Whatever the potential benefits of Barack Obama’s Clean Power Plan, this much is clear: It would kill Indiana’s coal industry and devastate our economy.
Indiana gets 84 percent of its energy from coal, an abundant and affordable natural resource that — when burned — emits carbon dioxide that is blamed for global warming.
“The Clean Power Plan,” an Environmental Protection Agency rule that takes effect Tuesday, envisions a low-carbon world and is Obama’s contribution to the Paris Agreement on climate change endorsed by 195 nations.
It’s a costly vision for states with heavy manufacturing like Indiana.
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Gov. Mike Pence boldly has vowed to defy the plan, which he and 23 other governors consider an abuse of federal and presidential power. Indiana’s Greg Zoeller is among 24 state attorneys general who have sued to stop its enforcement. Republicans in Congress also are pursuing measures to kill the plan.
“The stakes are high here for Hoosier ratepayers,” Pence said. “We have one of the most dynamic manufacturing economies in the country, and it is our judgment that this rule as drafted would be very harmful to the vitality of our economy and, more importantly, to working families in Indiana.”
Nationwide, the plan calls for a 32 percent reduction of greenhouse gas emissions from 2005 levels, and it imposes state-by-state targets to be reached by 2030. States are to write draft plans for meeting the targets next year, with final plans due by 2018. Those who fail to submit plans would have one forced upon them by the EPA.
Unless the Clean Power Plan is stopped by the courts or Congress, experts predict widespread closing of coal plants, which are Indiana’s most reliable electricity source. Hoosier coal would be replaced by some combination of renewable sources such as solar, wind and biomass; and natural gas, a fossil fuel that produces about half the carbon dioxide of coal per kilowatt-hour.
The costs could be staggering. According to a study by Energy Ventures Analysis, the price of wholesale electricity in Indiana would go up 27.4 percent. The manufacturing sector, the single largest consumer of energy, would have to cut jobs and raise the price of goods. Indiana has the highest share of manufacturing employment in the country at 17.3 percent and would suffer disproportionately.
The plan would also disproportionately affect the poor, according to Heritage Foundation economist Nicolas D. Loris.
“While the median family spends about 5 cents out of every dollar on energy costs, low-income families spend about 20 cents,” he noted. “As the number of fixed-income seniors grows in the United States, low-income seniors who depend largely on a fixed income are especially vulnerable.”
Indiana finds itself in a Catch 22. The plan sets emission standards that are unattainable using existing clean-coal technology; therefore, no new coal plants could be built to replace old ones as they retire. Bruce Stevens, president of the Indiana Coal Council, said this in turn would discourage the very research and development that could allow coal plants to meet stringent emission standards going forward.
In Canada, which has strict performance standards for coal-fired plants, efforts are under way to prove that coal is still a viable electricity source. The Boundary Dam Integrated Carbon Capture and Storage Project in Saskatchewan is the world’s first and largest commercial project of its kind. Despite budgetary and operational problems that have plagued the plant’s startup, early reports suggest the technology can cut carbon dioxide emissions by up to 90 percent.
“The academic institutions in Indiana and across the United States have some of the greatest minds in the world, and I believe could make great strides in these areas if the opportunity were available,” Stevens said. “Unfortunately, given that new coal-fueled plants cannot be constructed in the future, it in all likelihood precludes significant research effort of this variety.”
Defenders of the Clean Power Plan insist it will strengthen the state’s economy by forcing it to become an innovator in energy efficiency and renewable fuels. The Hoosier Environmental Council and the Sierra Club have urged Pence to move forward with a plan to comply with federal emissions targets. Hoosier politicians who have come out in support of the plan include U.S. Rep. Andre Carson, a Democrat, and Carmel Mayor Jim Brainard, a Republican.
The outcome of the court case probably won’t be known until 2017 or later due to the scientific complexity of the issues and the number of states involved. In the meantime, a presidential election will take place. If Democrats stay in power, the coal industry’s days are numbered. If Republicans win the White House, a new administration could rescind the Clean Power Plan altogether.
Andrea Neal is an adjunct scholar with the Indiana Policy Review. Contact her at firstname.lastname@example.org.