simple aging in
some cases and unwillingness to make the investments required
to allow those plants to go forward, competing them against--
economically against other technologies.
Chairman Bridenstine. Got it. Your analysis found that
under the base case scenario, 40 gigawatts of coal-fired
electric generation capacity would retire mostly before 2017.
Are the 40 gigawatts of retirements in the reference case a
result of EPA regulations that are currently in the
implementation stage, the 40 gigawatts, are they----
Dr. Gruenspecht. I think it's fair to say that the mercury
and air toxic standards which, you know, would--the operators
of these plants have to make decisions, do I want to invest in
the technologies required by that standard, and they look
forward and decide whether that's a worthwhile investment. In
some cases, it is; in some cases, it's not. In the cases where
it's not, they decide to close that plant.
Chairman Bridenstine. So that is--so the answer would be
yes, it is based on the current implementation of----
Dr. Gruenspecht. Well, and it also reflects the market
situation, that natural gas prices have an effect on this as
well. It's not the--EPA doesn't get natural gas prices.
Chairman Bridenstine. How many additional gigawatts of
retirements did EIA project as a result of the Clean Power
Plan? How much additional on top of the 40 gigawatts?
Dr. Gruenspecht. Well, it varies across the different cases
that we carried out but I think maybe 50 to 60 gigawatts
additional.
Chairman Bridenstine. So we're talking about 90 gigawatts
being taken, basically being shut down, and based on the
implementation of current regulation and then this new rule?
Dr. Gruenspecht. And the market.
Chairman Bridenstine. Okay. When did your projections
indicate that most of these additional retirements would occur
as a result of the Clean Power Plan? When would they occur?
Dr. Gruenspecht. Well, the proposed Clean Power Plan rule
takes effect in 2020, so most of these occur in that time
frame.
Chairman Bridenstine. EIA also analyzed the potential for
the Clean Power Plan to affect the heat rate or efficiency of
coal-fired power plants. Is that correct?
Dr. Gruenspecht. Yes.
Chairman Bridenstine. And EIA's analysis found that under
the Clean Power Plan, that coal-fired power plants would be
able to improve heat rates by approximately 1.9 percent. Is
that correct?
Dr. Gruenspecht. I think that's on average what they
actually achieved so, again, there are technologies available
to improve heat rates. They cost something. Those are
considered in the context of other options to comply, and we
did find that improvement in heat rates.
Chairman Bridenstine. Are you aware that the EPA believes
that coal-fired power plants can improve efficiency by as much
as six percent?
Dr. Gruenspecht. Right. So we--you know, in our analysis,
we did not try to reconstruct their building blocks. I mean, as
far as we're concerned, we thought our assignment and I think
proper assignment for EIA is to take the standards as given and
so EPA had a methodology for coming up with the standards for
each state that might have included that assumption, but at
some point the states, as I understand it, take the standards
as given and then there's a ``how do we meet it.'' So we looked
at the ``how do we meet it.'' We didn't second-guess the
building blocks.
Chairman Bridenstine. So the six percent, you didn't
assume--you're saying 1.9 percent is probably more accurate
than the six percent that the EPA claims? My question is, if
you could save six percent, why would they not already be doing
it? Because they could actually be more efficient, right?
Dr. Gruenspecht. Well, that's the classic economist
question of a $20 bill on the floor, why didn't somebody pick
it up, it can't be on the floor. But no in our analysis, we get
something between one and two percent, and some of that is just
the change in the heat rate. Some of that has to do with
actually investing in these technologies. I think about a third
of the plants that remain invest in these technologies. Some of
it just reflects the fact that some of the plants that retire
or shut down, depending on your choice of words, you know,
maybe the less efficient ones tend to be the ones that shut
down. So there is some actual investment in heat rate
improvement but some of it is just a changing mix.
Chairman Bridenstine. Okay. I'm out of time. I thank you,
and I'd like to recognize the Ranking Member, Ms. Bonamici, for
five minutes.
Ms. Bonamici. Thank you very much, Mr. Chairman, and thank
you to all of our witnesses.
Dr. Tierney, I especially appreciate how you pointed out
that the EIA analysis doesn't fully reflect innovation and
disruptive technologies. I think back a couple years ago,
Oregon had a feed--in tariff pilot program that sold out in
1five minutes, and there is so much potential out there with
new innovations to reduce costs and make a big difference, so
thank you for pointing that out.
I wanted to also focus on the fact that it's clear that the
EIA analysis does not consider potential health or
environmental benefits from reducing CO2 emissions.
Dr. Gruenspecht actually said that in his testimony. But beyond
the economic costs associated with changing climate, there are
very serious public health risks related to increases in global
temperature--longer heatwaves, what just happened in India--
changes in water and air quality, foodborne and insect borne
disease, in my state, the risks of fire. Climate change also
has the potential to exacerbate existing health conditions such
as asthma and adversely affect vulnerable populations like
children and the elderly.
So this cost to public health is unavoidable if we do
nothing to address the present threat of climate change, so can
you please talk a little bit more about what is the effect of
improving human health and lowering healthcare costs on the
U.S. economy? How does that affect the economy? And might there
be some other costs that are borne by the public if we do not
implement the Clean Power Plan?
Dr. Tierney. Thank you very much for the question. Clearly,
the kinds of health benefits that you just described, avoiding
asthma, avoiding respiratory illnesses, especially in
vulnerable populations like the poor is particularly important.
That shows up in the economy in lower healthcare costs around
the country. That has economic effects that are quite direct in
consumers' pockets but also in local economies that don't have
to have the burden of higher healthcare costs. Importantly,
additionally, the fact that communities will not have to incur
the burden of so many costs associated with addressing the
impacts of a changing climate. You described drought, fire,
extreme weather events. I didn't love the 112 inches in Boston
of snow that we had. It had a cost on people's roofs that we
avoid--that we can avoid by avoiding some of the effects of
climate change.
Ms. Bonamici. Thank you. And--thank you very much.
Dr. Gruenspecht and Dr. Tierney, Dr. Gruenspecht, you
stated in your testimony that EIA's analysis does not consider
the potential health or environmental benefits from reducing
carbon pollution under the proposed rule. It's not a cost-
benefit analysis. So can you confirm that that's correct?
Dr. Gruenspecht. Yes.
Ms. Bonamici. So is it fair to say that the NEMS model that
the EIA uses for its annual energy outlook and for its analysis
of the Clean Power Plan is not a comprehensive model of the
U.S. economy?
Dr. Gruenspecht. Well, there is a pretty comprehensive
macro model in NEMS but it's an energy economy model and it
definitely doesn't address benefits I think it is fair to say.
Ms. Bonamici. Thank you.
And Dr. Tierney, if the EIA's analysis does not include the
health benefits, how should we interpret the GDP impacts that
are presented by the EIA report?
Dr. Tierney. I would caution anyone from taking those home
to the bank. They are one side of the ledger, and there are a
number of co-benefits that will occur to the economy that are
not reflected in the EIA's results.
Ms. Bonamici. And Dr. Tierney, you know, critics of this
rule and many other EPA rules claim that the economy and the
American consumers will suffer as a result of the agency's
efforts to make our environment cleaner. Now, this is
contradicted by the fact that the U.S. economy has tripled in
size since the adoption of the Clean Air Act. One of the
concerns often raised by opponents is that the Clean Power Plan
will cause electricity prices to increase dramatically, but you
state in your testimony that the impacts on electricity rates
will be modest in the near term and can be accompanied by long-
term benefits in the form of electricity bills. Can you please
describe how the likely impact that the proposed rule will
have? How will it affect electricity rates and bills?
Dr. Tierney. Well, let me use an example to explain the
kinds of impacts that we have actually observed in states that
have adopted carbon control programs for the power sector. If
you look at the states of the mid-Atlantic and northeast
region, that for now six years have had a cap on the amount of
emissions that come from power plants, if you look at where the
money flows after power plant owners buy an emissions allowance
and that money flows into the hands of state governments, those
state governments then have turned those around and invested in
energy efficiency programs, allowing customers to reduce their
overall energy use and have lower customer bills over time.
We analyzed extremely carefully the flow of dollars around
the economy in those ten states for the first three years of
the program. We found there were $1.6 billion to the good for
those economies. Consumers got lower customer bills in the form
of $1.3 billion, reflecting those programs during the first few
years.
Ms. Bonamici. Terrific. Thank you very much. My time is
expired.
Thank you, Mr. Chairman.
Chairman Bridenstine. Thank you.
I'd like to recognize Chairman Weber from Texas, Boomer
Sooner.
Mr. Weber. Thank you to the gentleman from the north Texas
suburb of Oklahoma.
Dr. Tierney, you said in your testimony that some of the
analyses did not take--and it was an interesting term. You said
disruptive innovations.
Dr. Tierney. Like hydraulic fracturing.
Mr. Weber. That is in fact what you said, and that's where
I'm going. Thank you for saying that. She's ahead of me, folks.
That's fracking weird.
At any rate, was that fracking technology described as
disrupting the environment by some when that happened, when it
became prevalent?
Dr. Tierney. I'm sorry. I don't understand your question. I
was talking about disruptive technologies from an economic
point of view.
Mr. Weber. A lot of people said that fracking was also bad
for the environment. Would you--a lot of people said that it
was bad for the environment and was going to affect the water
supply and so on and so forth.
Dr. Tierney. There's a wide debate. Having been a member of
the Secretary of Energy's Advisory Committee on shale gas
issues, I know that there are a wide variety of indicators----
Mr. Weber. I'm just----
Dr. Tierney. --of air pollution.
Mr. Weber. I know, but you recognize that that discourse
did take place?
Dr. Tierney. Of course.
Mr. Weber. Absolutely. So it's interesting to me that you
call innovations disruptive.
Dr. Tierney. All economists would call technologies that
are game-changing----
Mr. Weber. I got it.
Dr. Tierney. --disruptive technologies.
Mr. Weber. I've got you, and I've got a specific question.
I'm going to get there.
So the EIA study did not take into account disruptive
innovations. Did it take into account the possibility of
disruptive regulations?
Dr. Tierney. I don't understand the phrase, ``disruptive
regulations.''
