By Zach Nelson
“I don’t think I’ve seen a rule or law before that has had such an impact on a large group of people.”
Such were the opening thoughts of Arthur Harrington, a Milwaukee-based attorney with expertise in energy law, on President Obama’s Clean Power Plan. Harrington, a partner in Godfrey & Kahn, joined two other panelists at a recent Wisconsin Cleantech Network forum at the Wisconsin Energy Institute.
The Cleantech Network is a project of the Wisconsin Technology Council, the Midwest Energy Research Consortium and Kremer Ventures.
About two-dozen people heard Harrington, Patrick Henderson of Quad/Graphics and Todd Stuart of the Wisconsin Industrial Energy Group discuss the pros and cons of the complex plan, which calls for a 32 percent reduction of carbon emissions by individual states by at least 2030.
In addition to reducing carbon emissions, states must also increase renewable energy production from 22 percent to 28 percent. That begins with initial state plans for all 50 states by September 2016 with a final plan a year later. States must also show progress towards reducing emissions in less than seven years, which at least one panelist said is not enough time to make necessary infrastructure changes to support renewable energy demand.
“I hope you weren’t sitting on your hands,” said Stuart, executive director of the industrial energy group. “The first reductions come in 2022, and in the utility world, that’s tomorrow.”
The massive Clean Power Plan outlines three main strategies for states to follow as they work to meet its requirements. The first is to reduce carbon emissions from the source. The second is to increase the use of natural gas-fired combustion energy. The third is to expand the use of low carbon renewable energy generating units.
Panelists expressed unanimous concern about the second strategy: Expanding the use of natural gas. Harrington noted that if demand for natural gas rises rapidly, the price will rise at a rate that will affect Wisconsin businesses and residential customers alike. Stuart echoed Harrington’s concern, but on a much larger scale.
“Since World War II, every recession has been preceded by a spike in energy costs,” Stuart said. “If natural gas goes up in use a tick or two, the price will skyrocket.”
Part of the federal incentive for states under the CPP is to award credits to offset the potentially higher energy costs associated with natural gas or other forms of renewable energy.
Despite the incentive of the credits, Harrington said he expects legal battles over who might be able to claim them. Many businesses spent millions of dollars to enhance sustainable energy use, and would not be keen on state governments getting the tax credits. Harrington warned the CPP did not specify who would receive these early reduction credits, even if the businesses were the primary investors.
A related question is whether Wisconsin – which has already invested heavily in its energy infrastructure – will be informally “penalized” for doing so.
“The reason energy costs are so high in Wisconsin is because we’ve rebuilt all our infrastructure due to EPA regulations over the last several years,” Stuart said. “Now with these new regulations, states that didn’t make those previous changes are let off easy with being able to spend their money on renewable energy. Wisconsin doesn’t have that wiggle room.”
Panelists noted that some Wisconsin businesses can’t afford higher energy prices, which could force tough decisions.
“We don’t want to do it but for our company, it might be cheaper to move somewhere else instead of paying for renewable energy,” Henderson said of Quad/Graphics. “And if we do that, it will hurt the state of Wisconsin.” (Since that meeting, the Wisconsin Public Service Commission approved a special energy rate to facilitate Quad/Graphics expansion.)
The flip side of the economic equation is opportunity for energy-related businesses, especially those in renewable energy sectors. There could be a burst in jobs associated with retrofitting or building infrastructure as well as engineering new ways to harness and produce energy.
“The biggest opportunity is education,” Harrington said. “Anyone who is interested in the CPP needs to understand it. There’s opportunity to reduce energy costs or create renewable energy.”
On top of all of the economic opportunity that comes with renewable energy, perhaps the most important benefit of all was left out of the discussion until the very end.
“Personally, I think the biggest benefit of the CPP is health-saving benefits,” Henderson said. “Reducing carbon emissions will have a positive effect on our health.”
Nelson is a student in the UW-Madison Department of Life Sciences Communication.