Industry Sees Costly Rules After Obama’s Climate Report

Photographer: Charlie Riedel/AP Photo
Next month, Obama is set to release rules to reduce carbon dioxide from power plants. Refineries, cement makers and other industries could be next.

President Barack Obama’s choreographed rollout of a dire new climate report is sending a signal to the fossil-fuel industry: look out.

Supporters and opponents saw the Obama administration’s full embrace of the National Climate Assessment yesterday as laying the groundwork for wide-ranging new efforts to curb emissions blamed for global warming.

Next month, Obama is set to release rules to reduce carbon dioxide from power plants. Refineries, cement makers and other industries could be next. The Environmental Protection Agency is also considering curbs on methane released from oil and gas production.

“It’s clear that the train has left the station,” Ross Eisenberg, vice president at the National Association of Manufacturers in Washington, which represents companies such as Caterpillar Inc. (CAT) and Southern Co. (SO), said in an interview. “This is a very, very high priority for us.”

In addition to emission rules, the State Department is still reviewing TransCanada Corp. (TRP)’s application to build the Keystone XL oil pipeline, which is opposed by environmentalists. Meanwhile, a U.S. Supreme Court ruling last week effectively gave the EPA wide deference in crafting regulations to control air pollution.

Climate Assessment

The climate report, ordered by Congress and co-authored by 300 scientists, was released in Washington and concluded global warming is already having an effect in the U.S. The result is more coastal flooding, heavier Eastern rainstorms and longer, more intense droughts in the West.

On the day the previous report was released in 2009, Obama unveiled financial overhaul legislation and approved an expansion of federal benefits for same-sex couples. He didn’t discuss climate change.

Obama sat down with the NBC “Today” show’s Al Roker and seven other national and local television weathercasters to discuss the report’s findings, part of a week-long series of events on climate issues.

“The public knows this is a problem,” Obama told Roker in the interview broadcast this morning. “We’ve got to have the public understand this is an issue that is going to impact our kids and our grandkids, unless we do something about it.”

At the White House complex, the media was invited in yesterday for a meeting between climate scientists involved in the report and administration officials, including adviser John Podesta.

Miners Worried

“This helps sets the stage” for the greenhouse-gas rules, said David Goldston, the head of government affairs at the Natural Resources Defense Council in Washington. “They’ve crossed the Rubicon on this.”

The report’s stark conclusions has the mining industry worried.

“We hope this assessment will form the basis of a realistic policy response,” Nancy Gravatt, a spokeswoman for the National Mining Association, said in an e-mail. “Americans still need affordable, reliable electricity, but current greenhouse-gas proposals from EPA are putting that at risk by pushing too far, too soon.”

Yesterday’s report concluded that a warming climate will affect broad sectors of the economy, from infrastructure along the densely populated corridor from Washington to New York, to crops in the farm belt to water supplies of the Southwest.

Human Cause

The authors also didn’t shrink from naming a primary cause.

“Humans have been increasingly affecting global climate, to the point where we are now the primary cause of recent and projected future change,” according to the report.

Scientists say they can now identify weather events already influenced by a warming climate, and not only predict what would happen in the future.

“He obviously understands that getting the word out about the science is something he has to do personally,” Joe Romm, a former Clinton administration official and writer at ClimateProgress, said in an interview. Romm criticized Obama for not doing enough to push a climate bill through Congress during his first term, and contrasted that effort with his media blitz yesterday.

Obama last year released a Climate Action Plan that seeks to reduce carbon pollution in the U.S. about 17 percent below 2005 levels by 2020. The centerpiece of that strategy is the EPA’s first-ever greenhouse-gas rules for power plants, which Obama said would be issued in early June.

Barrasso, Whitfield

While Goldston calls those rules the most important action the federal government could take to combat climate change, Republicans such as Senator John Barrasso of Wyoming and Representative Ed Whitfield of Kentucky say it’s part of an attempt at government overreach.

“This lengthy report is short on details about the policy responses that the president and his advisers are seeking to unilaterally impose on the American people,” Whitfield said after the release. It’s unlikely “that any of EPA’s rules will have a meaningful impact on the global climate. But we do know that it is likely that these rules will have a significant impact on jobs, the economy and energy reliability.”

Barrasso said Obama is “ignoring” the American people who want good jobs and instead is “doubling down today on extreme regulations that will put more Americans out of work.”

The industry most affected by the rules is coal, which is responsible for most of the world’s carbon emissions since the Industrial Revolution.

Coal Rules

Melissa McHenry, a spokeswoman for American Electric Power Co., (AEP) one of the nation’s biggest coal-burning utilities, said EPA administrator Gina McCarthy has promised to take into account the potential impact of greenhouse gas requirements on the power fleet and electric grid.

“We are taking her at her word,” McHenry said in an e-mailed statement. “We expect that the proposed greenhouse gas guidelines will be consistent with EPA’s limited authority to regulate power plants under the Clean Air Act.”

Still, supporters of the White House say the costs of acting on climate must be balanced against the costs of not acting, and the potential damage to come.

“We remain committed to the task of stopping runaway climate change. This is not easy for us. For millions of workers in the U.S., our livelihoods, our families, our communities are at stake -- not decades from now, but right now,” Richard Trumka, the head of the AFL-CIO labor federation, said in a statement. “We are prepared to make hard decisions and to make sacrifices.”

To contact the reporters on this story: Mark Drajem in Washington at mdrajem@bloomberg.net; Jim Efstathiou Jr. in New York at jefstathiou@bloomberg.net

To contact the editors responsible for this story: Jon Morgan at jmorgan97@bloomberg.net Steve Geimann

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