Mr. Weber. You understand the phrase ``disruptive
innovations,'' though?
Dr. Tierney. Sure. They are game-changing technologies----
Mr. Weber. Right.
Dr. Tierney. --that reduce the cost associated with some
activity.
Mr. Weber. So you might agree that there are also
regulations that are game-changing as well?
Dr. Tierney. Yes, and in fact, that may occur but this is a
relatively modest effect.
Mr. Weber. Would you call those disruptive as well?
Dr. Tierney. I would not call it disruptive.
Mr. Weber. You wouldn't? That's interesting bias, in my
opinion. Let me move on.
Dr. Gruenspecht, the EIA analyzed the impact the Clean
Power Plan would have on electricity prices across the country.
Now, I'm from Texas. The gentleman from Oklahoma has already
lauded that. What impact would the Clean Power Plan have on
electricity prices in my home State of Texas under the EIA's
analysis?
Dr. Gruenspecht. Well, our model is not a state-by-state
model but Texas being a big place and having its own region in
our model you could look at Texas. So in the base in 2020, the
modeling results are 7.3 percent above baseline, in 2030, about
.7 percent above baseline.
Mr. Weber. It's going to cost our consumers money.
Dr. Gruenspecht. There are positive impacts in Texas, yes,
positive price impacts.
Mr. Weber. I got you. So Texas has been a great model for
success. We've created more jobs in the last 10 or 12 years
than all the other 49 lesser states, and so we don't
necessarily want to impact that in a negative way. Let me move
on.
The EPA's regulatory impact analysis claims that while the
price of electricity will rise--you just said electricity costs
for consumers will decrease due to lower demand because of
``enhanced demand-side energy management,'' what I might call
disruptive regulations. EPA backs up this statement by assuming
states can meet a target of 1.5 percent annual improvement in
energy efficiency, which would theoretically lead to a decline
in demand for electricity over time. But the EIA's report
projects a more modest role for demand-side energy efficiency
with the increase in electricity prices from the Clean Power
Plan far outweighing, using the percentages you just gave for
Texas, far outweighing any decrease in demand. Remember, a
decrease of 1.5 percent but you just said seven percent higher
prices. Given the analysis of your report, doesn't this
directly contradict the EPA's claim that the prices will be
higher but Americans' electricity bills will be lower?
Dr. Gruenspecht. I think on average, but again, you know,
like they say in the television commercials, your results may
differ than the average, but on average, we show higher
electricity bills even--but not as much as the increase in
electricity prices. Again, it kind of goes back to an earlier
question. We tried to build in efficiency and have it compete
with other options, and we found that we got a lot of renewable
generation that was sort of a cheaper compliance approach than
some of the investments in efficiency. There are disputes about
the costs of efficiency----
Mr. Weber. Okay. I'm running out of time. The answer is
yes, it does dispute the prices.
Mr. Eule, would you agree with that?
Mr. Eule. Yes, I would. My analysis shows that people will
be spending $140 billion more over the compliance period.
Mr. Weber. Got you. And how about you, Dr. Dayaratna?
You're agreeing with it too? Turn your mic on, please.
Dr. Dayaratna. That the cost of electricity will rise,
correct?
Mr. Weber. Right.
Dr. Dayaratna. Correct.
Mr. Weber. And it disputes the EPA's findings that the
price will go up but the demand for electricity will actually
be lower.
Dr. Dayaratna. I'm not familiar with what the EPA----
Mr. Weber. I got you. Well, I'm out of time. Thank you for
your input. I appreciate that.
Chairman Bridenstine. The gentleman yields back.
The Ranking Member from Florida is recognized for five
minutes.
Mr. Grayson. Thank you.
Dr. Tierney, earlier this week EPA released a report titled
``Climate Change in the United States: Benefits of Global
Action.'' The report describes some of the benefits that we'll
see within the century if we take action to reduce emissions,
for instance, approximately $3 billion in avoided damages from
poor water quality, $11 billion in avoided damages in
agriculture, and an estimated 12,000 fewer deaths from extreme
temperatures in the 49 major U.S. cities.
Dr. Tierney, do you believe it's important to keep these
long-term economic and public health costs of inaction in mind
if we continue to promote policies that keep the United States
at the forefront of addressing the global threat of climate
change?
Dr. Tierney. Without a doubt, those are real costs that
would be avoided if we are taking steps today to control
emissions of greenhouse gases from the power sector.
Mr. Grayson. Dr. Gruenspecht, Mr. Eule's testimony states
that EIA's analysis demonstrates that the economic costs exceed
the climate benefits from this rule. Are you in a position to
agree or disagree with that assessment?
Dr. Gruenspecht. Again, we only looked at the energy and
economic side, not the benefits side, so our study doesn't
really speak to that.
Mr. Grayson. So to be specific about this, did EIA
calculate the economic benefits associated with the
implementation of the Clean Power Plan?
Dr. Gruenspecht. The health benefits?
Mr. Grayson. No, the--well, let's start with the economic
benefits and then discuss the health benefits.
Dr. Gruenspecht. So we looked at the energy system and the
relationship of the energy system to the economy, and we did
not look at the benefits in line with our--you know, which is
our expertise and our mission.
Mr. Grayson. All right. So what kind of benefits other than
health, which you mentioned, are not included in that analysis?
Dr. Gruenspecht. Again, there are no--there's no discussion
of benefits in the analysis that we did.
Mr. Grayson. All right. So then you're left disagreeing
with Mr. Eule's conclusion that somehow the EIA analysis
demonstrates that the economic costs exceed the climate
benefits because you didn't weigh one against the other?
Dr. Gruenspecht. Well, I think Mr. Eule should speak for
himself but I think he did further work, you know, using a
social cost of carbon or something. We didn't do any of that.
So I'm not saying I agree or disagree. We just didn't address
it.
Mr. Grayson. Mr. Eule, last month there was an independent
peer-reviewed scientific paper published in a journal called
Nature, Climate Change. The lead author was Charles Driscoll.
Are you familiar with that?
Mr. Eule. No, I'm not.
Mr. Grayson. All right. Well, among other things, the
research concluded that according to the article, the power
sector policy that's been proposed with the great health
benefits have the potential to prevent an expected 3,500--3,500
avoidable deaths in the United States each year and more than
1,000 heart attacks and hospitalizations each year from
pollution-related illness. Did your analysis take any of that
into effect?
Mr. Eule. Not having seen the study, no.
Mr. Grayson. Well, with regard to health consequences in
general, did your analysis consider any of those?
Mr. Eule. My analysis concerned the climate benefits. EPA
in its regulatory impact assessment does monetize co-benefits,
and I anticipated a question like this and I have taken a look
at the monetized co-benefits that EPA has calculated, and when
you run the numbers, the costs still exceed the co-benefits.
Mr. Grayson. Well, we can only deal with what you actually
report to us. Did your report include any analysis of the
health benefits I just described, yes or no?
Mr. Eule. No. As I said----
Mr. Grayson. Okay. Then the answer is no. Thank you.
Dr. Dayaratna, what about you? Did your analysis consider
any of the health benefits that come from controlling pollution
including quite dramatically the 3,500 annual deaths that would
be avoided in the United States from this pollution?
Dr. Dayaratna. Well, like I mentioned, I've run the
National Energy Modeling system myself over the past few years
at The Heritage Foundation, and this analysis that I presented
today was simply based on the EIA's report. I didn't rerun
their simulations. But let me just say one thing.
Mr. Grayson. Well, how about answering the question?
Dr. Dayaratna. Yeah, I will.
Mr. Grayson. Let's answer it now. I'm running out of time.
Dr. Dayaratna. Okay.
Mr. Grayson. Go ahead, answer it.
Dr. Dayaratna. Okay, I'll answer it.
Mr. Grayson. Yes or no?
Dr. Dayaratna. Did I do it?
Mr. Grayson. Yes, did you do it? I asked you----
Dr. Dayaratna. My analysis----
Mr. Grayson. --whether you did it.
Dr. Dayaratna. My analysis was regarding just looking at
what the EIA did in their report, the analysis of the report.
Mr. Grayson. Okay. So then your answer too seemingly very
reluctantly is no, you did not consider any of the health
consequences of pollution in the United States?
Dr. Dayaratna. In this--in my analysis that I discussed
today, no.
Mr. Grayson. Thank you. I'll yield back.
Chairman Bridenstine. Mr. Hultgren from Illinois is
recognized for five minutes.
Mr. Hultgren. Thank you, Chairman. Thank you all for being
here.
I do--I'm worried about the President's proposed new and
existing source performance standards for a number of reasons,
my chief concern being the arrogance of which preordained
policy solution is shoved down the American people's throat
after they flatly rejected it at the ballot box.
I came to Congress after this House rushed through a cap-
and-trade bill, which was thankfully stopped in the Senate. I
find it cynical for EPA to then try enacting a regulation that
essentially mandates a technology which this Administration has
undercut in CCS or requires the implementation of a state-based
cap-and-trade system, which the Pope even disagrees with.
My constituents deserve their voice to be heard, and it's
voter disenfranchisement to ignore them because they don't
agree.
Dr. Gruenspecht, what impact do you find this rule to have
on electricity costs above the baseline?
Dr. Gruenspecht. Again, over the 2020-2025 period, three to
seven percent increase in electricity prices.
Mr. Hultgren. So Dr. Gruenspecht and Mr. Eule and Dr.
Dayaratna maybe as well, what populations and demographics are
most affected by increased electricity rates? Dr. Gruenspecht?
Dr. Dayaratna. Do you want me to go for it? All right.
Okay.
Mr. Hultgren. Go ahead.
Dr. Dayaratna. Populations all across the board,
demographics and populations all across the country, all across
the board, especially those in low-income communities, those
are particularly included, and they will suffer the most,
especially people on fixed income as I think Chairman Smith was
alluding to earlier.
Mr. Hultgren. Help me understand, and I'm sorry I missed
Chairman's Smith questioning. My understanding is that low-
income communities are going to be hit, some already spending
more than ten percent of their income on energy certainly carry
a higher burden for increased energy costs. Would you agree
with that, and is that what your research has----
Dr. Dayaratna. Absolutely, and in fact, what the analysis
illustrates is that average income goes down and their
electricity prices go up, so things become even more difficult
for these people than just electricity prices going up.
