How EPA rules would choke NC economy

Gas prices have fallen below $2 a gallon in much of the state, providing North Carolinians with some extra cash to pay off those Christmas credit card bills.

Don't get used to the extra cash, however.

The Environmental Protection Agency is in the process of implementing three rules that a new study by the Beacon Hill Institute at Suffolk University says will not only substantially drive up the cost of energy in the Tar Heel State, but cost tens of thousands of jobs.

Of course, all North Carolinians want a clean environment; most appreciate the EPA's intentions. That said, it's clear that with the exception of a radical fringe, few are complaining about the current environment and clamoring for new federal regulations that threaten the state's economy.

For good reason. Measures of air quality have been steadily improving for decades. Sulfur dioxide and nitrogen oxide emissions by the state's major utilities were cut almost in half between 1998 and 2011, according to a report by the state's Department of Environment and Natural Resources. Mercury emissions have been cut by roughly 50 percent in that time span, and carbon dioxide emissions dropped by more than 15 percent from 2000 to 2011.

Apparently that progress hasn't been good enough for this EPA, however. Recently, it dictated three major rules on emissions - one on mercury and two on carbon dioxide - that will increase the price of electricity in North Carolina by a whopping 21 percent by 2030, according to the economists who conducted the study.

That's bad news for small businesses in North Carolina, many of which operate on razor-thin profit margins and can't stay in business with such a significant jump in electricity prices. In fact, annual electricity bills for commercial ratepayers are expected to rise by $1,500 a year because of these rules. Residential users won't be spared, either, facing $355 annual increases, according to the study's economists.

The rules especially target North Carolina's coal plants, which produce 44 percent of the state's electricity, one of the higher levels in the U.S., and also produce the bulk of base load electricity to the nation's electric grids. The rule mandates existing coal plants reduce their carbon dioxide emissions by at least 30 percent below 2005 levels by 2030.

To comply with this mandate, the state's coal plants will be forced to adopt expensive and unproven new carbon-capture technology. This will obviously have a devastating effect on the state's nearly 10,000 jobs directly or indirectly supported by the coal industry.

And the study's economists highlight how the employment impact will spread far beyond power plants and mining. They forecast that more than 32,000 state jobs will be lost by 2030, a number that includes those from other sectors that service the coal industry. Think the truck driver who gets the coal to the furnace and the barbecue chef who serves him lunch. Moreover, the burden of higher electricity costs will cause many small businesses to downsize or close up shop completely, and higher residential utility bills means North Carolinians will have less money to spend on other goods.

Even the EPA estimates that these regulations will cost over $50 billion nationally. But it justifies this cost by claiming that the regulations will provide tens of billions of dollars in benefits. The vast majority of these benefits come in the form of improved health.

Quantifying tens of billions of dollars in health improvements is a difficult task at best and a fool's errand at worst. The EPA has drawn widespread criticism for its use of secret science and stretched assumptions to come up with such a forecast. For example, the Beacon Hill study criticizes the benefit assessments for incorporating the reduction of particulate matter, which is already regulated under different EPA rules.

Clean air is a worthy goal, something North Carolina has worked hard to attain. North Carolina's air is as clean as it has been for decades. But as this study indicates, wringing the last few pollution particles out of the atmosphere comes at a cost that is too steep for North Carolina families.

Brian Balfour is policy director for the Civitas Institute in Raleigh.