Jon Huntsmans resorts to fear mongering on EPA, coal fired power plants

By Eugene Kiely and Lalita Clozel, FactCheck.org

Jon Huntsman falsely claimed that the Obama administration’s proposed regulations to cut pollution from coal-fired electric plants will “likely” cause blackouts “this summer.” That’s not true. Huntsman’s claim is contradicted by a Federal Energy Regulatory Commission letter cited by his own campaign, and by independent assessments as well.

No Blackouts ‘This Summer’

The Environmental Protection Agency has issued or is in the process of finalizing several regulations that would significantly affect coal-fired power plants. The new regulations include, for example, the Clear Air Mercury Rule, which will regulate mercury emissions from coal-fired plants for the first time, and the Cross State Air Pollution Rule, which will reduce the release of sulfur dioxide and nitrogen oxides from power plants in the eastern United States. In both cases, the EPA was acting under court order to comply with the Clean Air Act.

Huntsman, the former Utah governor who is running for the Republican presidential nomination, spoke of the cumulative impact of these and other EPA regulations on coal-powered generation plants during a Nov. 1 speech at the University of New Hampshire, where he unveiled his energy plan:

Huntsman, Nov. 1: Today coal is under siege from government regulations and litigation. There are even efforts to halt the export of our coal, which would destroy American jobs when we now need them most. This summer, in fact, we will likely see blackouts as a result of the administration’s assault on coal, which will take 8 percent of U.S. generating capacity offline.

We asked the Huntsman campaign to support the candidate’s claim that EPA regulations would reduce U.S. electricity capacity by 8 percent and cause blackouts “this summer.” We were referred to an Aug. 1, 2011, letter that was sent to Sen. Lisa Murkowski by FERC Chairman Jon Wellinghoff and two of its commissioners, John Norris and Cheryl LaFleur. The FERC was responding to Murkowski’s request for its assessment of “EPA rules affecting generation of electric power.”

But the agency’s letter does not support Huntsman’s claim. Quite the opposite.

The letter says “the retirement of coal units is expected to begin between 2015 and 2018,” and even then FERC expects to work with the industry to avoid disruptions in service. “As it has in the past, the commission would seek to find ways to require or allow utilities to operate when needed for reliability or other purposes while being compensated adequately and without violating other federal laws,” the letter says.

Wellinghoff, who was appointed to FERC by President George W. Bush and elevated to chairman by President Barack Obama, also addressed the reliability issue before a subcommittee of the House Energy and Commerce Committee on Sept. 14. In his prepared remarks, Wellinghoff said the industry “can plan to meet its reliability and environmental obligations.” He cited historical data to show the industry has done exactly that “when circumstances warranted.”

Wellinghoff, Sept. 14: As I have said before, available data indicates that the electric industry has added significant amounts of generating capacity when circumstances warranted. As a point of reference, EIA data shows that between 2000 and 2004, an annual average of 38.74 GW of capacity was added nationally, with a peak addition of 58.06 GW in 2002. Similarly, the electric industry has the ability to plan for the EPA regulations, which will affect the operation of some electric generation units.

To be sure, there are some who remain concerned about future reliability. FERC Commissioner Philip Moeller, who was appointed by Bush and reappointed by Obama, told the committee that “older, fossil-based generation” plants eventually should be replaced. “However,” he warned, “such retirements need to be handled in an orderly way to avoid regulatory, economic, and reliability chaos.”

But most experts do not predict chaos — and certainly not as early as this summer.

PJM Interconnection, a regional grid operator that serves 58 million customers in 13 states and the District of Columbia, issued a report in late August on the impact of two EPA rules — both of which have compliance deadlines of Jan. 1, 2015. The report concluded that “resource adequacy does not appear to be threatened” in delivery year 2014/2015.

Separately, the Bipartisan Policy Center — which was founded by four former Democratic and Republican Senate leaders — issued a report that said the impacts of the EPA regulations on the nation’s power sector are “manageable.” The potential for blackouts? The report, which was drafted by staff members of the center’s Energy Project, said “scenarios in which electric system reliability is broadly affected are unlikely to occur.”