Mr. Hultgren. This is another thing that I find so ironic
about this Administration and this regulation. If the EPA were
a lender and their housing risk analysis disproportionately
harmed low-income communities, populations of color and seniors
on a fixed income, they'd be stuck in disparate impact
litigation for so long that they'd probably choose to get out
of that business, but I guess we can't even get the Justice
Department to go after the most egregious cases involving this
Administration.
Mr. Eule and also Dr. Dayaratna, what is the potential
impact of the Clean Power Plan on grid reliability?
Mr. Eule. Well, I think any time you have about 30 percent
of your baseload power sources coming off the grid at once, I
think that poses a very significant challenge to reliability of
the grid. This is something that NERC has agreed to, that FERC
has agreed to. It's an issue that EPA really hasn't done enough
on, and a number of states, 32 states, as a matter of fact,
have pointed to reliability issues in their comments to EPA. So
this is a concern that's all the way across the board, and
unless we do something, we'll probably see more brownouts and
blackouts, although EPA might call these unanticipated energy
conservation events, but we all know that they will be
blackouts. So I think that this is an issue that EPA needs to
slow down on and take more time to consider.
Mr. Hultgren. Dr. Dayaratna, do you have any thoughts on
how the Clean Power Plan will impact grid reliability?
Dr. Dayaratna. I actually have not looked at that question
myself but I'm happy to look into it further.
Dr. Tierney. Mr. Hultgren, I have examined this very
carefully, and the Federal Energy Regulatory Commission has
written all five members, Republicans and Democrats, have
written to the EPA saying that the tools we have in place today
are adequate to handle the reliability issues. The grid
operators who have analyzed the retirement scenarios indicate
that those will take place over a period of time. It can be
handled by the grid operators. That's true in the Midwest,
that's true in your part of the country, that's true for both
PJM and the Mid-Continent ISO. There is no historical basis----
Mr. Hultgren. I've got last question----
Dr. Tierney. --for identifying the reliability issues.
Mr. Hultgren. If I could reclaim my time, there's clearly a
disagreement on that issue. Some are questioning the
reliability there. I certainly am hearing concern from my
constituents.
Mr. Eule, if I can wrap up my last 30 seconds, does the EPA
rule recognize technology and its limitation in both the short
and longer term?
Mr. Eule. I'm not sure. Could you repeat the question?
Mr. Hultgren. Does the EPA rule recognize technology and
its limitation in both the short and longer term?
Mr. Eule. I think the EPA makes assumptions about
technologies and technology deployment that many states find
unreasonable. That's something we found in our survey of the
state comments to EPA. Many states have pointed out that the
technology assumptions that EPA assumes just cannot be met.
Mr. Hultgren. Thank you. My time is expired. I yield back.
Thank you, Chairman.
Chairman Bridenstine. Thank you.
I'd like to recognize the gentleman from Colorado, Mr.
Perlmutter.
Mr. Perlmutter. Thanks, Mr. Chair, and thank you to the
panel. Obviously this Committee, we agree on a lot of things,
and then there are some places where we are in absolute
disagreement, and this may be one of those areas, and I do want
to thank my friend, Mr. Hultgren, for bringing up the Pope
because the most recent encyclical says let's do everything we
can to reduce pollution going into the atmosphere to avoid any
further climate change. So I appreciate him bringing up the
Pope.
I would like to address a couple things to you, Dr.
Dayaratna, and so just I understand, I think I heard in your
testimony you think that at its peak at some point, there would
be potentially a loss of 200,000 jobs a year.
Dr. Dayaratna. By 2023, a total of 200,000 lost jobs.
Mr. Perlmutter. A total by 2023?
Dr. Dayaratna. Yes.
Mr. Perlmutter. So if I am not mistaken, and you're a
mathematician, statistician, right?
Dr. Dayaratna. Correct.
Mr. Perlmutter. Are you familiar with how many jobs we were
losing at the end of the Bush Administration per month?
Dr. Dayaratna. Um----
Mr. Perlmutter. About 800,000. I'll help you on that, okay?
About 800,000 jobs a month in 2008 and 2009. So total is
200,000 jobs by 2023. Is that your testimony?
Dr. Dayaratna. Yes, including probably some in your own
district actually.
Mr. Perlmutter. Well, my guess is that there would be some,
but on the other hand----
Dr. Dayaratna. Including manufacturing jobs.
Mr. Perlmutter. On the other hand, we're gaining under the
Obama Administration at least 200,000 jobs a month, not 200,000
jobs by 2023 are lost, 200,000 jobs a month, 13 million jobs
since the Obama Administration took office.
Now, you had a very interesting statement right at the
beginning, and I almost thought you were working for the Obama
Administration because you said it with such authority: ``For
years it has been a primary goal of the Obama Administration to
fundamentally expand regulations across the energy sector of
the economy.'' Is that written down someplace where the Obama
Administration has said they fundamentally want to expand
regulations, or is that your opinion?
Dr. Dayaratna. I haven't----
Mr. Perlmutter. Is that your opinion, sir?
Dr. Dayaratna. It is my opinion. Throughout a variety of
things that I've seen over the past few years, I have noticed
that this seems to be the primary goal--one of the primary
goals of this Administration.
Mr. Perlmutter. So it is your opinion? Yes or no?
Dr. Dayaratna. I haven't seen it written down anywhere.
Mr. Perlmutter. Okay. Thank you.
So you, I understand, have taken a lot----
Dr. Dayaratna. Let me just say this, though----
Mr. Perlmutter. No, it's my time.
Dr. Dayaratna. All right. Go ahead.
Mr. Perlmutter. You'll get a chance to respond however you
like later on.
Dr. Dayaratna. Okay.
Mr. Perlmutter. So you took information from the Energy
Information Agency to determine some of your statistics,
correct?
Dr. Dayaratna. Correct.
Mr. Perlmutter. Can I have the EIA's solar projections put
up there, please? So did you in coming up with your analyses
that there would be this job loss, did you take into
consideration the growth factor of solar that the EIA has
continually underestimated? Did you look at--are you familiar
with this chart?
Dr. Dayaratna. I am not familiar with that chart
specifically but I am familiar with the fact that this--these
jobs are net jobs overall. So saying that this plan is going to
create jobs is essentially like saying minus five plus two is a
positive number.
Mr. Perlmutter. Minus five plus two, so that would be minus
three. Is that right?
Dr. Dayaratna. Yes.
Mr. Perlmutter. I mean, I'm not a statistician but I'm just
trying to do the math.
So--but you did not take that into consideration in doing--
--
Dr. Dayaratna. Unless the model----
Mr. Perlmutter. --your analysis?
Dr. Dayaratna. Unless the model did. I just used the EIA
results from their annual--yeah.
Mr. Perlmutter. Can we put up the other one, the levelized
costs of energy chart? So this is EIA information too comparing
the costs of different kinds of energy technology, and first
I'd like to ask, is The Heritage Foundation agnostic when it
comes to what kind of energy this country has or is it coal-
centric?
Dr. Dayaratna. I--well, my testimony does not reflect the
views of The Heritage Foundation so I'm not going to comment on
anything in that regard.
Mr. Perlmutter. But when I look at your testimony, it
starts off with ``The Heritage Foundation.'' You do it on
Heritage letterhead.
Dr. Dayaratna. Well, if you actually look at the first
paragraph, it specifically says that my views do not reflect
the views of The Heritage Foundation.
Mr. Perlmutter. But you used their letterhead.
Dr. Dayaratna. There is letterhead on my testimony,
correct.
Mr. Perlmutter. All right. Well, in looking at the chart,
levelized costs of energy, shows the most bang for the buck is
energy efficiency. Would you agree with that? I mean, a BTU
saved is a BTU earned, right in the middle, so the red sort of
energy efficiency and renewable energy sources is blue, fossil
fuels.
Dr. Dayaratna. I'm not sure about the data that's used in
this chart so I'm not sure I want to comment on it.
Mr. Perlmutter. All right. So you don't remember this chart
or this data?
Dr. Dayaratna. This chart and this data? Off the top of my
head, no.
Mr. Perlmutter. Okay. Well, my time is expired. I have many
other questions if we get to another round. I thank you, sir.
Chairman Bridenstine. The gentleman from California, Mr.
Knight, is recognized.
Mr. Knight. Thank you, Mr. Chair.
It seems like a lot of folks have used their own states so
I'm going to use mine in my testimony. Have we used California
as kind of a model in any of this with the recent legislation
that they've passed, the recent RPS standards, the AB-32
passage? Looking at what California has done when we had the
five dirtiest cities in 2010, and now that we've passed all
this legislation, we have the six dirtiest cities in 2015, can
anyone comment on what has happened in California? Have we used
this as a good model or is it something that we shouldn't use?
Dr. Gruenspecht. Well, we don't give policy advice of what
you should do or shouldn't do, but we do incorporate the
California programs into our energy outlook. That I will say.
Dr. Tierney. One aspect of the California program that is
relevant here is that it uses a mass-based approach. It puts a
cap on the amount of emissions. California's model is actually
economy-wide. The Clean Power Plan would ask each state to
adopt its own approach in the power sector. Many states are
looking at joining together voluntarily to choose an approach
that would do a multistate mass-based approach. The studies
have indicated consistently that that type of approach is the
most efficient way to deliver carbon reduction or air pollution
benefits, and we've seen that in wide literature on this topic.
Mr. Knight. And I won't speak countrywide, I'll just use
California as an example of the things that have happened. Over
the last five years, we have gone through AB-32 and RPS and we
have tried to lower the standards. We have continually been the
highest electric rates in this country, and we have risen by
the highest percentage over the last five years in electric
rates. Those are facts of legislation that has been passed in
California. Those are facts of what has happened in California.
Again, we've gone from the five dirtiest cities in this country
to the six dirtiest cities in the country with very, very
little impact by the legislation that we've passed.
