Despite low coal use, La. must reduce CO2 by 40%

State questions large decrease despite low usage

When the Obama administration announced its new plan to cut carbon dioxide from power plants to combat climate change, Louisiana found itself on the hook for a 40 percent reduction over the next 15 years or so — one of the bigger decreases demanded in the state-by-state goals.

The size of the proposed cut surprised many because Louisiana doesn’t rely heavily on coal, which generates more carbon dioxide than most other fuels.

Neither state regulators nor the U.S. Environmental Protection Agency can provide a clear reason for why Louisiana’s reduction is so large.

“We have more questions at this point than we have answers,” said Sam Phillips, an assistant secretary at the state Department of Environmental Quality.

Just how the EPA arrived at its numbers for Louisiana is a mystery, he said.

There has been one call so far with the states in the region to try to get answers from federal officials, Phillips said. All of the states had similar questions but got few answers, he said.

“Louisiana is significantly natural gas-fired now, so how is it we have significant opportunity to reduce? We don’t use much coal,” Phillips said.

EPA spokeswoman Liz Purchia issued a written explanation that didn’t directly answer the question, noting generally that each state’s goals are different because individual states produce and consume electricity differently.

“Some states have invested in natural gas, renewables and energy efficiency more than others,” she said. “When we take these unique circumstances into account, each state’s ability to improve its CO2 emission rate differs from other states. This doesn’t necessarily mean that it’s easier for one state or more difficult for another. It just means that each state’s goal reflects its potential to reduce pollution from its own unique starting point.”

Purchia didn’t give specifics as to what about Louisiana’s energy makeup caused its reduction goal to be set relatively high compared to other states.

Much like the question of how the goal was set, its impact on Louisiana homeowners and business is still unclear.

The Obama administration’s proposed rule, released June 2 with a comment period open for 120 days after it’s published in the Federal Register, lets the EPA give states flexibility in their implementation plans as part of a larger climate change policy. States now have until June 30, 2016, to have their initial plans done unless an extension is granted.

But Phillips says that before the state can make such decisions, some more fundamental questions need to be answered.

Louisiana’s plan could include upgrading outdated energy plants, shifting energy sources from those that release large amounts of carbon dioxide or looking harder at renewable energy options such as wind and solar power. States also can choose to increase energy efficiency programs, with the idea that if less energy is needed, less pollution will be created generating energy.

Casey DeMoss, CEO of Alliance for Affordable Energy, based in New Orleans, said the proposed rule is primarily focused on coal-fired power plants, and Louisiana just doesn’t use a lot of coal. She said she doesn’t know how Louisiana wound up with such a high reduction goal.

Only about 12 percent of Louisiana’s in-state generation of energy comes from coal, she said. About 10 percent of Louisiana’s out-of-state purchases come from coal-fired plants, she added.

She said cutting coal-based energy wouldn’t necessarily drive up utility bills.

“You could eliminate that and still not see an increase,” said DeMoss, head of the nonprofit group that promotes environmentally responsible and affordable energy.

In fact, she said, if the state takes the option of beefing up energy-efficiency programs, people could actually see their bills lower over time. She pointed out that some people pay very high bills even though Louisiana energy rates are low, noting many homes have little insulation and no energy-saving improvements.

The proposed rule was widely praised by environmental groups as a bold step toward encouraging cleaner energy production and addressing climate change.

“For me, it’s really good because it’s decisive,” said Marylee Orr, executive director of the Louisiana Environmental Action Network. “Louisiana is ground zero for climate change. We have to get a handle on greenhouse gases.”

Although the ultimate goal is to reduce carbon dioxide, a greenhouse gas that contributes to global climate change, the measure will also cut other harmful air pollutants, resulting in national savings on health care, she said.

“The health effects are tremendous and real,” Orr said.

But many of Louisiana’s elected officials have a much dimmer view of the new rules. Republicans on the state’s U.S. House of Representatives delegation wrote a letter saying the plan will “hamstring the economy, raising utility costs for families and destroying tens of thousands of jobs.”

Both of Louisiana’s U.S. senators, Democrat Mary Landrieu and Republican David Vitter, also opposed the rules.

EPA Administrator Gina McCarthy claims worries about climbing energy bills are misplaced.

“Critics claim your energy bills will skyrocket,” she said in a written statement. “They’re wrong. Any small, short-term change in electricity prices would be within normal fluctuations the power sector already deals with. And any small price increase — think about the price of a gallon of milk a month — is dwarfed by huge benefits.”

Louisiana Public Service Commissioner Foster Campbell said although he applauds anything that could increase energy efficiency programs, it’s important to continue to have a mix of natural gas and coal power in the state in addition to renewable sources like solar power. The Louisiana Public Service Commission regulates public utilities, including power providers, in the state.

PSC Commissioner Scott Angelle said he’s not convinced the EPA actually has the authority to regulate carbon dioxide. If the rules hold up, the effects on consumers could be great, he said.

“A 40 percent reduction. I think that is unachievable without some vast new technology or without costs to be borne by businesses and customers,” Angelle said. “It begins to wipe out a significant source of energy mix for America.”

Angelle said that while nothing in the proposed rule would actively shut down coal-fired power plants, investors will probably shy away from funding them.

It’s possible that the rule is just the first step in a larger, future action that could impact Louisiana more drastically, he warned.

“One of my concerns is that it’s coal today, but natural gas tomorrow,” Angelle said.

Energy companies have varying opinions on how the rules might affect their operations.

Entergy is reviewing the rules, said Chuck Barlow, Entergy’s vice president of environmental strategy and policy. The company, which through three subsidiaries provides electricity for about half the state’s customers, has been looking for about a decade at greenhouse gas emissions, Barlow said.

“Entergy was the first U.S. utility to voluntarily commit to stabilizing carbon dioxide emissions as part of our efforts to address the business risk posed by climate change,” Barlow said.

The company is working to keep emissions 20 percent below 2000 emission levels, Barlow said.

Entergy relies on nuclear and natural gas to fuel its electricity generating plants, both of which create low carbon emissions, Barlow said

“Entergy, the nation’s seventh-largest power producer, produces fewer CO2 emissions than 80 of the other top 100 power producers,” Barlow said.

For smaller energy providers like electric cooperatives, such as DEMCO and Beauregard Electric Co-op, proposed regulations on coal-fired plants could hurt the bottom line, representatives said.

Randall Pierce, CEO of the Association of Louisiana Electric Cooperatives, said it’s still hard to know until DEQ comes up with the implementation plan.

But energy rates will almost certainly be affected, he said. Although Louisiana in total may have only 20 or 22 percent of electricity coming from coal, for the energy cooperatives, that amount is more like 80 percent, he said, meaning that regulations on coal would probably have an impact on the cooperatives’ customers.

Whatever changes occur, he said, it won’t happen overnight — there is the 120-day comment period, plus several years given to states to develop a plan, not to mention delays caused by inevitable litigation seeking to halt the rules.

“There are going to be a tremendous number of lawsuits by states and others against EPA,” Pierce said, noting that a major complaint is that the measure should have gone through Congress rather than being imposed by the EPA. “It’s going to be some time before it gets settled.”

For his part, PSC Commissioner Eric Skrmetta said he is going to ask Gov. Bobby Jindal to have DEQ research and then challenge the very idea that carbon dioxide is something that needs to be managed.

“From the dawn of time until 2011, carbon dioxide has never been a pollutant,” he said.

Follow Amy Wold on Twitter @awold10. Advocate Capital Bureau Chief Mark Ballard contributed to this report.