‘Back-of-the-Envelope’ Assessment

Now, let’s look at Huntsman’s claim that the EPA regulations will reduce the nation’s electric generation by 8 percent. That figure also comes from the FERC letter to Murkowski and a press release the senator released in response to it.

Murkowski, Aug. 3: The commission’s staff has preliminarily estimated that up to 81 gigawatts of existing generation are ‘likely’ or ‘very likely’ to be retired as a consequence of new EPA rules. That’s nearly 8 percent of our installed capacity for electric generation and a retirement at that scale could have drastic consequences for many parts of our country.

But FERC’s letter also warned not to put too much stock in its estimate of coal-fired plants likely to be retired. The letter called it an “informal, preliminary assessment,” adding that “an in-depth analysis could not be conducted because complete information was not available.” In his Sept. 14 testimony, Wellinghoff pulled the plug entirely on his staff’s informal analysis. He told Congress it was an “adequate back-of-the envelope first assessment of the amount and location of potential generator retirements,” but he warned that such an informal analysis “is inadequate to use as a basis for decision making.” For one thing, Wellinghoff said, FERC “did not evaluate any alternatives that might be available to the regions to offset any generator loss such as new or planned generation or transmission, retrofits of coal-to-gas burners, demand-side resources, or energy efficiency strategies.”

There is no doubt that the EPA’s regulations and proposed regulations will have a significant impact on coal-fired power plants. American Electric Power of Columbus, Ohio, announced in June that complying with EPA regulations would cost between $6 billion and $8 billion and force the company to “retire nearly 6,000 megawatts (MW) of coal-fueled power generation; upgrade or install new advanced emissions reduction equipment on another 10,100 MW; refuel 1,070 MW of coal generation as 932 MW of natural gas capacity; and build 1,220 MW of natural gas-fueled generation.” Nearly all of the plant closings will occur by Dec. 31, 2014, or later.

Huntsman can offer his opinion that the EPA is moving too fast or that the regulations are too costly, or both. And, of course, there are those who will disagree with him. In his Nov. 1 testimony before a House oversight committee, Deputy EPA Administrator Bob Perciasepe cited both the health and economic benefits of retiring or upgrading aging power plants.

But Huntsman resorts to fear-mongering when he raises the specter of blackouts “this summer.”

Jon Huntsman's energy speech in New Hampshire - Video and transcript

Republican presidential candidate Jon Huntsman delivered a major address on energy at the University of New Hampshire in Durham earlier today.




Transcript:

It’s an honor to be back at the University of New Hampshire; a university that has distinguished itself as a leader in academics, research and innovation.

A few minutes ago I visited your cogeneration plant, which has earned national accolades.

Using processed landfill gas, it serves as this campus's primary energy source – powering your gymnasium, your dorm rooms and to the dislike of some, your lecture halls.

By taking more control of its energy supply, the university benefits from a stable energy source and predictable energy prices.

So, the need to make our nation itself energy secure is what I’d like to address today.

We are all too familiar with the statistics.

Fifty years ago, President Eisenhower warned we should import no more than 20 percent of our oil. Today we import 60 percent.

Energy security can no longer be a catchphrase; it will be a driving force behind my administration's agenda.

Because this is an issue critical to solving two of America's most urgent challenges: putting people back to work, and ending our heroin-like addiction to foreign oil. 

Every year we send $300 billion – half our trade deficit – overseas for oil, to unstable and unfriendly regimes.

300 billion dollars to our competitors and nations with whom we have nothing more than a transactional relationship. I want that money going to American energy suppliers, spent in American stores, saved in American banks, and invested in American communities to create American jobs.

That’s just one economic aspect of our dependence on foreign imports.

10 of our last 11 recessions were preceded by sharp spikes in the price of oil. Three years ago, it was the doubling of oil prices that helped bring our economy to its knees.

When prices rise, and motorists and truckers have no choice but to pay more at the pump, it depresses economic growth.