But I guess my question would be more on some of the power
that we address in these standards and what we're trying to do,
and I'll just go straight down the line. Would we agree that
nuclear power is a clean energy that we could use to lower the
impacts of carbon in the air and pollution in the air? And I'll
start right with you, Dr. Gruenspecht.
Dr. Gruenspecht. Yes. It's just expensive to build new
plants but definitely clean in terms of carbon.
Mr. Eule. Yes.
Dr. Tierney. Yes, and I hope that the EPA presents a rule
that will allow us to retain safely operating existing nuclear
reactors.
Dr. Dayaratna. Correct.
Mr. Knight. I knew that would be a quick answered question.
Again, I'll go back to what we have decided in California
that that is not a clean energy and we are trying to get rid of
those energy sources, so I'm glad that we would agree that that
would be a very clean energy, that that would lower the carbon
standards and our carbon footprint, and we could continue on
with that.
And with that, I will yield back the balance of my time.
Chairman Bridenstine. The gentleman yields back.
I recognize Mr. Veasey from Texas, Boomer Sooner.
Mr. Veasey. They weren't saying that at the TCU game last
year, that's for sure.
I did have a question that I wanted to ask about
affordability. Dr. Tierney, you know, one of the things that I
know that you're aware of is that critics of the proposed rule
of the EPA claim that American consumers will have to pay more
because of the changes. One of the specific concerns highlights
that the Clean Power Plan will cause residential electricity
prices to increase dramatically, and also it states that
residents in certain areas of the country will see higher rates
of increase, and one of those regions is in Texas that I
represent, and residents in the district that I represent, I
represent a very urban area in Dallas and Fort Worth, and it
would be really tough for the constituents that I represent for
them to see any increases in their utility bills. I'll be very
frank with you on that. Which is why I was actually encouraged
to see that you disagreed with the report's conclusion on this
based on the analysis completed by EIA. Can you please describe
in more detail the likely impact of the proposed rule and what
it will have on electricity rates and bills?
Dr. Tierney. Sure, and I think there are two parts to your
question that I'd like to address. One of them is, in a place
like California and in other parts of the country where
electricity rates may be higher than other parts of the
country, the consumers' total bills, total electricity bills,
in those parts of the country are lower than other parts
because of energy efficiency. The amount of consumption that a
poor person in a low-income housing building, they're going to
end up paying less per month on total for electricity as a
result of this fact that electricity rates may be slightly
higher but you're going to spend much less on your total bill.
So we've seen that. We've seen that around the country. We've
seen that in California. The parts of the country that have
invested the most in energy efficiency are places where there
is a much bigger economic gain per dollar spent on energy by
consumers and by the total economy. So this--the fact that
people talk about rates just clouds the fact that in fact what
customers do each month is write a check for their bill.
And the second part that I want to address is that those
same consumers that are paying for electricity out of one
pocket, in a situation where they're going to have lower
healthcare costs and lower taxes as a result of their
communities not having to address climate change impacts so
much, they're going to be paying less out of that other pocket.
So the customer or the person living in that community is going
to be positively benefited by the kinds of things that are
underway here.
Mr. Veasey. Thank you very much. I'm glad that you talked
about that. I think that's important, and I think that's left
out of the discussion too often, and for people that do
represent, you know, areas like I do, that's a huge concern
when we have these particular debates.
Another issue that is very important to the state and the
district that I represent is the impact that the rule will have
on jobs. A recently released study found that the CPP would
result in an increase of 263,000 civilian jobs by 2030, and I
understand that you helped analyze the economic impact of a
similar regional rule, the RGGI rule. Can you describe the
economic impact that RGGI had in its region? And also, can you
relate those results to the Clean Power Plan? And what I mean
by that is, that you believe the effect on the economy would be
similar?
Dr. Tierney. Let me address the report that I think you
were referring to that has recently been published by the
Economic Policy Institute, and there's another one recently
published by Industrial Economics. Each of them uses a
macroeconomic model, and what they do is look at what happens
when consumers may end up spending less on electricity or they
might spend a slightly higher amount for electricity but that
local economy is hiring people to put lighting fixtures,
insulation in homes, new windows, a variety of different things
that are job-producing effects. Well, those folks who get those
kinds of jobs are then spending their own dollars in the local
economy associated with clean energy investments and those are
producing jobs that offset some of the other things that may be
associated with shutting down a power plant just like we all
shut down our cars from time to time when we think that they're
old and inefficient. We're seeing here the modernization that's
going to lead to jobs in local economies.
Mr. Veasey. Thank you very much. I appreciate that. My time
has expired. Mr. Chairman, go Frogs.
Chairman Bridenstine. The gentleman from California, Mr.
Rohrabacher, is recognized for five minutes.
Mr. Rohrabacher. Thank you very much, Mr. Chairman.
And going over some of the things that have been said here
I find quite disturbing, I--let me just note that the CO2
impact on health has been--we continue hearing CO2
is a pollutant, CO2 is a pollutant, and that some
people believe that a pollutant actually has to hurt human
health in order to be a pollutant and there is great--well,
there's not any controversy at all. CO2 has no
direct impact on human health.
I'd like to ask Dr. Tierney, you mentioned that asthma is
created by CO2. Could you give us any type of
journal, medical backing for that?
Dr. Tierney. I didn't say that.
Mr. Rohrabacher. Yes, you did.
Dr. Tierney. No, excuse me, I did not.
Mr. Rohrabacher. All right. I'm taking back my time.
Dr. Tierney. I did not say that.
Mr. Rohrabacher. I'm taking back my time. You just said you
didn't say it.
Dr. Tierney. I didn't.
Mr. Rohrabacher. The record will indicate whether or not
you noted that asthma was a relationship from CO2.
Dr. Tierney. Of the----
Mr. Rohrabacher. You----
Dr. Tierney. --other emissions associated with fossil fuel
combustion. I did not say they were from CO2.
Mr. Rohrabacher. Oh, well the record will----
Dr. Tierney. Excuse me.
Mr. Rohrabacher. The record will--you used the word asthma
and then you went to health impact. I don't know if you're
trying to get your message through without being responsible
for the message that's actually being delivered but----
Dr. Tierney. I will say it very clearly----
Mr. Rohrabacher. Mr. Chairman, I think I just----
Dr. Tierney. --I did not say that CO2----
Mr. Rohrabacher. Mr. Chairman----
Dr. Tierney. --directly is a health problem.
Mr. Rohrabacher. Madam, Madam, we have a certain length of
time here. Your disregard for that is arrogant and disruptive.
Let the members of this committee have their right to ask you
questions without you utilizing our time so you won't have to
answer more detailed questions. All right?
Let me note that the CO2--from what I have heard
today, the CO2 health impact comes directly because
of what it does to climate change. We've also heard from our
opponents today that climate change caused by CO2
causes droughts, causes floods, causes this rain to--causes
more rain, causes less rain, causes things to be colder, causes
things to be hotter, has more hurricanes, more rising ocean
levels. Let me just note that every single malady that you can
think of in the climate is caused by an increase in CO2
according to what we have heard today from our colleagues on
the other side of the aisle.
I, and I believe science, rejects that notion, that
CO2, plugged as--by the way, CO2 does not
itself have a health impact on human beings. We had other
testimony here from other witnesses in the past, very--on the
other side of this issue who also refused to say that CO2
actually has a direct impact on people's health. So this idea
that there's any savings whatsoever by these CO2
standards, that that savings is based on the fact that there
are health-related benefits by having lower levels of CO2
is totally inaccurate.
Let me suggest that in terms of--you heard it from our
colleagues on the other side of the aisle, that the pipeline--
in the past we heard--when talking about exaggerated claims, we
heard the pipeline in Alaska was going to eliminate the
caribou. We heard that temperatures were going to increase
dramatically unless we had something about CO2 and
reduce the CO2 levels, that the temperatures were
going to climb. Well, the temperatures haven't climbed for 17
years.
We have basically heard that the polar bears would be
extinct by now and they're not. We have heard that--again,
we've heard about more droughts, and even--I--I'm not sure if
this is your testimony; I'll go back and check--something about
more hurricanes. We haven't had more hurricanes. There have
been no more--and the climate is not more aggressive than it
was in our time of growing up.
Now, all of these things that supposedly cost money could
be put into an equation to show that increasing the electricity
bills is actually going to have a positive impact. It's like
saying if we break windows, you know, you break the windows of
a house, that we're going to benefit by that because you're
going to have to hire somebody to fix the window. Well, that
makes no sense economically at all. It may seem like it does
because there's now a job there, but if that job of fixing the
window wasn't there because you didn't break the window, that
money would be spent hiring somebody for a job that needed to
be done that increased the level of wealth in our society.
I find--it's a good hearing today. Thank you very much. And
let me just note we only have five minutes to ask questions,
and when someone tries to filibuster that, they're taking away
from the validity of the hearing and I resent that. I'm sorry
if I lost my temper actually, but we have--we all have a right
to--I'd give you an extra ten minutes if I could but I can't.
I've got five minutes, so thank you very much.
Chairman Bridenstine. I'd like to thank the gentleman from
California.
I would remind all the folks on our panel--and I do--we're
going to stick around for a second round at the request of Mr.
Perlmutter. I'd remind everybody that our witnesses are here at
our request, and as respectful as we can be even when we
disagree, that's what we ought to do.
I'd like to recognize the gentleman from Texas, Mr. Babin,
for five minutes.
Mr. Babin. Thank you, Mr. Chairman. I appreciate that.
And I'll say it for you, Boomer Sooner.
Well, I live in Texas, District 36. We have more power
plants, petrochemical facilities than any other district in the
country. And 63 percent of our electricity is created in coal-
fired plants, which is strange and it was a surprise to me when
I found this out because the price of natural gas is cheap and
very plentiful and being produced readily in my State.
But I had a group of utility folks come to see me last year
and complained that if this Clean Power Plan is implemented,
that they are coal-fired plants, 63 percent of our electricity
is going to be endangered with the--whether you call it
retirement or whether you call it just simply closing them on
down.
This, according to some of the testimony I've heard today,
would increase our utility bills by up to $70 a month and cost
the average family of four $2,000 a year in the years to come
because of the Clean Power Plan. The EIA analysis projected
that coal production would decline under this plan. How much of
a reduction in coal production would occur according to your
analysis, Dr. Gruenspecht?
