Ohio already has a compliance plan for the EPA’s carbon rules. It’s called SB 221.

epa carbon reduction goals by state

Carbon reduction goals by state under the EPA’s proposed rule (courtesy of Business Insider).

As you’ve no doubt heard, President Obama took the most serious executive action in American history to tackle climate change on Monday. The US EPA unveiled its long-anticipated rule to regulate carbon emissions from existing power plants. The rule calls for a 30% reduction in carbon intensity within the electric power sector by 2030. The rule is extremely complex and lengthy (645 pages, to be exact), but the details are starting to emerge.

Like the Affordable Care Act, the EPA’s proposed rule is highly flexible and will be implemented at the state level. Cognizant that states have different fuel makeups within the electric sector, the EPA set carbon reduction targets for each state, ranging from just 10.6% in North Dakota to 71.8% in Washington. The rule also provides states with tremendous flexibility in how they can reduce carbon emissions, listing a bevy of different options, including:

  1. Improving fossil fuel plant efficiency
  2. Switching from coal to natural gas for electric generation
  3. Ramping up electricity production from renewable energy
  4. Investing in end user energy efficiency
  5. Adopting a cap-and-trade system or join an existing program, like the Northeast’s Regional Greenhouse Gas Initiative (RGGI)

This rule is far from being finalized. It still needs to go through a public comment period, an implementation phase, and – no doubt – a lengthy battle in the courts. That said, it is already starting to reap potential dividends. Yesterday, Chinese officials announced that they may include a carbon cap in its next Five Year Plan, which begins in 2016. The Chinese have are already experimenting with pilot cap and trade systems in seven cities, though the experiment has not been a rousing success.

How will this rule affect Ohio?

Understanding that it will be more difficult for some states – namely, the most coal-dependent ones – to reduce their electric power emissions, the EPA set more lenient emissions reductions standards for these states. Ohio, which gets 65% of its electricity from coal and emits more CO2 than all but three other states, is required to reduce its carbon emissions from 1,850 tons per megawatt (MW) of energy to 1,338 tons per MW (see page 30 of PDF) by 2030. That represents a 27.7% reduction, slightly under the overall 30% standard nationwide.

Predictably, lawmakers in Columbus have already started their posturing over the issue. More than a week before EPA even announced the rule, a bipartisan group of coal boosters in the Statehouse introduced House Bill 506, which requires the Ohio EPA to establish rules that dictate how the state will implement the regulation. The bill, which passed unanimously out of the House Agriculture & Natural Resources Committee, is intended to shield Ohio’s coal industry. According to Gongwer (subscription required):

[Rep. Jack Cera (D-Bellaire] said the bill looks to continue Ohio’s energy supply portfolio that relies heavily on coal-fired generation. He said the industry has a significant impact in his district, and the use of coal is vital to the region’s economic security….

[Rep. Andy Thompson (R-Marietta)] said he is looking to make sure Ohio continues to have affordable, reliable power supplies based on reasonable policies. He said the bill allows the state agency to consider each power generating unit, and how changes would impact local communities. If done properly, the state policy could prevent the retirement of older coal-fired plants.

Mr. Cera said a rush to meet federal requirements could be detrimental to families by increasing energy costs and eliminating jobs. He said further reduction of coal-fired power facilities could bring the state and region closer to having inadequate power supplies. Mr. Cera added that while technology is advancing, additional time may be needed to get enhanced controls in place.

Mr. Thompson told Rep. Tony Burkley (R-Paulding) there is a place for a mix of power sources, but said it is essential that the state has a baseload source that is available at all times.

“Coal is there,” he said. “Coal is on site. There is no delay.”

Craig Butler, the Director of the Ohio EPA, who would be tasked with developing the compliance plan, has decried the proposed regulations as “unnecessary federal mandates.” He has also sworn to “preserve as much existing coal-fired electric generation” as possible.

