Policy Memo: Clean Power Plan Put on Hold – Ohio Reacts

MEMORANDUM

TO: OHIO GOVERNOR, JOHN KASICH

FROM: MATTHEW LANDINI, OHIO RESIDENT, UNDERGRADUATE ENVIRONMENTAL ANALYST, DAVIDSON COLLEGE

SUBJECT: CLEAN POWER PLAN PUT ON HOLD: OHIO REACTS

DATE: MARCH 20, 2016

On February 9^th, 2016, the U.S. Supreme Court put a stay on the Clean Power Plan – preventing state planning and freezing development. The halt allows the D.C. Circuit Court of Appeals to debate the legality of President Obama’s proposal before it is implemented.[1] Despite the temporary restriction, Ohio should take preemptive steps and create a timetable to reduce carbon emissions by 32% in 2030.

Reducing carbon emissions is an environmental necessity and a political “hot take.” The challenge to the Clean Power Plan (CPP) is regulatory.[2] That is to say, Republicans object to how the CPP imposes federal authority over state authority. Historically, the EPA has been given sweeping authority to regulate state resources. While the courts debate this precedent, Ohio has the unique opportunity to reaffirm the importance of state involvement in overcoming environmental challenges. Gov. Kasich can prove the importance of state regulatory authority by rendering the CPP unnecessary with his own environmental plan.

Carbon emissions hurt Ohioans.

• In 2013, Ohio ranked 5^th in total carbon dioxide emissions with 229 million metric tons.[3] West Virginia, by comparison, ranks 22^nd despite being a comparable energy producer.[4] As Gov. Kasich says, “we can do better.”[5]
• In 2012, Ohio set 583 new high temperature records.[6]
• Rising temperatures contaminate drinking water and hurt the fishing industry by increasing the algae blooms and number of invasive species in Lake Erie.[7]

Diversifying energy sources helps consumers. In the past, Gov. Kasich has testified on the importance of diversifying energy sectors.[8] Supporting renewable energy creates new sources of power, revenue, and jobs.

• Private growth creates opportunities for workers. It also encourages existing energy corporations to explore new enterprises to stay competitive.
• AEP, Duke, and FirstEnergy monopolize Ohio’s energy market. Promoting new energy sources (and businesses) gives consumers greater independence and more buying power.[9]
• Polls show the majority of Ohioans want new energy sources.[10]

State subsidies promote energy independence. Subsidizing new energy startups helps them grow.

• Raising taxes on carbon producers (per metric ton) also better incentivizes business to change processes and maximize efficiency.

PROPOSED SOLUTIONS

Each of the following solutions uses a weighted scale (from 12.5% to 25%) to illustrate the impact on different social, political, and economic variables. The final weighted score – ranging from 1-3 – shows the total impact that decision will have on different stakeholders. “1” means that the costs of the solution outweigh its benefits. “2” is neutral, i.e. costs match benefits. “3” is ideal, as benefits exceed costs.

1. No change, wait for the courts to make a ruling. Do not preempt any environmental plan.

• Feasible, but purposefully ignores the negative impact carbon emissions have on Ohioans.
• Expends little political capital. Has no negative economic effect, but prevents any future gains.

2. Check existing industries by regulating carbon emissions.

• Levy a tax on carbon emissions to discourage polluters. Taxes are effective in eliminating behavior that negatively impacts Ohioans.
• Encourage research and development (R&D) as a way to reduce those taxes.
• Regulatory proposals require significant political capital. In this instance, benefits match costs. Offset any carbon tax with cuts to payroll and/or income taxes, i.e. pro-growth taxes.
• Encourages bipartisan cooperation.

3. Public program to subsidize new start-ups.

• Build on public sentiment to diversify energy sources. Effectively break the monopoly imposed by AEP, Duke, and FirstEnergy and encourage competition.
• Gives consumers and buyers much more political/economic power.
• Encourages local innovation and entrepreneurship. Requires hefty amounts of political capital, while not guaranteeing a reduction in carbon emissions.

