Friday, August 15, 2014

EPA's Proposed Rule:

Some of the Complexities

There has been a lot of discussion since early June, when the US Environmental Protection Agency (EPA) released its proposed rules for the reduction of carbon dioxide emissions.  I have previously commented on the possible ramifications of this rule for nuclear power.

Since that time, there has been a lot more discussion on the possible implications of the proposed rules.  While I think there will be still more analysis, I thought it would be worthwhile to summarize some of the new information here.

One study comes from MIT, and emphasizes the importance of a multi-pronged approach to reducing carbon emissions.  While their study doesn't explicitly address the EPA's proposed rule, they do address some of the same issues.  According to the authors of the study, source-specific regulations are an important element of emissions reduction, but they provide only partial coverage and must be combined with other measures to have the desired impact.

The authors favor a price-based policy, such as cap-and-trade or a carbon tax.  This is a contentious area, but one argument they make is that source-specific regulations force action in particular areas, while ignoring cheaper options that may be possible, such as reducing overall energy use or cutting emissions from industry.  They also say that, “Using targeted emissions policies can actually encourage emissions increases in other areas.”  When costs to the consumer drop (such as with fuel economy standards), there is a tendency for consumers to increase their usage.

Another study comes from a joint effort of the Center for Strategic and International Studies (CSIS) and National Security Program and the Rhodium Group (RHG).  On July 24, CSIS hosted a presentation in Washington to present the preliminary findings of this study.  This study looked explicitly at the EPA rules and assessed what changes to the electric power and energy production systems in the US are likely to occur under the EPA’s proposal, as well as what the price, demand expenditures and other impacts may be.  Their full report is due out in October, but in the meantime, you can view their 1 hour 10 minute oral presentation by clicking on the image below:

Unfortunately, there are a couple of spots where the audio fades for a moment, but overall, this session provides an interesting glimpse into some of the state and regional considerations that are likely to be involved if the EPA rules are adopted.

 If nothing else, these two studies illustrate the complexity of this issue, and emphasize some of the elements we should be looking at closely to be sure that the proposed rules have the desired effect and avoided unintended negative consequences. 


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