Dr. Gruenspecht. Roughly 30 percent. Almost all the coal
produced in this country is produced for electric power
generation----
Mr. Babin. Yeah.
Dr. Gruenspecht. --so 30 percent reduction generation, 30
percent reduction in coal production.
Mr. Babin. Does EIA have any projections on the impact of
the reduction in coal production--and you may have said this
earlier and I just happened to miss it--with regard to
employment in the future?
Dr. Gruenspecht. I don't think we addressed that in our
report. It would depend on----
Mr. Babin. Okay.
Dr. Gruenspecht. --productivity, trends in the industry.
You know, coal employment has been falling for quite a while.
But--and then rising very recently. But 30 percent, you might
look at 30 percent of whatever the projected employment would
be would be a good guess since it goes across all regions.
Mr. Babin. Okay. Dr. Dayaratna, did you have a statistic on
that?
Dr. Dayaratna. Excuse me, on what?
Mr. Babin. In regards to employment, the impact of rising
coal--reduction in coal production with regards to employment.
Dr. Dayaratna. I--based on the analysis of the Clean Power
Plan, I suggested in my written testimony there's some overall
impact on employment. Beyond that, I have not conducted any
further analysis.
Mr. Babin. Okay. What would be the impact of the United
States, American GDP with regard to coal production reductions?
Can anyone answer that one?
Dr. Gruenspecht. Well, I think that's included in our basic
framework of the .17 to .25, you know, reduction in cumulative
GDP over the 2015 to 2040 period. So again, there are losses in
coal, there are gains in other things.
Mr. Babin. Okay. Well, let's switch over real quick and
talk about natural gas because this is a big part of our
economy, and especially in my district. The EIA analyzed the
impact of the Clean Power Plan on natural gas prices, and found
that natural gas prices would not rise significantly as a
result of the rule. Does this lack of price increase depend on
the availability of domestic natural gas?
Dr. Gruenspecht. It does take account of that but it also
reflects the extensive use of renewables for compliance. There
is a pop in gas prices right around 2020, but over time,
renewables become more important to compliance and natural gas
sort of--we view as returning to our baseline view. But the
view of natural gas is a very important part of this thing.
Mr. Babin. Right. Yeah, Mr. Eule.
Mr. Eule. Just to make one comment about natural gas, EPA's
plan really doesn't take into account the infrastructure that
would be needed to deliver the gas for its building block two,
which would increase dispatch from natural gas plants to the
electricity grid. This is a very, very big concern. Siting and
permitting is very, very slow in this country and if we're
going to expect to use more natural gas to meet EPA's goals,
then we need the infrastructure to deliver that gas to where
it's needed. And right now, that's a very time-consuming
process.
Mr. Babin. Absolutely.
Thank you, Mr. Chairman. I yield back.
Chairman Bridenstine. The gentleman yields back.
I'd like to recognize for five minutes Mr. Westerman from
Arkansas.
Mr. Westerman. Thank you, Mr. Chairman. And I will add a
woo pig sooie to that.
I'd like to thank the panel for coming today.
I've got kind of an interesting background as it relates to
this topic. Before I was in Congress, I'm an engineer and I
designed industrial manufacturing facilities, including
renewable energy facilities. Even the renewable energy
facilities had to go by the EPA guidelines for permitting. And
another interesting thing, even renewable energy facilities
take into account their pro forma analysis of electrical cost
and whether to build the facility or move somewhere else where
electrical costs are lower.
Also, I did graduate work at the Yale School of Forestry
and Environmental Studies, which is a leading institution in
environmental responsibility, so I've got a pretty good grasp
and understanding of that as well.
In my State of Arkansas we have a wide variety of energy
sources. We have coal, natural gas, hydro, nuclear, and we've
got a variety of renewables there. We're a relatively small
State. We've only got about 16,000 megawatts of total
electrical generating capacity and we do export electricity out
of Arkansas.
About 40 percent of our power comes from coal. We happen to
have the most efficient, low-emission coal plant that can be
built. It's the Turk Plant. And thanks to research and
technology and better materials, we're able to use ultra-
supercritical process. It allows higher temperatures and
pressures and makes that facility about 40 percent system-
efficient versus 30 percent for a traditional coal-fired
facility.
Now, when we look at renewables in my State, we are blessed
with an abundance of biomass. That's our largest source of
renewable energy there. Our state forestry economists said that
we've got right now in excess of 18 million tons per year of
growth in our state. That's timber and biomass growth that's
not being utilized right now. If every bit of that could be
harvested and put into a renewable energy facility making
electricity, it would make less than 1/10 of the 16,000
megawatts that are produced that we have in generating capacity
right now. We're talking about cutting millions and millions of
acres of timber and putting it all in a power plant to make 1/
10 of our needs currently.
These regulations create a Catch-22 for a coal-fired plant
in my State. They say you have to have an efficiency rate of X,
you've got to have an emission rate of Y. When you put the
control technology and to get the efficiency rate or to get the
emission rate, you lower the efficiency rate, so you've put
this coal-fired plant in a position where it can't succeed. If
it closes down in the real world it'll make electrical rates
for consumers drop to--or rise to 20 to 40 percent more than
they currently are.
So, Dr. Dayaratna, I've got a question for you. In your
testimony you indicated that you've used the same economic
model as EIA to calculate impacts of the Clean Power Plan. Your
analysis has determined that households will see a loss of
$2,000 of income as a result of this rule, so what are some of
the real-world impacts of a loss of $2,000 of income as a
result of the Clean Power Plan?
And also, are the impacts of the plan even greater for
families that are on fixed incomes because I've got a lot of
families on fixed incomes in my district.
Dr. Dayaratna. Yeah, thank you for your question,
Congressman.
The--I just want to correct something. This is based on
the--I didn't rerun the dissimulation myself. This is based on
their results that are online. But I have used the National
Energy Modeling System myself many times before. So, yes. I
suggested in my testimony that during the course of the next
decade, as a result of the impacts on GDP, this would cost--the
Clean Power Plan will cost a family of four nearly $2,000. And
that is roughly the cost of like a full semester's worth of
tuition at a local junior college, which is--which isn't
trivial at all.
And furthermore, unemployment will increase, jobs will be
killed, and this will significantly harm people. It'll make it
difficult to move up the ladder in this country. And it will
harm people on fixed income.
Mr. Westerman. All right. And moving along, Dr. Gruenspecht
and Mr. Eule, can you give us just a brief overview of the cost
of electricity produced from different fuels? Like what is the
lowest-cost electricity and what is the highest cost if you
look at nuclear, Hydro, coal, natural gas?
Dr. Gruenspecht. Well, this is a good question and you have
to be really careful about this. And it came up in an earlier
question by one of your colleagues. You have to distinguish
between the cost going forward, so like a coal plant, very
expensive to build, you probably wouldn't build it today given
natural gas prices, but the cost of running that coal plant is
very cheap, you know, relatively cheap, on average across the
country, the fuel cost would be $24 a megawatt hour, 2.46----
Mr. Westerman. Let me just move on because I'm almost out
of time.
Dr. Gruenspecht. Yes.
Mr. Westerman. Is it--have we fully developed renewable
technologies or--to make them cost-competitive with traditional
fuel sources?
Dr. Gruenspecht. I think they're very competitive if you
need new fuel capacity. But the issue here is replacing
existing generation from existing capacity with new generation
from new capacity, and that's the issue. It's not the
comparison of the levelized cost that was shown earlier. It's
the operating cost of what you have now versus what you will
bring in to replace it, which will have to cover not only its
operating costs but it's capital costs of building it.
Mr. Eule. May I add onto that? Renewables are also
intermittent so they need backup. Oftentimes, when you build
renewables, you have to build the transmission lines because
where the renewable power is generated isn't where the people
live so you have to--the expense of building additional
transmission lines. There are a lot of costs involved in--of
very rapid build-out of renewable energy that have to be
considered.
Mr. Westerman. Where I was leading with that was would it
be better to invest more in research to make renewables fit
into their place better and utilize the low-cost traditional
fuels that we have in place today?
Mr. Eule. And I think the better approach, instead of
making cheap energy expensive, it's probably better if we try
to make expensive energy cheap.
Mr. Westerman. Thank you, Mr. Chairman.
Chairman Bridenstine. The gentleman yields back.
The gentleman from Louisiana, Mr. Abraham, is recognized
for five minutes.
Mr. Abraham. Thank you, Mr. Chairman, and thank the
witnesses for being here.
Mr. Eule, I'll start with you and then I'll follow up with
Dr. Dayaratna.
This Administration, Obama Administration, has been
increasingly relying on the social cost of carbon in order to
justify all these regulations that they're throwing out there.
Can you please explain the social cost of carbon and some of
the controversy surrounding the analysis to measure the
supposed benefit of this Clean Power Plan?
Mr. Eule. Sure. I mean the social cost of carbon is a tool
that folks use to measure the alleged benefits of producing
CO2 emission. This could be benefits as far as
agriculture go, there are some health benefits involved, some
benefits to forestry, a whole host of things that go into the
social cost of carbon.
It's very controversial. The models that they use, if
they're tweaked a certain way, can actually come up with a
negative social cost of carbon. So no one quite knows what the
level is but that hasn't stopped the Administration from
certainly making an attempt to come up with a number. And they
have. And when you employ that number and use it compared to
the GDP losses that EIA identifies in its model, you wind up
still with a negative net--a net cost in GDP to the country.
Mr. Abraham. Okay. Dr. Dayaratna, let me refer to you on
this. Would you explain how the models used to calculate the
costs are flawed?
Dr. Dayaratna. Excuse me. You're asking me to--can you
repeat the question?
Mr. Abraham. Well----
Dr. Dayaratna. Yeah.
Mr. Abraham. --Mr. Eule just said that, you know, there's
some controversy----
Dr. Dayaratna. Yes.
Mr. Abraham. --and I guess my question would you please
explain how the model is used that he was referencing used to
calculate the social cost of carbon are actually flawed? What--
--
Dr. Dayaratna. How are they flawed? That's the question.