4. Match some CPP regulations. Preempt the courts.

• Meet President Obama’s recommendation and propose a 32% reduction in Ohio carbon emissions by 2030.
• Enforce a tax (per metric ton) on carbon emitters. Announce subsidies for existing energy companies looking to diversify with new technology. Encourage start-ups to do the same.
• Will expend significant political capital – follows cues from the Obama Administration.
• Lead the bipartisan charge for environmental change..
• Affords maximum environmental, social, and economic rewards. Frame Ohio as the “Silicon Valley” of energy.

RECOMMENDATION

It is in Gov. Kasich’s best interest, based on our scoring system, to match some of the CPP regulations before the courts make a final decision. He can frame his environmental plan as a response to unfair federal regulations, while dictating how and when taxes and state subsidies are appropriate.

[1] The Plain Dealer, 2016

[2] Commons, 2016

[3] U.S. Energy Information Administration, 2013

[4] Ibid, 2013

[5] Kasich, 2015

[6] U.S. Global Change Research Program, National Climate Assessment, 2013

[7] Ibid, 2014

[8] Kasich, 2015

[9] Miller, 2012

[10] Public Citizen, Ohio Survey Results, 2014

Works Cited

Commons, E. R. 2016. “What’s next for Ohio under Clean Power Plan?” Accessed March 21, 2016, http://midwestenergynews.com/2016/02/08/whats-next-for-ohio-under-clean-power-plan/

Inglis, B., & Laffer, A. B. 2008. “An Emissions Plan Conservatives Could Warm To.“ The New York Times. Accessed March 18, 2016, http://www.nytimes.com/2008/12/28/opinion/28inglis.html

Kasich. 2015. Kasich Plan Fact Sheet, Energy. Accessed March 16, 2016, https://s3-us-west-2.amazonaws.com/john-kasich-assets/wp-content/uploads/2015/10/Kasich-Plan-Fact-Sheet-Energy.pdf

Miller, Jay. 2012. “As electric deregulation takes effect, FirstEnergy, AEP drop gloves.” Accessed March 20, 2015, http://www.crainscleveland.com/article/20120514/SUB1/305149966/as-electric-deregulation-takes-effect-firstenergy-aep-drop-gloves

Loris, N. 2015. “The Many Problems of the EPA’s Clean Power Plan and Climate Regulations: A Primer.” Accessed March 21, 2016, http://www.heritage.org/research/reports/2015/07/the-many-problems-of-the-epas-clean-power-plan-and-climate-regulations-a-primer

Michigan, et al v. EPA, U.S. Supreme Court, No. 14-46.

“Obama’s Clean-Power Plan Put on Hold by U.S. Supreme Court.” Accessed March 20, 2016, http://www.bloomberg.com/politics/articles/2016-02-09/obama-s-clean-power-plan-put-on-hold-by-u-s-supreme-court

Ohio Senate. 2014. 130^th General Assembly. Ohio SB310.

Public Citizen. 2014. “Ohio Citizens for Climate Action Factsheet.” Ohio Citizens for Climate Action. Accessed March 16, 2016, http://www.citizen.org/documents/oh-citizens-for-climate-action-factsheet-november-2014.pdf.

Reports, P. D. Staff and Wire. 2016. “U.S. Supreme Court stops Clean Power Plan while Ohio, other states, challenge constitutionality.” Accessed March 20, 2016, http://www.cleveland.com/business/index.ssf/2016/02/us_supreme_court_stops_clean_p.html

“The Net-Zero Gas Tax.” 2009. Weekly Standard. http://www.weeklystandard.com/the-net-zero-gas-tax/article/17031.

U.S. Energy Information Administration. 2013. Rankings: Total Carbon Emissions, 2013. Accessed March 18, 2016, http://www.eia.gov/state/rankings/?sid=OH#series/226

U.S. Global Change Research Program. 2013. National Climate Assessment and Development Advisory Committee: The National Climate Assessment. Accessed, March 16, 2016, http://www.globalchange.gov/ncadac