Because nothing makes sense any more, FirstEnergy has actually downplayed the rule and made it seem like it’s happy to comply. CEO Tony Alexander, who last made news for bashing the same EPA over its nonexistent “war on coal,” told the New York Times he supports cap and trade, saying,

By trading on carbon credits, we’ll be able to achieve significantly more cuts at a lower cost. The broader the options, the better off we’re going to be.

VP Ray Evans even told the AP that the company was “generally pleased by the overall direction of the federal plan.”

Now, under normal circumstances, if FirstEnergy approved of an environmental regulation and felt it could comply with it easily, I’d be freaking out over how lax the rule was. And I do have some concerns about the plan, namely the decision to make the baseline year 2005, which is when carbon emissions reached their peak in the US. I would be much happier with 2012 as the baseline, as emissions fell 16% during that seven-year span. This would make the rule far more ambitious and beneficial. As it currently stands, the rule would only lead to a 17% reduction from 2012 emission levels, not the 30% headline number we are all seeing (which is relative to 2005).**

But I digress. What I really want to emphasize here that the executives at FirstEnergy are apparently more progressive on environmental regulations than the head of the Ohio Environmental Protection Agency. Let that one sink in for a minute.

SB 221 and the carbon rule

So how should Ohio go about meeting this new rule? What should the state’s compliance plan look like? Well, it’s first important to note that, in addition to the 2030 goal, the EPA’s rule also includes an interim reduction target for states to achieve by 2025; for Ohio, this involves a reduction to 1,452 tons per MW. This amounts to a 21.5% decrease by 2025. So Ohio roughly needs to reduce its carbon emissions from the electric power sector by 22% by 2025.

Wait, 22.2% by 2025 – where have I heard that number before? Oh, right, that’s the standard for energy efficiency set by SB 221 back in 2008. Under those standards, Ohio’s four investor-owned utilities need to reduce the amount of electricity that their customers use by 22.2% through 2025, against a 2006-2008 annualized baseline. The similarities are startling.

sb 221 energy efficiency benchmarks

Annual energy efficiency benchmarks for Ohio’s investor-owned utilities, as specified by SB221 (courtesy of Mark Rabkin).

Now, you may note that carbon emissions and energy efficiency are not the same thing. And you’d be right.

But, under the EPA’s proposed plan, states that choose to invest in energy efficiency would need to improve demand-side energy efficiency by 1.5% per year from 2020-2030. Conveniently, SB 221 requires the state to improve its energy efficiency by 2% per year from 2020-2025, allowing it to meet and even exceed that standard. And while 22.2% savings still comes up short of the 27.7% mark required by 2030, the state would be well on its way to meeting this standard, and it could make up the rest of the gap by continuing to implement its existing renewable portfolio standard, which also exists due to SB 221.

In other words, Ohio already has compliance plan in place. The state passed it, nearly unanimously, six years ago. But, thanks to the legislature, we are just one signature away from derailing these standards.

SB 310 and Ohio’s compliance plan

SB 310 will leave Ohio in a precarious situation. The freeze would last until December 31, 2016, six months after the date that EPA has set for states to submit their compliance plans*. The state could sue over the rule, which may affect that date – Mike DeWine has already shown a predilection to waste taxpayer resources over the latest right wing cause du jour – but I feel pretty confident the courts will uphold the regulation.

So, where will Ohio find itself as the clock strikes midnight on January 1, 2017? Will it implement weakened energy standards, as SB 310 makes clear the legislature plans to do, or will it allow SB 221 to come back into force? Will it put together a satisfactory compliance plan, or will the US EPA have to step in and take over?

Surely, the legislators behind SB 310 considered these questions when crafting the law. Not quite. According to Tom Knox at Columbus Business First,

Rep. Sandra Williams of Cleveland, the ranking Democrat, asked him how the freeze would impact the state’s ability to meet new regulations to limit coal-plant carbon dioxide emissions. Balderson said he was unaware of the rules but didn’t think they would impact his bill.

