EPA’s First Carbon Rules Seen to Costing Little, Gaining Little

The first round of greenhouse-gas rules issued by the U.S. Environmental Protection Agency is unlikely to burden companies with substantial costs or significantly cut emissions linked to climate change, according to a Bloomberg Government study.

The EPA rules let new and modified industrial facilities such as power generators and refineries meet the standards by investing in energy efficiency. Most companies are already incorporating conservation measures into their construction and expansion projects, according to the study published today.

President Barack Obama’s EPA pushed ahead with regulations last year after Congress failed to pass climate-change legislation. The rules prompted protests from industry officials such as Mike Morris, chief executive officer of American Electric Power Co., who has said the regulations will impose a moratorium on U.S. power-plant construction.

Such comments are overblown, at least for the initial phase, according to the study by Marisa Buchanan and Rob Barnett, Bloomberg Government energy analysts.

“The rules don’t change industry behavior much from business as usual,” Barnett said in an interview. “It’s a rubber stamp on what companies would do anyway.”

The EPA’s first phase of greenhouse-gas rules for power plants and oil refineries began in January. The regulations require such polluters to apply for state permits if they build or expand operations. Photo: David McNew/Getty Images Close

The EPA’s first phase of greenhouse-gas rules for power plants and oil refineries began... Read More

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The EPA’s first phase of greenhouse-gas rules for power plants and oil refineries began in January. The regulations require such polluters to apply for state permits if they build or expand operations. Photo: David McNew/Getty Images

The regulations under the Clean Air Act, which took effect in January, require polluters to apply for state permits if they build or enlarge operations. The decision on what controls are needed is made on a case-by-case basis.

A second phase may be more costly and affect existing plants, according to the report.

Nucor’s Plant

Greenhouse-gas permits issued under the new rules include one for Nucor Corp. (NUE), the second-largest U.S.-based steelmaker by sales. The Charlotte, North Carolina-based company announced in March that it began construction of a $750 million iron-making plant in Louisiana after meeting federal and state pollution requirements. The project will spur job growth and help the economy, Nucor Chairman and Chief Executive Officer Dan DiMicco said in a March 7 statement.

So far, the only direct challenges to permits issued under the new EPA rules have come from environmental groups arguing the emission controls don’t go far enough. The Sierra Club petitioned the EPA last month, asking the agency to challenge the company’s state air permit. The group said the emissions the Nucor plant will be allowed to discharge are at a “considerably higher” level than they should be.

The EPA, as part of a legal settlement with 11 states and groups such as the San Francisco-based Sierra Club, has said it will propose further greenhouse-gas rules later this year.

The EPA said on June 13 that the next proposal for utilities will be delayed by two months to give the Obama administration more time to hear recommendations, including from companies and states. The agency, which had faced a July 26 deadline, now intends to issue a draft rule by Sept. 30.

To contact the reporter on this story: Kim Chipman in Washington at kchipman@bloomberg.net

To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net

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