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EPA emission standards just the beginning

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Chris Hamilton Chris Hamilton
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Chris Hamilton, senior vice president for the West Virginia Coal Association, serves as chairman of the West Virginia Business & Industry Council (BIC). BIC was created more than 30 years ago and is comprised of more than 60 West Virginia trade associations and businesses, representing more than 395,000 employees across 26 separate industries.

I write as chairman of the West Virginia Business & Industry Council to communicate our views on the importance of protecting West Virginia jobs and the economy as the Environmental Protection Agency (EPA) proceeds with its greenhouse gas (GHG) regulatory agenda.

BIC members share a common priority: sustaining access to affordable, reliable energy that provides a critical operating advantage in an increasingly competitive global economy. Nearly every leading industry in the state — from manufacturing and construction to agriculture, transportation and retailing — benefits greatly from West Virginia’s diverse and growing abundance of energy resources.

Those advantages are threatened as the EPA pursues regulations likely to be among the most costly in the history of the agency. Earlier this year, the agency formally proposed GHG emission regulations for new power plants (those that haven’t yet been constructed). On June 2 it released rules for existing power plants (those currently in operation).

These rules, meant to cut carbon dioxide emissions from power plants, are so stringent that the use of coal for electricity generation will be significantly reduced. Based on a preliminary economic analysis, the related decrease in coal production due to the existing power plant rule would result in the loss of approximately 175,000 direct mining, utility and railroad jobs and a total of 600,000 jobs from the American economy.

Additionally, coal consumption for electric generation would decrease by 13 percent or by 120 million tons by 2020 and by 46 percent, or 430 million tons, by 2030 in order to meet the new standard. And, of course, as coal use declines, West Virginia will lose the jobs and taxes associated with the industry and the economies coal supports.

West Virginia already has experienced negative consequences in terms of lost mining and manufacturing jobs and millions of dollars from our state economy as the direct result of these actions and certainly will experience further economic decline as the rules advance.

Thankfully, our state’s natural gas industry is thriving. The Marcellus and Utica plays are booming and provide jobs and taxes that are helping to offset some of the negativity impacting the coal industry. However, due to the labor intensive nature of coal production, our state’s gas industry would need to increase development by 60 percent to offset the jobs lost by a 10 percent reduction in coal production.

To make matters worse, EPA has asserted that it intends to follow up with additional GHG regulations affecting dozens of other sources. Most recently, the agency released its fiscal year 2015 budget, which requests congressional funding to begin considering new GHG regulations on six sources: petroleum refining, pulp and paper facilities, municipal solid waste landfills, iron and steel production, animal feeding operations and Portland cement manufacturing.

Additionally, the agency has said it is working “as quickly as possible” to advance GHG permitting requirements that ultimately will include an estimated 6 million buildings and facilities. The National Association of Manufacturers notes that these rules “will apply to the largest GHG emitters, including power plants, refineries and cement production facilities, as well as smaller emitters, such as churches, farms, restaurants, hotels and health care facilities.”

This agenda will be economically devastating. Our members will be hit twice — first as energy consumers, and then as industries “next in line” for subsequent rules that EPA has committed to pursuing. Economists have estimated the uncertainty created by these regulations alone will reduce investment by 5 to 15 percent in directly impacted industries, resulting in up to 1.4 million fewer jobs and $141 billion lost GDP in 2014. West Virginia will be particularly impacted due to the importance of energy production and energy-intensive industrial activity to the economy.

It is clear that the structure and outcome of these regulations — beginning with power plants and extending into other economic sectors — will have a significant impact on energy prices, investment, employment and overall economic activity.

For Americans, these policies also will bring higher electric bills and with them higher costs for all goods produced in the United States.

EPA must work cooperatively with stakeholders and the public to ensure the continued affordability and reliability of West Virginia’s abundant energy resources. Our state will suffer greatly unless these new rules are cost-effective, attainable and avoid harming jobs and the economy.