Energy drives everything we do.

How can we stabilize our economy when its most fundamental building block is controlled in large part by despots and dictators half a world away?

Even if a political crisis doesn’t threaten oil supplies, increased demand from China, India and other developing countries will lead to permanently heightened prices that exceed the highs of 2008.

Today oil remains in the high 80’s despite a global recession.  Imagine where prices will be when the global economy recovers.

Ladies and gentlemen, for the sake of America’s economic and national security, we must unshackle ourselves from the scourge of foreign oil.

So how do we do that?

There are three basic steps that need to be taken.

First, America is drowning in energy resources. So we must remove the regulatory constraints on the production of domestic energy.

Second, we need to break oil's monopoly as a transportation fuel, and create a truly level playing field for competing fuels.

Third, we need to build an environment that will incubate the next generation of energy technologies and ensure that America leads the global energy economy in the decades to come.

So number one, we must increase domestic production.

Oil is a plentiful resource across America.  From the Gulf of Mexico to Alaska, our country has abundant untapped resources.

Yes, there is a balancing act between utilizing our resources and maintaining the integrity of our oceans and forests. But there is no reason drilling cannot be safely conducted in the Gulf, across the states and in Alaska.

It's important to note that from beginning to end - that is, from initial geologic survey to the time oil reaches the gas pump - it can take ten years.

Regulations and approvals for new wells and pipelines need to be streamlined and directed to “move at the speed of business.”

President Reagan created a mechanism for the swift resolution of regulatory delays without sacrificing safety. With one in ten Americans out of work, the same approach must be duplicated again.

On top of the resources available here in our own country, our friend and ally Canada has enormous energy reserves.  In fact, America imports twice as much oil from Canada as Saudi Arabia, and our neighbor is increasing production every day.

There are 170 billion barrels of oil in Alberta’s oil sands – more reserves than in all of Iraq. Yet lawsuits and legislation threaten to block access to this resource.

My administration will stand behind the Keystone pipeline, creating more than 100,000 American jobs while reducing our dependence on overseas imports.

Every barrel from a friend is one less from a foe.

Hyperbolic fracturing is also an opportunity to expand our domestic energy production.

Because of fracking and its companion, parallel drilling, the United States has surpassed Russia as the world’s leading producer of natural gas.

As we speak, fracking is leading a manufacturing revival across the Midwest in cities like Youngstown, Ohio, where hundreds of jobs are being created.

Unlocking vast new oil deposits, like in North Dakota’s Bakken Field, also will come through fracking.

Hyperbolic fracking has been used on more than one million wells using a technology refined over 60 years, and the industry must continue to demonstrate to the American people it is a safe and sustainable practice.

As president, I will break down barriers to the continued, safe use of fracking, which could increase America's production of natural gas by 25 percent - an outcome the American people deserve.

Coal, while viewed with hostility by some, is one of America’s most abundant energy resources and the mainstay of many communities. 

It generates the majority of America's power, and the expansion of an emerging technology, coal-to-liquid fuel, will allow us to take full advantage of our coal reserves, which could supply us for 300 years.

Today coal is under siege from government regulations and litigation. There are even efforts to halt the export of our coal, which would destroy American jobs.

This summer, in fact, we will likely see blackouts as a result of the administration’s assault on coal, which will take 8% of U.S. generating capacity offline.

In a time of economic uncertainty, subjecting American businesses to even more volatile energy prices indicates a grave lack of judgment, and a wrong that my administration will make right.

However, we cannot simply drill our way to energy security; we also need to use the power of the marketplace.

This means breaking oil's monopoly as a transportation fuel, and creating a truly level playing field for competing fuels.

So number two, we must break oil's monopoly.

America's prosperity has always flowed from competition, and I believe it's time to let creative destruction loose in our energy sector.  Energy security, as Winston Churchill said, "lies in variety and variety alone."

Yet the current system of transportation fuels is essentially closed to competition because of gasoline's de facto monopoly for light-duty vehicles and diesel's near-monopoly for heavy-duty vehicles.