Mr. Abraham. How--exactly.
Dr. Dayaratna. All right. Okay. Well, the issue is,
firstly, and a variety of issues that I've looked at these in
my own research, that there are three integrated assessment
models that the EPA has used to compute the social cost of
carbon, the DC. model, the FUND model, and the PAGE model. We
looked at two of these three models in my research, and the
larger issue is that there are extremely sensitive to choices
and assumptions.
And when you tweak the assumptions slightly ranging from
the discount rate to the ECS distribution to the end year,
these models end up trying to make projections 300 years into
the future, which is just completely ridiculous. And if you
even tweak that to make it say an unrealistic end year, say 150
years into the future, you get vastly different estimates of
the social cost of carbon. And in some cases, as Mr. Eule
suggested, you can even get negative estimates of the social
cost of carbon, suggesting that there are even benefits to
carbon dioxide emissions primarily due to like issues like
fertilization. So with the results all across the map, their--
the tool is just completely unreliable for these purposes.
Mr. Abraham. Okay. Thank you very much.
And I'm going to follow up with you again, Dr. Dayaratna.
Dr. Dayaratna. Sure.
Mr. Abraham. Your testimony indicated that even if all the
carbon emissions were brought to zero in the United States, the
global temperature would decrease by 2/10 Celsius. Does that
mean, then, that the Clean Power Plan represents only
tremendous costs without measurable benefits?
Dr. Dayaratna. Exactly, yes. The Clean Power Plan will--
it's just--it's an extremely expensive way to approach an issue
that will provide, you know, negligible impact and it will just
kill jobs and stifle the American economy for years to come.
Mr. Abraham. Thank you. Mr. Chairman, I yield back.
Chairman Bridenstine. The gentleman yields back.
I'd like to recognize the gentleman from Alabama, Mr.
Palmer, for five minutes.
Mr. Palmer. To continue the theme, ``roll tide,'' and I
guess ``war eagle'' since my kids went to Auburn. But anyway, I
want to get into these questions real quick.
You know, there is a lot of talk about how the Clean Power
Plan is going to impact the economy and impact job growth. And,
Dr. Tierney, you talked about how it's going to lower heating
costs, and I think you said something about--that heating costs
have gone down in Boston. I think the fact of the matter is is
that it's gone up 37 percent and last year was particularly
tough on families of the Northeast.
Dr. Tierney. You don't have to tell me that.
Mr. Palmer. Okay.
Dr. Tierney. I don't know that.
Mr. Palmer. Here's something I want to point out. Now, this
is the interesting thing about this is you talk about how this
green technology is going to lower energy costs and everything.
In December 2005 when the State of Maryland began implementing
their plan for going over to renewables, the cost of natural
gas was $13.05 per million BTUs. Do you know what it was in
December 2014?
Dr. Tierney. It was probably 1/3 of that because of
disruptive technologies of hydraulic fracturing and directional
drilling that combined were applied--
Mr. Palmer. Well, you're close. You're close. It was $3.48.
Now, the interesting thing is is that over that same period of
time, household energy costs went up 61 percent. Now, when you
start talking about disruptive technology, that's pretty
disruptive.
And I also want to point out, you know, Mr. Rohrabacher got
a little emotional there and I think he got off topic, but he
was talking about asthma rates. And you also made this point
that our GDP has tripled since the passage of the Clean Air
Act. Since 1980 it's grown 460 something percent. At the same
time, vehicle miles driven have gone up 90 something percent,
energy output has gone up 32 percent, the population has gone
up 38 percent, yet emissions have gone down 50 percent.
Now, the interesting thing about that is is that we've had
an explosion of asthma cases. That doesn't quite compute from a
health benefit perspective when the air is demonstrably cleaner
today than it has been in the last 50 or 60 years, yet asthma
rates have gone up. And the other interesting thing about it is
is that it's related to income, the problem with asthma.
There's a study out of UCLA that indicates that the
preponderance of asthma cases in California are among the low-
income households.
Now, I want to get into how this new Clean Power Plan is
going to impact that. You talked about that one of my
distinguished colleagues mentioned that employment has gone up.
Well, actually it hasn't. And there's a new report--an article
by the CEO of Gallup talking about the big lie, you know, we're
reporting that our unemployment rate is below six percent when
in fact it's--I've got the numbers here--it's over--thank you.
Ignore the buzzer.
The unemployment rate in reality is about 15.8 percent. And
the way this was calculated is the reported unemployed U.S.
workers is 9 million, involuntary part-time workers is 6.8
million, the marginally attached to the labor force work is 2.1
million, and then the additional unemployed workers with 65
civilian labor force participation rate is 7.--almost 8
million. That's 26 million people who are either unemployed or
underemployed or just quit looking.
So I want to point out that when you take into account
what's going on with these renewables and the regulatory
environment that's been created and the impact on the economy,
it's devastating and it's going to have a very negative impact
on people's health.
Mr. Eule, I think you wanted to say something.
Mr. Eule. Yeah, the employment numbers you pointed to, very
interesting. If you take a look at the employment numbers since
the end of 2007 for the rest of the economy other than the oil
and gas industry, employment has been essentially flat. In
other words, it's about returned to the place where it was at
the end of 2007. Employment in the oil and gas sector, because
of the disruptive technologies, fracking has gone up about 40
percent. So the energy revolution that's underway now in the
United States has really been a driver of employment.
Mr. Palmer. That's the only thing that's really saved us
and kept us to this point. Also----
Dr. Tierney. But, you know, renewables are cheaper in some
parts of the country than a fossil fuel technology. Recently in
Minnesota, for example, there was a request to have offers from
different suppliers. Natural gas-fired power plants did not
beat the price of a renewable project.
Mr. Palmer. If I may reclaim my time, Mr. Chairman, I just
would like to point out, though, that there's an offset here
and the offset is far more negative than the positive.
So I yield the balance of my time. Thank you.
Chairman Bridenstine. The gentleman yields back. I think
we--is there anybody that hasn't been heard? I think we've been
through the list on both sides so we're going to go into a
second round of questions.
Was that a call for the votes, by the way, that--Okay.
Okay.
So we're going to go into a second round of questions as we
have time here.
I've been--I obviously--you guys have heard me say Boomer
Sooner to my Texas friends on the panel on both sides of the
aisle. In full disclosure, I actually went to Rice University
in Houston, Texas, which is in Texas, and my constituents are
aware of that so I'm going to be okay there.
But one of my good friends Chuck McConnell is the Executive
Director of a department at Rice University called Energy and
the Environment. He was in the Obama Administration from 2011
to 2013. He was the Assistant Secretary of Energy at the
Department of Energy from 2011 to 2013. He wrote an op-ed that
was in The Hill recently. He says this: He says ``I just spent
a day in Washington last month testifying before the House
Science, Space, and Technology Committee on the Environmental
Protection Agency's recently released Clean Power Plan,
specifically the EPA's 111(d) rule. I was honored to be asked
to testify and came away simply amazed at the misdirected
political rhetoric around climate change that dominated the
hearing. I was often offered an insightful and--I was often
offered as insightful and concerned inputs about jobs and our
environment, was completely disconnected from what this
proposed policy would achieve and absent any connection to
fact.
This clean carbon plan does not''--and then he says ``let
me repeat, the plan does not impact CO2 levels or
climate change at any relevant or impactful way.'' This is a
former, you know, Administration official. ``Discussion about
implementation and policy and economic impact abounds, but the
fundamental truth is that this rulemaking does not reduce
CO2 or greenhouse gas to affect the climate. So how
disingenuous is it to talk about climate change, jobs, our
future, implementation, et cetera? We're acting as if
meaningful discussion for our citizens--we're acting as if it
is meaningful discussion for our citizens and it masks the
facts.
These are the facts for EPA 111(d) if fully implemented.''
He says this: ``Number 1: a .18 percent reduction in global
CO2 output,'' .18 percent reduction of--he says
``The resulting .01 degrees Celsius impact to global
temperature,'' .01 degrees Celsius impact. And if I remember
from his testimony, I think these facts were from EPA's own
models but I'd have to go back and check that. ``A resulting
impact of the lessening of global sea rise by an amount equal
to 1/3 the thickness of a dime,'' 1/3 the thickness of a dime,
and again, I think that's from the EPA's own models.
``Can we be serious that this is meaningful, relevant, and
impactful? EPA Administrator Gina McCarthy''--this is from
Chuck McConnell--``EPA Administrator Gina McCarthy has already
answered that question in testimony to the House of
Representatives in 2013. That answer was and is today ``no.''
McCarthy admitted this fact but added that the United States
needed to take this action to gain ``political leverage'' in
the world and show ``climate change leadership.'' This is from
one of the Obama Administration's own officials who is now at
my alma mater Rice University.
Mr. Eule, you prepared testimony. You referenced the EIA's
projection of cumulative reduction of CO2 emissions
by 6.2 gigatons in 2030. How does this reduction compare to
global carbon emissions, 6.2 gigatons compared to global carbon
emissions?
Mr. Eule. That is 6.2 gigatons saved over 11 years, so it's
a very, very small amount. And you get an idea of how small. In
2030 Chinese emissions will offset that 6.2 gigaton reduction
in a little over 7 months.
Chairman Bridenstine. So it's--your quote was very, very
small.
Mr. Eule. Very, very small.
Chairman Bridenstine. What about emissions from China
specifically? Do you have information on that?
Mr. Eule. Information--emissions from China, depending on
which model you use, emissions from China, carbon dioxide
emissions, not talking about total greenhouse gas emissions,
carbon dioxide emissions in 2030 could be anywhere from nine to
ten billion-gigatons so----
Chairman Bridenstine. Got it. The EIA describes the impact
from the Clean Power Plan on GDP as ``equivalent to changes of
a few tenths of one percent from the baseline given the
magnitude of GDP and disposable income accumulated over the
2015 to 2040 period.'' Can you elaborate on this
generalization, Mr. Eule?
Mr. Eule. It's a significant amount of money, and the way
that I calculate it, it's a cost of about $1.2 trillion over 11
years. Even in Washington, that should be considered real
money.
