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Commentary:

Get real about climate change
EPA regulation is setting unreasonable and unrealistic goals

On July 29, 2010, I had the honor of speaking at the Association of Illinois Electric Cooperatives’ Annual Meeting in Springfield. I was asked to talk about the challenges facing the coal-fired power industry with a particular focus on climate change. Of course, I was ready, but the question was whether everyone in the audience was ready to hear what I had to say so early in the morning. So, I jazzed up a power point presentation to make the content of my talk a little more interesting. I seemed to remember enjoying a good game of darts in my younger days, so I analogized the regulations and other issues facing the coal-fired power industry to a dart board (the power plants) and darts (the regulations and challenges). A good game of “Double In-Double Out” but in the coal- fired power plant dart game, unfortunately, there is no good way to double out.

The United States Environmental Protection Agency (EPA) has proposed or is getting ready to propose close to 15 different rulemakings that focus on the coal-fired power industry. Many of these rules will require the industry to expend millions, if not billions, of dollars to comply at different times for different purposes. Regulations are not the only challenge. Activists are pressing regulators to hold numerous hearings, respond to lengthy comments and to delay permits and other needed decisions. Financial institutions are pausing before investing in coal-fired plants making it difficult, at best, to obtain reasonable financing. Coal supplies are also being squeezed by the same pressures.

Some may say, however, that although those darts hurt, the industry has avoided, thus far, the “mega dart” in our game of darts — climate change legislation. Indeed, should that “mega dart” be thrown, deep change in how we light our homes, where and if we work and how much we pay for daily living, may occur. But as the debate over climate change and energy legislation continues in Congress, we cannot forget the EPA has already thrown its own dart and climate change regulation is already under way.

As a former Director of the Illinois EPA, my job required me to look at the impact of a regulatory change on more than just the industry it has impacted. Indeed, I also needed to consider how a change in regulation impacted the state as a whole, local government, interest groups and the ordinary citizen. I further had to be prepared to explain the new regulation in a way that was sensible to someone who is not an environmental expert. So, let me try to explain how the EPA regulatory approach to climate change affects the livelihood of an existing coal-fired plant in the United States.

Think about owning a tractor you use to farm your land. When you bought it, you spent good money on it. Since it is a valuable piece of equipment, you really maintain it so it continues to run. You need it to make your living, produce crops for people and have relied on the fact you can use it. You recognize that you may need to put new parts on it and you are ready to make those necessary investments because, again, you paid a lot of money for it in the first place and you need to be able to continue to use it.

Let’s say, though, that the Department of Agriculture comes in and tells you that it has passed a regulation that requires you to reduce the amount of diesel you use in your tractor per day. If you exceed the amount specified, it will be against the law to operate your tractor. However, you still need to operate the same amount of hours each day in order to work your fields. The demand for your crops not only remains the same but may even increase because of demand.

You are perplexed. You ask, “How do I still operate my tractor the number of hours I have to operate to produce my crops but reduce my diesel usage?” You are not aware of any new piece of equipment that can be put on your tractor to reduce the diesel usage to the level specified in the regulation. You have been reading about one technology that is very, very expensive, but you are not certain you can even install it on your old but well-maintained tractor. So you decide to ask someone at the department what you should do because surely they must know. They created the regulation. You figure giving up farming when food still needs to be produced cannot be your only option. But when you ask the department to identify the options available to you, they really do not give you an answer. They tell you they will try to give you guidance within a few months of the effective date of the new rule but they tell you the new rule is still effective even if they do not give you guidance. They also have no answer when you question them on whether this really means you just have to stop using your tractor, figure out a different way to produce crops at the same volume and reliably, or wait and buy a brand new tractor that meets the regulation once it is on the market, all while the demand for your crops is greater than ever before.

This is the reality of EPA climate change regulation today for electric co-ops. The regulations are here and will be phased in starting January 2011 with little to no guidance on how the EPA’s regulatory expectations will be met. Is this the answer? No, especially when the industry faces a host of other regulatory mandates and challenges. Electricity still needs to be produced and cannot possibly be provided completely through wind, solar and energy efficiency improvements.

What’s needed? Legislation from Congress that is fair, affordable and achievable — yes, achievable — and not regulations that do not, and cannot, recognize the realities the industry and consumers face. So, next time you put on your lights to play a game of darts, think about providing Congressional members some thoughts on what we need to see from them. Inaction on climate change legislation coupled with uncoordinated regulatory mandates is simply not the answer.

