In the News

THE Environmental Protection Agency’s proposal earlier this week to reduce greenhouse gases from new power plants was hailed by many environmentalists, but unless steps are taken quickly to bring existing plants under the rule, it will create a perverse incentive for companies to keep running older, more heavily polluting power plants. That’s bad economics that could lead to dirtier air.

The proposal would regulate carbon emissions from future power plants but leave existing sources untouched. This is yet another instance in a more than 40-year pattern under the Clean Air Act in which old and outdated technology has avoided new environmental standards. The result is continuing unhealthy levels of pollution.

“To get CCS going, you’d have to have a rule that was so strict you couldn’t even build a natural gas plant, you’d have to move to CCS,” said Michael Livermore, executive director of the Institute for Policy Integrity at the New York University School of Law. “You’d have to make CCS plants cleaner than natural gas.”

“The option of building new, efficient natural gas plants remains a viable alternative for companies that want to construct,” said Jason Schwartz, legal director for the Institute for Policy Integrity at New York University. “They’re allowed to look into the future and use their best judgment and set standards in anticipation of the growth of technology.”

“EPA’s not denying, of course, and they won’t deny, … that there’s going to be costs” from the regulation, said Michael Livermore, executive director of the Institute for Policy Integrity and adjunct professor at New York University School of Law who focuses on cost-benefit analysis. “The question is whether the costs are justified by the benefits.”

But a clear point, he said, is that the industry study is “not a prediction about gasoline” costs.

“It seems unlikely that they’ll be able to pass on 100 percent of their costs,” Livermore said of the oil companies. “If they can just pass along the costs to consumers, then why fight [the new regulations] tooth and nail?

“It’s not the role of EPA to keep every polluting business in the country open,” Livermore said. “It’s actually businesses’ job to comply with environmental regulations at the cheapest possible cost.”

Michael Livermore, executive director of New York University’s Institute for Policy Integrity, called the failure to cover existing plants “a big problem,” noting that the move might encourage utilities to keep operating conventional coal plants operating longer.

“When you want to reduce pollution, you need to go where the pollution is, and that’s existing sources,” he said, adding that when the government grandfathers existing plants and raises the standards for building new ones, “you increase the incentives to keep existing facilities around.”

In addition to lucrative tax breaks and subsidies from the government, many fossil fuel producing companies also enjoy another type of built-in bonus: they don’t have to pay for a lot of the harm they cause to public health. If they did, it could cost billions per year and make investing in renewable energy much more attractive.

If citizens could send an invoice to coal, oil, and gas companies for all of the damage they did—medical bills, reimbursements for sick days taken thanks to illnesses caused by pollutants in the air, even funeral costs—it would amount to a staggering bill.

But said Jason Schwartz, legal director for the Institute for Policy Integrity at New York University, believes focusing on the numbers is too narrow. In the broader sense, the tailoring rule works if the court allows EPA to take a “step-by-step piecemeal approach” by focusing on the big sources first.

“The agency is looking at all of the language together and coming to the closest reading they can get,” he said.

While any major change to our nation’s transportation model is currently floundering on Capitol Hill in the form of a massive transportation bill being used as a political football, it’s still possible for the president to slowly change the way we get around in this country. He can do this by exercising some of his regulatory power, something he has tried to do by raising the fuel economy standards of America’s automotive fleet.

Mike Livermore, executive director of the Institute for Policy Integrity at New York University, said the offer from electric utilities is not surprising, because they do not benefit as much from the remaining subsidies as some other industries do.

But while there is broad support in theory for a plan that streamlines the tax code and gets rid of provisions that “pick winners and losers,” that comity will disappear as soon as Congress takes a serious look at making certain companies pay more than they do under the current tax code, he said.

Livermore expects a battle royal between some energy companies — such as coal, oil and gas producers — and those that lack the same portfolio of tax breaks. One question is whether heavy-hitting utilities will line up against their compatriots in the energy industry, or sit on the sidelines during what could be a bruising political battle.

“Energy producers are going to fight tooth and nail for their provisions,” he said. “Everyone else is going to moderately want a tax break, but the question is how hard they’re willing to fight for it.”

No doubt about it, “it’s going to be a fight,” he added. “We’re not going to hold hands and sing Kumbaya and figure it out.”

There’s a lot of uncertainty around exactly how much taxpayer money the government gives out to Big Oil, Big Coal and the rest of the dirty energy industry each year in subsidies. But we know one thing for sure: it’s a lot. A new crowdsourced project called the Energy Tax Breaks Wiki promises to help identify the sections of the tax code containing these outrageous fossil fuels subsidies.