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Editorial: Obama climate rules are too much, too soon

The Detroit News

President Barack Obama this week unveiled his Clean Power Plan, new rules from the Environmental Protection Agency that will fundamentally alter energy production in the United States, and will inevitably drive up costs for consumers.

The plan is an ideologically driven attempt to reshape the U.S. economy via regulatory power.

The demands reach beyond the EPA’s authority, and threaten America’s otherwise growing energy economy with higher electricity costs and energy portfolios unattainable and too expensive for most states, particularly Michigan.

The chief component of the rule requires existing power plants to cut emissions from 2005 carbon dioxide levels by 32 percent by 2030. It also sets stricter requirements for energy production from renewable sources, calling for a 15 percent increase in renewables by 2030.

The problem with the administration’s energy equation is that it prevents a shift to natural gas, a clean, affordable energy source and one that utilities were counting on to replace coal. With coal all but dead, natural gas is key to keeping energy affordable, particularly in states like Michigan, which gets half its power from coal burning plants.

DTE Energy and Consumers Energy have already begun transitioning away from coal, and while they continue to invest in wind and solar, natural gas-powered plants were to carry the bulk of energy production in coal’s absence.

A 10-year energy strategy presented earlier this year by Gov. Rick Snyder also relies heavily on natural gas as the state shifts away from coal. Limiting its consumption will push up the state’s electricity costs — particularly for residents farther north, who already pay some of the highest energy rates in the country — and leave it less competitive for jobs and development.

This element of Obama’s plan differs from the draft proposal presented last year, which favored natural gas as a coal replacement. The final regulations instead force the states to use renewable energy and energy efficiency programs through a cap-and-trade system of buying and selling credits for pollution. The proposals are similar to those that have been tried and scaled back by Germany and other nations because of their impact on employment.

Low cost energy is one of the advantages America enjoys in competing for global manufacturing jobs. Many of those jobs are in Michigan, and drastically increasing energy prices will hurt one of the state’s bread-and-butter industries.

The administration is trumpeting the new rules as the penultimate moment for reversing climate change. But the regulations will mean billions of dollars of investments in technology to accommodate more solar and wind power, with the costs trickling down to every American.

Annual costs will be $8.4 billion. NERA Economic Consulting estimates the new rule will cost $366 billion by 2031, while raising electricity bills by double digits in 43 states.

The supposed public health and environmental benefits are between $34 billion and $54 billion annually, instead of the more than $90 billion the EPA touted last year.

This rule has the potential to devastate the American economy. Congress must step in and declare it a fundamental overreach of regulatory power.