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Arkansas begins to grapple with climate change 

New proposed EPA rule could dramatically impact state.

click to enlarge WHITE BLUFF: Ranks 42d in the U.S. as a polluting power plant image
  • WHITE BLUFF: Ranks 42d in the U.S. as a polluting power plant.

Last month, the Environmental Protection Agency announced a proposed rule that will require a 30 percent reduction nationally in carbon emissions produced by power plants, phased in over the coming decades. The feds will tailor reduction targets to individual states, but it's up to the states themselves to come up with plans that address those targets. On June 25, the Arkansas Department of Environmental Quality (ADEQ) and the state's Public Service Commission (PSC) held a public meeting to solicit preliminary input from stakeholders, including utility companies, environmental groups and consumer advocates.

The EPA provides four "building blocks" as suggestions for states to design their carbon-cutting plan, said Stuart Spencer, a legal policy adviser for ADEQ. The state can do all, some or none of these things, just as long as it meets EPA's requirements. (If Arkansas fails to come up with a feasible plan at all, the federal authorities will step in and give us one.) The four suggestions: 1) Make existing coal plants more efficient; 2) increase the use of existing natural gas plants; 3) increase power supplied by renewables and nuclear; 4) increase end-use efficiency (for example, by making homes and buildings more efficient).

Note that one option is conspicuously absent from the above list: retiring coal-fired plants altogether. Glen Hooks, director of the Arkansas Sierra Club, said that should be on the table as well. "About 85 percent of the CO2 emissions generated by the state's power plants come from five coal-burning facilities," he said. "That really is the meat of this discussion."

Arkansas is in an unusual position, in terms of coal. The state's carbon emissions aren't the highest in the nation, nor are its per-capita emissions. But, according to the PSC, the state's reliance on coal for its energy means the rate of emissions per megawatt hour has increased significantly in recent years. Arkansas has allowed new investment in coal-fired plants at a time when most of the rest of the nation, including other Southern states, has moved in the opposite direction. The carbon intensity of Arkansas's power sector emissions increased a dramatic 37 percent from 2005 to 2013, the fourth highest rise in the nation for this period. (During the same period, our power consumption rose by only 1 percent. The rest was exported to other states.)

It's exactly this measure that the EPA rule targets: The rate of carbon released per megawatt hour (MWh). So, Arkansas has some major changes to make. To comply with the rule, our rate of CO2 produced per MWh must decline 44 percent by 2030.

Unsurprisingly, power companies and most business interests aren't thrilled. They say implementing the EPA rule will raise rates for consumers. There is truth to this. Coal power is cheap, and both households and businesses will probably see costs rise if the state does indeed prod utilities into using less and less of it. A representative from the Arkansas Chamber of Commerce said that it was "just an economic fact" that the state's remaining manufacturing jobs would be threatened by higher rates.

Talk of hurting business through costlier energy doesn't take into account the economic activity that would result from weaning the state away from coal. A representative from the Arkansas Advanced Energy Association (a business group) enumerated the benefits: increased job opportunities in energy efficiency, investment in new renewable plants, a better market for the state's rich reserves of natural gas and the possibility of creating a market for carbon credits in a multistate partnership.

Then there are the economic costs exacted by a continued reliance on coal. Burning dirtier fuels in Arkansas makes for unhealthier Arkansans. Dr. William Mason of the Arkansas Department of Health said there was "unequivocal scientific evidence" that the particulate matter released by coal-fired plants causes an increase in asthma and other respiratory disorders among children and the elderly.

Though poorer local air quality is a big deal, it pales in comparison to a larger economic and public safety threat over the long run: potentially devastating climate change. A recent report co-authored by Henry Paulson, secretary of the Treasury under former President George W. Bush, highlighted the multibillion-dollar economic danger posed by a destabilizing climate. Droughts and floods are predicted to increase in severity, destroying crops and damaging property; rising sea levels could displace millions. Paulson is a fiscally conservative Republican, but he sees the scientific writing on the wall.

"If there's one thing I've learned throughout my work in finance, government and conservation," he wrote in a New York Times op-ed in June, "it is to act before problems become too big to manage. For too many years, we failed to rein in the excesses building up in the nation's financial markets. When the credit bubble burst in 2008, the damage was devastating. Millions suffered. Many still do. We're making the same mistake today with climate change. The warning signs are clear and growing more urgent as the risks go unchecked."

Still, in the short term, costs to consumers matter. There are at least two distinct government interests at play, as represented by the two state agency heads who hosted the meeting. ADEQ Director Teresa Marks is charged with enforcing environmental law. The chair of the PSC, Colette Honorable, is supposed to ensure that utilities keep consumer rates affordable and the power grid reliable and safe. After the meeting, Honorable acknowledged that those two mandates aren't always identical, but said the agencies were committed to working more closely than ever before.

"At the end of the day, Teresa's focus may be apart from ours, but this is a great opportunity to collaborate and cooperate," she said.

Wednesday's meeting was only the first step in a long process. EPA won't issue its final guidelines until next June at the earliest, and states have at least another year after that to submit their compliance plans. That's all assuming the rule even survives; legal challenges are inevitable, said Chuck Barlow, Entergy's vice president for environmental policy. One of many disadvantages to taking major action on climate (or anything else) via an executive agency rather than legislation is that it creates a readymade argument for legal challenge — that the EPA, and the Obama administration, has overstepped its bounds.

"Our questions about the rule — our uncertainties — run to pages and pages," he said. "We're very concerned about legal defensibility of the rule."

When asked if Entergy itself might challenge EPA over the rule's legality, Barlow replied, "I don't know that there's going to be a legal challenge from us ... but there will be from somebody." However, he also said that the electric giant will be taking steps to shape the new regulation and comply with its mandates even as it contemplates fighting it in court.

"You can't bank on winning a legal challenge," he explained. That's something proponents of regulating carbon have said all along: If tough emissions standards cut into the bottom line, power companies will adapt.

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