On July 29, 2010, I had the honor of speaking at the Association of Illinois Electric Cooperatives’ Annual Meeting in Springfield. I was asked to talk about the challenges facing the coal-fired power industry with a particular focus on climate change. Of course, I was ready, but the question was whether everyone in the audience was ready to hear what I had to say so early in the morning. So, I jazzed up a power point presentation to make the content of my talk a little more interesting. I seemed to remember enjoying a good game of darts in my younger days, so I analogized the regulations and other issues facing the coal-fired power industry to a dart board (the power plants) and darts (the regulations and challenges). A good game of “Double In-Double Out” but in the coal- fired power plant dart game, unfortunately, there is no good way to double out.

The United States Environmental Protection Agency (EPA) has proposed or is getting ready to propose close to 15 different rulemakings that focus on the coal-fired power industry. Many of these rules will require the industry to expend millions, if not billions, of dollars to comply at different times for different purposes. Regulations are not the only challenge. Activists are pressing regulators to hold numerous hearings, respond to lengthy comments and to delay permits and other needed decisions. Financial institutions are pausing before investing in coal-fired plants making it difficult, at best, to obtain reasonable financing. Coal supplies are also being squeezed by the same pressures.

Some may say, however, that although those darts hurt, the industry has avoided, thus far, the “mega dart” in our game of darts — climate change legislation. Indeed, should that “mega dart” be thrown, deep change in how we light our homes, where and if we work and how much we pay for daily living, may occur. But as the debate over climate change and energy legislation continues in Congress, we cannot forget the EPA has already thrown its own dart and climate change regulation is already under way.

As a former Director of the Illinois EPA, my job required me to look at the impact of a regulatory change on more than just the industry it has impacted. Indeed, I also needed to consider how a change in regulation impacted the state as a whole, local government, interest groups and the ordinary citizen. I further had to be prepared to explain the new regulation in a way that was sensible to someone who is not an environmental expert. So, let me try to explain how the EPA regulatory approach to climate change affects the livelihood of an existing coal-fired plant in the United States.

Think about owning a tractor you use to farm your land. When you bought it, you spent good money on it. Since it is a valuable piece of equipment, you really maintain it so it continues to run. You need it to make your living, produce crops for people and have relied on the fact you can use it. You recognize that you may need to put new parts on it and you are ready to make those necessary investments because, again, you paid a lot of money for it in the first place and you need to be able to continue to use it.

Let’s say, though, that the Department of Agriculture comes in and tells you that it has passed a regulation that requires you to reduce the amount of diesel you use in your tractor per day. If you exceed the amount specified, it will be against the law to operate your tractor. However, you still need to operate the same amount of hours each day in order to work your fields. The demand for your crops not only remains the same but may even increase because of demand.

You are perplexed. You ask, “How do I still operate my tractor the number of hours I have to operate to produce my crops but reduce my diesel usage?” You are not aware of any new piece of equipment that can be put on your tractor to reduce the diesel usage to the level specified in the regulation. You have been reading about one technology that is very, very expensive, but you are not certain you can even install it on your old but well-maintained tractor. So you decide to ask someone at the department what you should do because surely they must know. They created the regulation. You figure giving up farming when food still needs to be produced cannot be your only option. But when you ask the department to identify the options available to you, they really do not give you an answer. They tell you they will try to give you guidance within a few months of the effective date of the new rule but they tell you the new rule is still effective even if they do not give you guidance. They also have no answer when you question them on whether this really means you just have to stop using your tractor, figure out a different way to produce crops at the same volume and reliably, or wait and buy a brand new tractor that meets the regulation once it is on the market, all while the demand for your crops is greater than ever before.

This is the reality of EPA climate change regulation today for electric co-ops. The regulations are here and will be phased in starting January 2011 with little to no guidance on how the EPA’s regulatory expectations will be met. Is this the answer? No, especially when the industry faces a host of other regulatory mandates and challenges. Electricity still needs to be produced and cannot possibly be provided completely through wind, solar and energy efficiency improvements.

What’s needed? Legislation from Congress that is fair, affordable and achievable — yes, achievable — and not regulations that do not, and cannot, recognize the realities the industry and consumers face. So, next time you put on your lights to play a game of darts, think about providing Congressional members some thoughts on what we need to see from them. Inaction on climate change legislation coupled with uncoordinated regulatory mandates is simply not the answer.


Renee Cipriano is a partner in the Chicago law firm of Schiff Hardin, LLC. She served under two Illinois governors as the Director of the Illinois Environmental Protection Agency. She was also the Illinois Assistant Attorney General and Senior Policy Advisor to the Illinois Governor for Environment, Natural Resources, Agriculture, Nuclear Safety and Energy.

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