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Republican Governors Take Issue With EPA's Proposed Emission Standards

Fifteen Republican governors, representing some of the nation's leading natural gas and coal producing states, have sent a letter to President Barack Obama strongly questioning his administration's proposal to significantly cut carbon emissions from the power generation sector by 2030 (see Daily GPIJune 2).

The letter, signed by governors from states including Pennsylvania, North Dakota and Wyoming, says the U.S. Environmental Protection Agency's (EPA) June proposal fails to recognize the diversity of energy markets in states across the country and the disparate infrastructure needs of each.

Written with a tone of frustration, the governors asked Obama to answer several key questions that they said are critical to drafting an efficiency program that the EPA has asked for from each state by June 2016 under its proposal to lower carbon output.

"Our country needs a coherent, consistent energy policy that promotes reliable and affordable energy in addition to a healthy environment," the letter said. "However, we cannot achieve this end without a sincere partnership between the states and the federal government, whereby the EPA appropriately recognizes the limits of federal authority.

"EPA's proposed rule for reducing carbon emissions...fails to strike this necessary balance."

Announced in June, as part of Obama's climate change initiative, the EPA's proposal calls for slashing carbon emissions from the power generation sector 30% below 2005 levels by 2030. Although emissions have been on the decline for several years across most of the country, power plants remain the single largest source of carbon pollution in the U.S.

At the time it was announced, the EPA said the plan would be implemented through a state-federal partnership "under which states identify a path forward using either current or new electricity production and pollution control policies," such as a diverse generation portfolio, energy efficiency programs or demand-side management, to meet the federal goal.

The plan's public comment period is scheduled to end Oct. 16, but the governors said they remain unclear about key issues that will prevent them from providing crucial insight and balancing the needs of their states and the proposed federal mandates.

Under its proposal, the EPA said natural gas demand for the power sector could increase by 3.3 Bcf/d by 2025, as coal-fired generation is replaced with rising supplies (see Daily GPIJune 3). But before that switch can occur, the governors said pipelines and storage facilities must be built at a steady clip to ensure the fuel source is readily available to fill the gap.

"The necessary pipelines require permits, and in many cases, federal approval," the governors wrote to Obama. "Before your proposal, studies indicated the need for more than $300 billion in gas infrastructure investment between now and 2035. Currently, EPA projects that its proposal will result in nearly 50 GW of retirements of baseload coal generation between 2016 and 2020, creating even greater demand for infrastructure investment."

The governors went on to ask what steps the federal government will take to ensure such infrastructure is constructed and how it will be paid for.

The letter also questioned the EPA's heavy reliance on renewable energy sources to reduce emissions, with the governors noting that not all states have equal access to those sources, and adding that it remains unclear how increased renewables will impact grid reliability and existing baseload capacity.

They also wondered if the EPA would overreach by enforcing renewable portfolio standards if they fail to adequately reduce emissions, saying that EPA Administrator Gina McCarthy failed to answer such questions at a recent Senate hearing.

In recent responses to federal lawmakers, FERC commissioners also addressed the issue of grid reliability by offering a number of solutions on how the government will adequately review the varying plans that state's are likely to submit under the EPA's proposal. Commissioner Tony Clark said that task should fall to the Federal Energy Regulatory Commission (FERC) because the EPA lacks the expertise and the Department of Energy is part of the executive branch.

While the EPA's proposal has been greeted positively by the natural gas industry, and environmentalists have said the move was long overdue, most Republicans have been negative about its regulatory scope and its potential effects on the coal industry. Analysts have said that state proposals and the government’s role in the process will likely lead to a series of legal challenges that could ultimately postpone the federal goals, or the deadline for states to submit efficiency plans.

Earlier this month, McCarthy said the agency this fall will release a strategy to deal with methane emissions from natural gas and oil pipelines and wells that may include both regulatory approaches and recommended voluntary steps (see Daily GPI, Sept. 4).

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