The Obama administration is taking a page from their health care playbook and setting aside billions of dollars to encourage states to shut down coal-fired power plants and implement policies to fight global warming.
President Obama’s 2016 budget proposal includes $4 billion in payments to “support states exceeding the minimum requirements” mandated by the Environmental Protection Agency “for the pace and extent of carbon pollution reductions from the power sector.” States that implement EPA rules to cut emissions from power plants will be rewarded with federal funds. But states that don’t go along could get punished, argue critics.
Some highlight the Obama administration’s intent to coerce states into shuttering coal plants and cutting emissions by taking away their highway funding.
“President Obama’s EPA is executing a massive power play, attempting to coerce states into adopting draconian policies that would steeply increase the price of energy,” said Phil Kerpen, president of the conservative American Commitment. “States that don’t cooperate are being told they’ll have their federal highway funding cut off. That’s unconstitutional.”
The EPA is allowed to use highway funding to force states to comply with its mandates. Failing that, the agency can even implement its own plans in the states.
“[T]here is a way forward for the agency to proceed with a strategy to coerce States into Clean Power Plan compliance by withholding highway funds,” wrote Will Yeatman, a policy analyst with the Competitive Enterprise Institute.
Yeatman argues that EPA could use highway funding to force states into implementing carbon emissions reductions plans. If that fails, the EPA could take over the state’s environmental enforcement and impose their own federal plan to reduce emissions in non-compliant states.
“If the agency were to propose a federal implementation plan… concomitantly with highway funding sanctions, then the States would have an alternative choice: lose highway funding OR have the federal government take-over,” Yeatman said, adding the EPA would likely avoid legal complications this way. “The agency’s path to constitutional coercion is clear: Create an alternative — that is, produce a model federal implementation plan — that is so terrible, the States have no choice but to implement the Clean Power Plan, or else they’d countenance the loss of their highway funding.”
The EPA’s Clean Power Plan requires states to cut carbon dioxide emissions from existing power plants 30 percent below 2005 levels by 2030. There are several ways states can meet this mandate, including shutting down coal-fired power plants and replacing them with natural gas or green energy.
The EPA itself estimated its power plant rule would force up to 49 gigawatts of coal-fired power capacity to close down and raise electricity prices about 6 percent in 2020. The coal industry says the rule would cost $41 billion per year, so EPA’s $4 billion would only cover a fraction of the costs.
“President Obama has resorted to bribing states with taxpayer money to implement a rule many are already working fervently to overturn,” said Laura Sheehan, spokeswoman with the American Coalition for Clean Coal Electricity. “Worse yet, this $4 billion bribe will do nothing to offset the half-trillion dollars Americans will have to pay out of their own pocket to use less electricity.”
Many states have already sued the EPA over the Clean Power Plan, saying it violates the Clean Air Act and infringes upon state sovereignty. Wisconsin Gov. Scott Walker is the latest administration to join the anti-EPA lawsuit bandwagon, saying it would raise electricity prices on state residents.
“Top-down regulations and mandates from the federal government get in the way of innovation and growth in Wisconsin and states like ours,” said Walker, who is eyeing a presidential run in 2016.
Coal power currently provides the U.S. with about 40 percent of its electricity — more than nuclear power and renewable energy combined. Wisconsin gets more than 60 percent of their electricity from coal because cheap, reliable power is needed to power its huge manufacturing base. Manufacturers, like food processors and plastics makers, use more than one-third of the state’s electricity and would see raise rates as more coal-fired power is taken offline.
The EPA says its $4 billion fund will reward states that go beyond the call of duty and lower their emissions beyond what the administration has called for. Obama’s budget proposal said the funds “would enable states to invest in a range of activities that complement and advance the Clean Power Plan, including efforts to address disproportionate impacts from environmental pollution in low-income communities and support for businesses to expand efforts in energy efficiency, renewable energy, and combined heat and power through, for example, grants and investments in much-needed infrastructure.”
“What we will be looking for are states that will get (carbon emission) reductions earlier… or seek to go further than final guidelines require,” Janet McCabe, who heads up EPA’s clean air office, told reporters on Monday.
Obama’s budget puts into place $48 billion in green energy subsidies over the next 10 years which states could use to help meet federal emissions mandates. These subsidies would give preferential tax treatment to companies that produced green energy and biofuels, buildings that installed energy efficient equipment and for making alternative fueled vehicles.
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