Chairman Bridenstine. Dr. Dayaratna, what is the value to a
family of four of that GDP impact?
Dr. Dayaratna. So as I----
Chairman Bridenstine. Will you turn on your microphone?
Dr. Dayaratna. As I said in my--I was alluding to in my
testimony, by the middle of the next decade it would cost a
family of four nearly $2,000.
Chairman Bridenstine. Okay. That's good information. Now
that I have made the blood boil of my good friend from
Colorado, Mr. Perlmutter, I would like to recognize him for--
now that my time is expired, I'd like to recognize him for five
minutes.
Mr. Perlmutter. Thanks, Mr. Chair.
And, Dr. Dayaratna, I want to apologize. I got a little
aggressive with you and I'll tone it down. I do want to start
with a question for you going back to--you know, for me I'm
agnostic as to the energy source or energy efficiency, that we
just continued--you know, the title to our committee is
Science, Space, and Technology, technology being the key here
as to disruptive technologies that continue to provide more
energy at less cost with innovation and invention, okay?
So would you be opposed--there's a company in Boulder,
Colorado, called Zolo Technologies. And what they've done is
they've taken the ability--these guys are rocket scientists
actually from the Jet Propulsion Laboratory, and they're
improving the burners of coal-fired power plants to get more
power per ton from coal. Would you have any opposition to that
in----
Dr. Dayaratna. In terms of letting innovators do what they
want to do in terms of the free market, no.
Mr. Perlmutter. So I mean that kind of efficiency is
something you would embrace? You know, you're saying if there's
a regulation that forces that, you won't embrace it, but just
on its own, you would embrace it?
Dr. Dayaratna. I mean I would have to see the details of
that. I mean I came here to discuss the impacts of the Clean
Power Plant itself.
Mr. Perlmutter. Right. So--but you wouldn't object to more
efficient power production, would you, just as a general
proposition?
Dr. Dayaratna. I mean, again, so I would have to see the
general details of what you're describing.
Mr. Perlmutter. You're going to get me more aggressive here
as we go through. You would have to see it. I agree. Okay.
Dr. Dayaratna. So----
Mr. Perlmutter. So, I mean, yeah. I do want to----
Dr. Dayaratna. The devil is in the details.
Mr. Perlmutter. --you to know you have a friend up here who
said you're a good guy and for me not to be so harsh on you. So
I will not be harsh and I will turn to Dr. Tierney and I won't
be harsh on her. I'm going to try to be not a trial lawyer
cross examining you all.
Dr. Tierney, I had a slide up there--if we could put the
one up on the solar projections--that shows how the EIA has
projected solar usage over the last few years, and based on
this chart, they've underestimated the construction and the
building of new solar generation. Can you comment on that,
please?
Dr. Tierney. Yes. In fact, if you were to take those annual
energy outlooks for many years before 2010, which you're
showing on this chart, and look over the past decade, each of
the outlooks that EIA has used looking forward to the amount of
installed renewables--I'll put it solar, wind, other renewable
technologies all combined, they have undershot what has
actually happened in the real world in part because the cost
reductions of these technologies is moving forward at such a
clip that they are coming in at lower cost on an installed
basis.
Mr. Perlmutter. So based on the cost piece solar is coming
in, you know, less per kilowatt hour, wind is coming in less
per kilowatt hour, natural gas coming in because of changes
through fracking and innovation in the oil and gas industry,
less per kilowatt hour, right?
Dr. Tierney. Yes. I mean what we saw for natural gas was
over a period from mid-2007 to 2012 we saw dramatic increases
in electricity generation. Those have kind of flattened off in
some sense because we have not continued to see the declines
that we saw over the last year when technology was first being
introduced.
Mr. Perlmutter. Okay. Dr. Gruenspecht, you wanted to
comment?
Dr. Gruenspecht. Well, thank you so much for recognizing
me.
Mr. Perlmutter. You're----
Dr. Gruenspecht. Since we seem to direct questions about
EIA to everybody but EIA, I think it might be useful----
Mr. Perlmutter. You want me to cross examine you?
Dr. Gruenspecht. No. I welcome it actually. It'd be very
interesting.
Mr. Perlmutter. Okay.
Dr. Gruenspecht. But I do want to point out, you know, we
do pay careful attention to renewables in our projections. I've
been reading a lot of press articles. You know, actually
there's a publication called Politico that ran something this
morning, an appropriately named publication. It should not be
called Analytico for sure. The top of this things says in 2009
the federal government's EIA made a forecast for the next two
decades wind power would reach 44 gigawatts in 2030 and then
just six years later U.S. wind capacity is already up to 66
gigawatts and kind of basically this guy has these interesting
tweets and he says we're idiots pretty much. He didn't use that
word.
But I would say this, our projections are appropriately
developed based on current laws and regulations given EIA's
role. You are the policymakers. You and the people at the other
end of Pennsylvania Avenue are the policymakers. We don't guess
what you're going to do.
I would say that in 2009 this body met and passed something
called ARRA, the American Recovery and Reinvestment Act, a very
important piece of legislation. We came out in April of 2009
with an update to our reference case of our Annual Energy
Outlook, and in that reference case we had a projection for
wind energy for 2014. It was, guess what, 65 gigawatts. These
projections are not always going to be right, but it is exactly
what the capacity at the end of 2014 was.
So, you know, we can play these games and put up charts
like this and pretend it's all about technology progress, and
there are surprises and there are disruptions, but a lot of
what goes on here----
Mr. Perlmutter. I'm going to reclaim my time because I
wasn't----
Dr. Gruenspecht. It doesn't----
Mr. Perlmutter. I was not putting this up there as a cheap
shot.
Dr. Gruenspecht. Okay.
Mr. Perlmutter. I was putting this up there to show that
there have been improvements. I don't mind that you're
conservative in your estimations and your predictions.
Dr. Gruenspecht. Thank you.
Mr. Perlmutter. You know, the future is always kind of a
fuzzy thing for most people.
Dr. Gruenspecht. Right. That's not what I said.
Mr. Perlmutter. So I was not taking a cheap shot by putting
that up there.
Dr. Gruenspecht. I say you're not. I'm saying the policy
matters so that, yes, there are improvements in technology,
yes, there are improvements, but things like a 30 percent tax
credit, things like a production tax credit, those are the
things that have driven this thing, because in April of 2009,
after taking account of the ARRA, we projected the wind
capacity at 65 gigawatts, which is exactly what it is in 2014.
You read the article in Politico, which I know you didn't
write so you don't have to take credit for it, but----
Mr. Perlmutter. I don't read Politico.
Dr. Gruenspecht. You shouldn't. It's a waste of time. But
I--you know, but basically I say----
Mr. Perlmutter. I take it back. I do read Politico from
time to time.
Dr. Gruenspecht. Well, you----
Mr. Perlmutter. I don't want to--yeah.
Dr. Gruenspecht. You had extra time then.
Mr. Perlmutter. All right.
Dr. Gruenspecht. But all I want to say is this----
Mr. Perlmutter. Let's----
Dr. Gruenspecht. --it's policy as well as--you know, we
tell the story and it's legitimate about, you know,
unanticipated advances, this and that, but a lot of what
happens is driven by policy, and to talk about how off EIA
projections are that don't take account of policies, when we
take account of the policies like our update after you passed
the ARRA, the projections are actually--turn out to be quite
good.
Mr. Perlmutter. Okay.
Dr. Gruenspecht. So again----
Mr. Perlmutter. Thank you very much.
Dr. Gruenspecht. You're very welcome.
Mr. Perlmutter. And I yield back my time----
Chairman Bridenstine. Thank you.
Mr. Perlmutter. --and whatever may exist of it.
Chairman Bridenstine. I appreciate Mr. Perlmutter from
Colorado----
Dr. Gruenspecht. And I appreciate him.
Chairman Bridenstine. I'm glad I'm on the side of the table
and not on that side of the table.
I would say, Dr. Dayaratna, you mentioned earlier that the
Obama Administration has fundamentally expanded regulations
across the energy sector, and I know Mr. Perlmutter got on your
case about that. I would just say this: When the President was
asked in 2008 as he was campaigning--they asked him at the San
Francisco Chronicle, they said are you going to shut down coal?
And he said, no, I'm not going to shut down coal; I'm just
going to make it so expensive that they won't be able to
operate.
Dr. Dayaratna. Yes.
Chairman Bridenstine. So I would say that your testimony is
accurate.
I'd like to recognize the gentleman from Texas, Mr. Weber,
for five minutes.
Mr. Weber. I want to note that the preceding editorial
comments about Politico were not necessarily reflecting the
views of the management or any other living Member for that
matter.
And the President did say, by the way, while he was running
to the Chairman over here to my right that under his energy
plan electricity prices would of necessity skyrocket, his
words, not mine. Find the YouTube. So you're absolutely on
track with that.
Dr. Gruenspecht, in your bio here that was along with our
notebook, it's written that you were the Economic Advisor to
the Chairman of the U.S. International Trade Commission 1988 to
1990.
Dr. Gruenspecht. I think that's accurate.
Mr. Weber. You think that's accurate? Well, I'm glad that
at least some of the information we have is accurate. So you
kept up with international trade obviously. So following this
energy debate, once we shut down coal prices or, as the
President said in San Francisco, make it too expensive for them
to operate, do you think, based on your experience with the
U.S. International Trade Commission, that other countries are
going to follow suit or is this going to put us at a--the
United States had a comparative disadvantage?
Dr. Gruenspecht. I can't speculate on that. I have no--
Mr. Weber. Fair enough. You don't want to say, that's fine.
You have to have an--I would think you'd have an opinion.
Furthermore, in your testimony you basically say on page
three of it that ``there is considerable uncertainty and many
challenges'' or--and I'm reading from your testimony--``many
challenges are involved in projecting the impacts of the
proposed Clean Power Plan.''
Dr. Gruenspecht. Yes.
Mr. Weber. You did make that comment? So in your
estimation, your opinion, is it worth that kind of uncertainty,
all of the downturn in the economy that we've talked about with
the minimal uptick on good stuff? Do you know what I'm saying?
Do you think it's worth that risk?
