Half a Billion Dollars Gets You a Gentler Climate Plan

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DUKE ENERGY

The silhouettes of emissions are seen rising from stacks of the Duke Energy Corp. Gibson Station power plant at dusk in Owensville, Indiana, U.S., on Thursday, July 23, 2015.

There could be half a billion reasons for the concessions President Barack Obama’s clean-power plan made to a defiant energy industry.

Electric utilities, oil companies and their allies spent $502 million on lobbying in the year since the Environmental Protection Agency proposed new regulations on carbon emissions from power plants, according to disclosures reviewed by Bloomberg. That’s 22 times more than renewable energy companies and environmentalists spent.

Industry groups swiftly condemned the plan and vowed to fight it in courts and statehouses. Yet they had won changes to final rules announced Aug. 3, such as later deadlines for compliance, less emphasis on cutting energy consumption and gentler cuts to coal-fired power.

“Sliding the date, that alone seems like a fairly significant give,” said Kevin Book, managing director of Clearview Energy Partners LLC, a consultant in Washington. “One thing the EPA does pretty consistently is start strict and loosen.”

The biggest spenders against the plan were the U.S. Chamber of Commerce, the National Association of Manufacturers and Caterpillar Inc. On top of that, Exelon Corp. and Chevron Corp. spent more than $5 million on lobbying in the past year. So did National Grid Plc and Calpine Corp., power companies that support the plan, according to the disclosures.

‘Market-Based Solutions’

“This new rule supports market-based solutions while giving the states options to flex them to address their specific characteristics,” National Grid U.S. President Dean Seavers said in a statement.

Chevron supports “prudent, practical and cost-effective action” to address climate change without undermining economic growth, Melissa Ritchie, a spokeswoman, said in a statement.

Bloomberg counted records if they identified the EPA and included the word “power.” The dollar amounts reflect the total spending in a given quarter and could include issues other than the power-plants rule.

The plan is the product of one of the most extensive processes the EPA ever conducted, taking into account more than 4 million public comments, spokeswoman Enesta Jones said in a statement. It will reduce greenhouse-gas emissions from U.S. power plants 32 percent by 2030, compared with a 30 percent cut in the draft. Obama called it the most important step yet in the fight against climate change.

Pared Back

Still, the final rule was pared back in several ways. In response to industry concerns, the first mandatory reductions will take effect in 2022 at the earliest, instead of 2020 as proposed.

The agency also yielded to industry objections by removing an initiative for demand-side efficiencies. In a victory for the nuclear industry, reactors now under construction will count toward carbon reductions, unlike in the draft.

Despite the dramatic claims from both sides, the plan by its own admission merely continues pre-existing trends in the U.S. electricity system. Power-plant emissions will decrease more slowly in the next 15 years under the plan than they did in the past 10 years due to market forces and existing regulations.

Efficiency Assumptions

The final rule acts more slowly than the draft because the EPA softened its assumptions about how much efficiency coal plants could gain and how much slack natural gas could pick up.

“The transition to clean energy is happening without the [new rules], and it’s happening faster than anticipated,” Jones, the EPA spokeswoman, said. “The Clean Power Plan accelerates this momentum, putting us on pace to cut this dangerous pollution to historically low levels in the future.”

The final rule came after a last-minute lobbying push. In July, the Office of Management and Budget met with officials from power companies such as Dominion Resources Inc., Exelon, NextEra Energy Inc., Calpine, FirstEnergy Corp., Duke Energy Corp., and Berkshire Hathaway Energy; trade groups including the American Petroleum Institute, the Biomass Power Association, the American Forest & Paper Association, the Solar Energy Industries Association, the Nuclear Energy Institute and the U.S. Chamber of Commerce; environmental groups the Natural Resources Defense Council and the Environmental Defense Fund; and state governments.

Congressional Opposition

Also last month, eight Republican Senators and 18 House Republicans sent the OMB a letter opposing the regulations. Those officials --including Representative Fred Upton of Michigan, Senator James Inhofe of Oklahoma, and Senator Shelley Capito of West Virginia -- received a combined $7.6 million in campaign contributions from the oil and gas, electric utilities and mining industries, according to data from the Center for Responsive Politics. Those industries were the top contributors to 12 of the officials.

While its lobbying efforts didn’t make the EPA’s rule acceptable, the National Association of Manufacturers built momentum with the public and in the states, said Greg Bertelsen, the director of energy and resources policy. Now the group will consider litigation and pushing new laws in Congress.

“We’re not stopping, we’re not conceding anything,” Bertelsen said.

As opponents prepare lawsuits, they’re also looking for a new administration that would change course. Republican presidential hopefuls Jeb Bush and Scott Walker spoke out against the plan.

“This rule is about as ambitious as the administration can get away with,” said Nathan Richardson, an environmental and energy law professor at the University of South Carolina. “There are a lot of places where the administration pulled back from what they would like to do or what the greens would like them to do and they didn’t push as hard.”

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