This month, Indiana and 11 other states filed suit against the Environmental Protection Agency in an attempt to prevent it from instituting a plan to have states significantly cut back on their carbon-dioxide emissions by 2030.
Announced in June, the EPA’s Clean Power Plan sets an overall goal of reducing carbon-dioxide emissions across the United States by 30 percent from their 2005 levels within the next decade and a half.
Indiana, because it gets more than 80 percent of its electricity from coal-fired power plants, was among the states granted a lower target under the EPA plan: a 20 percent reduction by 2030. How it reaches that 20 percent mark is left up to the state, which had the fourth-highest amount of carbon-dioxide emissions among all states in 2013.
The EPA is presently holding public hearings on the Clean Power Plan. Indiana is supposed to submit its implementation plan to the agency by June 2016.
Hoosier business groups and politicians, including Gov. Mike Pence, have derided the plan because of fears it would cause electricity prices to spike, which in turn could lead to companies opting to move elsewhere or laying off workers to offset cost increases and remain competitive. Utility companies would bear the brunt of the regulations and have to radically rethink how their energy is generated.
“As a state that relies heavily on coal-burning power plants, these proposed regulations will be devastating for Hoosier workers and families,” Pence said June 2. “They will cost us in higher electricity rates, in lost jobs and in lost business growth due to a lack of affordable, reliable electricity. Indiana will oppose these regulations using every means available.”
“All of these Environmental Protection Agency regulations issued by the Obama administration will eventually stunt the growth of our rejuvenated Indiana manufacturing sector because they increase the cost of doing business,” Patrick Kiely, president of the Indiana Manufacturers Association, said after the EPA’s plan was announced.
Manufacturing is the reason the state has rebounded so well from the Great Recession. It’s also the reason the EPA’s Clean Power Plan, regardless of how well-meaning its intentions, could be lights out for some Hoosier businesses that rely on low-cost energy.
Manufacturing made up more than 30 percent of Indiana’s gross domestic product in 2013, according to the U.S. Bureau of Economic Analysis. At more than $95 billion, the state had the sixth-highest amount of manufacturing GDP in 2013.
Indiana’s average retail price for electricity in 2012, the latest year available, was 8.29 cents per kilowatt-hour, or 14th-lowest among all states, according to data from the U.S. Energy Information Association. The average residential price was 10.53 cents per kilowatt-hour in 2012, while the average commercial price was 9.14 cents per kilowatt-hour and the average industrial price was 6.34 cents per kilowatt-hour.
The Clean Power Plan, say the Indiana Manufacturers Association and the National Association of Manufacturers, would cost the state a total of $102 billion in GDP from 2017 to 2040 and would result in more than 108,000 lost jobs or job equivalents each year. And 94 percent of the state’s coal-fired electricity generating capacity would have to be shut down.
Those are dire-sounding numbers, but proponents of the Clean Power Plan can offer up their own alarming projections. A July White House report warns if the United States’ average temperature rises 3 degrees Celsius above preindustrial levels, that could reduce the nation’s GDP by about $150 billion annually. And every year the U.S. delays action, the cost to reduce carbon-dioxide emissions rises.
During the past decade, according to the report, the country’s average temperature was 0.8 degree Celsius higher than the average temperature from 1900-1960. Sea levels are rising by 1.25 inches per decade, and the rate is accelerating, the report states.
Climate change is happening. The evidence-based science is abundantly clear. And yet, the Clean Power Plan and its 20 percent mandate for Indiana could very well deal a significant economic blow to the state.
There is a middle ground, if those involved in this issue are willing to meet there. The federal government could take into account the potential for overwhelming hardship the Clean Power Plan places on businesses. And instead of suing, the state of Indiana and Hoosier businesses and utilities could come up with workable, responsible steps to reduce carbon-dioxide emissions.
But that would require the present political winds to favor cooperation — instead of just blowing a lot of hot air.