Dr. Gruenspecht. Well, again, I'm--I mean we did our best
job on this thing. We take our role pretty seriously--
Mr. Weber. Yeah. Okay. How about you, Mr. Eule? You think--
with the considerable uncertainty, you think it's worth that
risk?
Mr. Eule. The numbers don't indicate that it is.
Mr. Weber. They don't. Let me just follow with what Dr.
Babin said earlier about the coal industry. I looked it up on
Google real quick and there was 174,000 jobs in the coal
industry, so I think the figure thrown out there was 30 percent
reduction. So, you know, do the math. That was 174,000 direct
jobs. So--and then there was a lot of indirect jobs that--a lot
of jobs that were supported indirectly by the coal industry.
It's not worth that risk.
Let me move on here. You also said in your testimony, Dr.
Gruenspecht, since you wanted to be cross examined----
Dr. Gruenspecht. I was getting a little bored.
Mr. Weber. You were getting a little bored? You looked a
little sleepy there for a minute. You said that the
construction of new generation to comply with the Clean Power
Plan may necessitate upgrades and expansion of electric power
transmission systems. We would call that infrastructure. Okay.
Dr. Gruenspecht. That's right.
Mr. Weber. Additional costs. So you're actually--there's
another factor in here that we don't know what that would
require that's going to be the additional cost, which would
further increase the price of electricity possibly. Now, on
page five of your testimony--I'm sorry, on page three of your
testimony, again you said in the last paragraph ``NIMS does not
consider how deliverability of natural gas to power plants
using that fuel might be impacted.'' And there at the very
bottom you said because of the shift away from coal toward
``intermittent'' renewables, is intermittent another word for
unreliable?
Dr. Gruenspecht. Intermittent is a--means that you can't
dispatch them. You can't just order them to turn on when you
want them.
Mr. Weber. So when you want them and they're not there,
would you say that--would you admit that that's unreliable?
Dr. Gruenspecht. Well, it's not available. You have to do
something else.
Mr. Weber. Okay. Well, to me when energy is not available
when you want it, that seems pretty unreliable, not that I'm
putting words in your mouth. Okay.
Dr. Gruenspecht. You'd have a hard time doing that.
Mr. Weber. You know, I can believe that.
Now, let me just tell you, you also said earlier that we
were the--just in your recent exchange with the cross examiner
over here to my right----
Dr. Gruenspecht. My friend.
Mr. Weber. Your newfound friend, your BFF, that we are
policymakers along with the gentlemen at the other end of
Pennsylvania Avenue or something like that.
Dr. Gruenspecht. That's right. We're located right in the
middle.
Mr. Weber. In theory, that's supposed to be true but the
truth of the matter is when the EPA unilaterally under the
President's direction decides to implement these kinds of
policies, that actually takes Congress out of the policy
decision-making chair. So I just want to opine on that.
Finally, I own an air-conditioning company, 34 years. I can
tell you about power. I can tell you about SEERs, seasonal
energy efficiency ratings.
Dr. Gruenspecht. Yeah.
Mr. Weber. I can tell you about the number of amps
compressors draw on. I can tell you about the number--the
houses and the cooling bills and what they use in Texas in the
way of energy. And I will just tell you that when you take a
family on a low income and they need a new air-conditioning
system and the standard efficiency is going to cost them 4, 5,
6, $7,000 to put that new system in their house but a high-
efficiency--let's say $5,000--but a high-efficiency system is
going to cost $8,000, trust me, based on 34 years' worth of
experience in the Gulf Coast of Texas, they're going to opt for
the lower efficiency equipment. So when you drive energy prices
up, they're not only not going to be able to take advantage of
them, they're going to have less money in their pockets even to
buy high-efficiency equipment. And so I take this very
seriously when we start increasing their price.
Mr. Chairman, I'm going to yield back.
Chairman Bridenstine. The gentleman yields back.
I do need a new air-conditioning unit in my home so I'll
probably be giving you a call.
Mr. Weber. 281-4859.
Chairman Bridenstine. I'd like to recognize the gentleman
from California, Mr. Rohrabacher, for five minutes so long as
he commits to not yell at the witnesses.
Mr. Rohrabacher. All right. Well, I think if my colleague
from Colorado can be so gracious as to apologize for being too
combative, I, too, can be that gracious and apologize for being
too combative with Dr. Tierney.
And as I said, I would give you the time if I had it and I
do have the time, so I'm going to yield one minute and a half
to Dr. Tierney, who has got lots of comments and hasn't been
able to make them because we've had witnesses on the side,
whatever you'd like to put into the record now about what you
gleaned from this hearing.
Dr. Tierney. Congressman, that was so generous.
Mr. Rohrabacher. All right.
Dr. Tierney. And I apologize in turn for stepping on your
own words, so thank you very much.
Mr. Rohrabacher. All right.
Dr. Tierney. I appreciate that.
I think the one thing that I want to say is with regard to
this question of whether or not acting through the Clean Power
Plan will make a difference in the emissions that contribute to
climate change, in the world, 1 out of every 15 tons of
omissions anywhere in the entire globe comes from the United
States' power generation sector. Reducing ten percent, reducing
20 percent, reducing 30 percent of that would--is equivalent to
the tons of emissions that are produced by scores of countries
around the world. This will make a difference and it will be
affordable by the United States.
It does--global warming is causing tremendous impacts
around globe. I'm not a Catholic person--I mean I'm not a
Catholic. That sounds crazy what I said. I am not a member of
the Catholic Church. I am so impressed that we have a global
leader who has written and is cyclical who has talked about the
impacts of a warming globe on the poorest of the poor around
the world.
We can make a difference here. It is worth doing. We are
not going to kill jobs. The economy will come out in a robust
fashion. We are Americans and we can do this. Thank you very
much.
Mr. Rohrabacher. All right. Well, thank you. And let me----
Chairman Bridenstine. Try not to yell.
Mr. Rohrabacher. Let me just note that we--there are
fundamental differences in the analysis of what the science
says. And as I say, when I have heard over the--my lifetime, I
remember when Jacques Cousteau when I was a young reporter told
me that the oceans would be black goo within ten years. And I'm
a surfer and I can tell you that oceans are not black goo. I
was just out on a surfboard last weekend. I actually had a word
that we had 66 people on one surfboard in Huntington Beach and
I'm very proud of that.
Dr. Tierney. So I used to do body surfing at the Wedge
growing up as a girl, so I know this well. I was raised in
Redlands, California. I'm going out with you.
Mr. Rohrabacher. You know what, we probably were body
surfing at the Wedge together. It was my favorite spot when I
was younger.
Dr. Tierney. Me, too. It was awesome.
Mr. Rohrabacher. Okay. There you go.
Now--but with that said, people who are benevolent people
can disagree and disagree aggressively. I certainly disagree
with the idea that CO2 is causing any change in the
climate, especially manmade CO2, which is only ten
percent of the CO2 that's in the air. And all of the
CO2 that we're talking about, the minimal amount
that this draconian regulation is going to have on our society,
even that tiny bit is just what mankind or what Americans of
mankind are contributing. We're talking about a microscopic
impact if there is any impact on CO2 at all on our
climate.
But the cost, and then again here we go into the cost that
we're being said is a--compensates for this is going to be that
our health benefits are going to be better or because people--
if indeed the climate is better, fewer people will get sick,
there'll be less people dying in India because of the heat
waves or Boston because of the snow in the winter time. It just
doesn't pencil out. And when it doesn't pencil out, it means
there's less wealth in the society.
Efficiency through better technology does mean there's more
wealth in society. But efficiency that's generated by
regulation, as we have heard here, is most often accompanied by
mandatory controls and/or, I might add, tax supplements which
cost the federal government revenue that could go into
education and other type of programs for today.
So when you're consuming wealth in order to promote
technology that would not otherwise be implemented, that wealth
is not available for the other things government has to do. And
if we take it out of somebody's pocket, personal pocket, then
they don't have the money to pay for their kids' junior college
education. So there's really a cost that we may disagree on
that and I don't believe that the health benefits that will
derive from changing the climate--and of course we don't
believe the climate will change on this--but those health
benefits in some way are going to offset the cost of what
we're--of what's being imposed by these regulations.
And thank you very much for understanding.
Chairman Bridenstine. The gentleman yields back. That was
actually quite nice. And I think I might like the other Dana
Rohrabacher better.
The gentleman from Louisiana, Mr. Abraham, is recognized
for five minutes.
Mr. Abraham. Thank you, Mr. Chairman. It won't take that
long.
Just one quick question to follow up on--Dr. Gruenspecht,
I'll direct it to you. What's the total estimated loss to the
GDP in dollars, not--we've been talking about tenths of percent
and that type of--on the Clean Power Plan, but the estimated
cost in dollars year-to-year is analyzed by the EIA.
Dr. Gruenspecht. It's cumulative over 2015 to 2040----
Chairman Bridenstine. Will the gentleman turn on his
microphone?
Dr. Gruenspecht. Excuse me, sir. Cumulative over 2015
through 2040, it's 1 to 1-1/2 trillion--3--depending on how
you----
Mr. Abraham. Three with a T?
Dr. Gruenspecht. Trillion with a T.
Mr. Abraham. Okay.
Dr. Gruenspecht. So again, there are two figures, figures
38 and 39 that show the same information. You know, it's all a
question of framing. Different people want to frame this in
different ways. We try to frame it pretty neutrally.
Mr. Abraham. Okay. That's all I had, Mr. Chairman. Thank
you. I yield back.
Chairman Bridenstine. The gentleman yields back. This is
the end of our hearing. I thank the witnesses for their
valuable testimony and the Members for their questions. The
record will remain open for two weeks for additional comments
and written questions from the Members.
The hearing is adjourned. Thank you.
[Whereupon, at 12:30 p.m., the Subcommittees were
adjourned.]
Appendix I
----------
Answers to Post-Hearing Questions
Responses by Dr. Howard Gruenspecht
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Responses by Dr. Susan Tierney
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Appendix II
----------
Additional Material for the Record
EIA report submitted by Representative Jim Bridenstine
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Documents submitted by Representative Gary Palmer
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
[all]