That’s right. An elected official who sits on the Senate Public Utilities Committee and introduces a bill as significant as SB 310 openly admitted that he was “unaware” of forthcoming EPA standards that anyone with a passing knowledge of Google could have found out about. Did he miss the massive speech that President Obama gave last summer when he announced these rules? It wasn’t exactly a secret.

The climate change imperative in policy making

That’s what makes things like SB 310 or Cuyahoga County’s decision to sign a 20-year deal to get coal-fired power from from  Cleveland Thermal so mind boggling. Policy making doesn’t happen in a vacuum. Obviously uncertainty always exists, and it’s sometimes necessary to make simplifying assumptions and leave out exogenous factors. But the preeminent policy challenge of our times is not just one of those things you can ignore. Pretending science doesn’t exist won’t make it so.

A changing climate is not just one of many factors at play. It is a baseline factor that directly and indirectly influences everything else. From insurance markets to credit worthiness, from allergies to vector-borne diseases, from human and economic development to violence and conflict, climate change is always a factor in play. While it would be nice to pretend otherwise, it’s no longer an option available to us.

Even if you reject the overwhelming scientific consensus on this issue, it makes sense to assume it’s true. Because consider the risks if your wrong. What if that expensive new bridge or road your state just built was only designed to withstand one foot of sea level rise? Or what if a farmer invested his or her life savings in a crop that can’t survive the megadrought happening in the West?

Every single policy decision we make now, regardless how mundane or seemingly unrelated, must have climate change embedded in it. It may be convenient to pretend this one local project can’t possibly have any bearing on such a global issue – I’m looking at you, ODOT – but we cannot afford that luxury.

So the people in charge in Columbus can – and, I’m quite sure, will – continue to ignore what I’ve just said, because they have a clear profit motive to do so. But if there is one thing that these new carbon rules make clear, it’s that the day of reckoning on issue is coming, and it’s a lot closer than some people may like.

Ohio has 30 months to decide whether or not it will act on climate change or whether it will cling to the status quo. Because, whether or not Columbus likes it, the EPA has supremacy on this issue, and it has the law in its side.

So what does this all mean?

Oh, I guess you were expecting me to actually go somewhere with this. Okay then.

Ohio’s best option is for John Kasich to veto SB 310 and call on lawmakers to not only protect the state’s clean energy standards, but actually discuss ways to strengthen them through 2030. But seeing as I’m not the benevolent dictator of this state (but seriously, I’d be ever so benevolent…), and the Governor has made it clear he will sign SB 310, that leaves us searching for alternatives.

Given the options available, our next best choice is to ensure that Ed Fitzgerald and David Pepper get elected as Governor and Attorney General this fall. That would empower Governor Fitzgerald to veto any GOP-led plan to weaken the standards that may emerge during the freeze and ensure that Attorney General Pepper does not foolishly sue the EPA over the carbon rules. That may seem like a long shot at this point, but the alternative is far, far worse.

Ohio is poised to meet the EPA’s carbon rules while creating jobs, cleaning its air, and creating thousands of good jobs. Or we can throw all of that out the window to gamble that the GOP-led legislature can somehow come up with a law that is better equipped to do all of this than SB 221. Don’t hold your breath.

Update (6/4/2014 3:31 p.m.): I originally thought the EPA was requiring states to submit their compliance plans by December 31, 2016, the same date as the end of the proposed freeze. The actual date is June 30, 2016; I have updated the post to reflect this change.
Update 2 (3:44 p.m.): Brad Plumer just pointed me to a post from Resources for the Future, which argues that everything people have been saying about the 2005 baseline is incorrect. Apparently EPA was only using 2005 as the headline year, because President Obama’s commitment to reduce US emissions by 17% at the Copenhagen Conference uses 2005 as its reference point. But, in reality, all of the EPA targets for state carbon reductions are based on 2012 numbers, meaning that this rule really does represent a strong emissions reduction standard. Look for cheers from fellow environmentalists and cries of impending economic doom from fossil fuel boosters.