The concentration of distribution ownership is similar to the broadcast network domination in the early 1970s, which triggered market-opening FCC rules and an antitrust consent decree.

Accordingly, the Federal Trade Commission and Senate Judiciary Committee must commence an expedited review of the fuel distribution network.

Breaking oil’s monopoly will also require the repeal of regulations that prevent a truly open and fair market.

America has more natural gas than Saudi Arabia has oil. Yet on August 9th, the Obama Administration issued fuel efficiency rules that effectively bar heavy-duty vehicles – which consume 20% of our oil imports – from converting to natural gas.

Amazingly, they did this even after conceding that more alternative-fueled vehicles would increase national security by reducing dependence on foreign oil. 

The EPA has also imposed costly rules with respect to converting cars to natural gas, which is cheap, clean and available for refueling in nearly half of American homes.

It has effectively barred states, which have the primary responsibility for meeting air quality standards, from switching fleets to electric cars and clean fuels.

Rolling back these and other similar rules will be an immediate priority of my administration.

And finally, number three, we must build a new energy future.

As we take steps to meet current energy demands, we must also build an environment that will promote innovation and help foster the next generation of energy technologies.

We must reduce barriers and increase investment in a modern “smart grid.” 

Such a system will lead to improved efficiency and resilience, and will be sorely needed if the next generation, for example, chooses to charge electric vehicles in their garages.

Development of a “smart grid” should be done in tandem with support for innovative state-based solutions.

California leads the nation in geothermal. The Northwest has world-class hydropower facilities. 15 percent of Iowa’s energy comes from wind.

When I was governor of Utah, we made great strides in natural gas. We designated a natural gas corridor through our state, and partnered with the private sector to build a network of fueling stations. I even drove a natural gas car.

States are laboratories of innovation, yet federal rules handcuff them with red tape.

Washington needs to give states more flexibility to develop unique energy solutions.

To assure our long-term competitiveness, America must also prioritize investment in basic research that will lead to the energy technologies of tomorrow. 

The IEA predicts that by 2035, the global energy economy will be a $38 trillion economy.

Which nation will lead that energy economy?

Which nation’s innovators will develop the technologies that transform our energy future, and then sell those technologies to the world?

That nation must be America.

My administration will remove regulatory barriers that are slowing development of the next generation of nuclear technology, including small modular reactors – thus making America competitive in a sector we once pioneered.

We will also reaffirm our support for non-commercial research at ARPA-E – the DOE’s version of DARPA – and invest more funding in pure research at our universities, like this one.

However, we must not confuse pure research with politically-driven industrial policy such as we saw with Solyndra 

We must have a level playing field, with the federal government setting fair rules, but investing only in basic research.

Breaking oil’s monopoly and freeing ourselves from OPEC’s grasp will not be easy.

For decades presidents have talked about energy independence, with lots of rhetoric but little results.

America cannot afford the status quo any longer, nor can we afford half-measures, nor can we allow reform to be derailed and delayed once again by powerful, entrenched interests.

On my first day in office, I will take three immediate steps to launch a sea change in energy policy.

I will direct my administration to clarify rules that ensure the safe and rapid expansion of offshore drilling and fracking.

I will move to open our fuel distribution network to all forms of energy, biofuels, natural gas and electricity.

I will systemically begin to eliminate every subsidy for energy companies, whether it be oil, natural gas, wind or solar. Under my presidency, the United States will get out of the subsidy business. And if necessary, I will use my executive authority to act unilaterally.

We will stop using limited federal resources to prop up individual companies – directing that money instead to basic energy research.

Whether it is our tax code, our foreign policy, or our energy policy, we need bold reforms that are equal to the monumental challenges we face.

I’m running to transform America’s economic foundation, and give the American people the tools to compete in the 21st Century.

If we succeed, we can leave to our children and grandchildren a safer, healthier, more secure, more prosperous future.

That is our obligation to the next generation – to your generation – and it’s an obligation we must and will fulfill. 

Thank you.