Tom Underwood: Under EPA rules, Ky. families, businesses will suffer

June 11, 2014 

In 2012, there were 357 coal mines in Kentucky that employed 16,351 people. Thousands more provide for their own families by working at small businesses that cater to these miners or support the coal industry in some way.

If the Obama administration gets its way, these mines, and these jobs, will go away, and everyone else, even those who don't depend directly on the coal industry for their livelihoods, will be hurt as electricity costs skyrocket.

Clearly, the bureaucrats and policy wonks have failed to think things through.

I don't think anyone in this administration has thought about the miners or their families, for example. I suppose the government will agree to spend a little money on work-force training, to help the displaced miners find new jobs; but there are no jobs. Unemployment in the coal fields is still the highest in the state.

On top of that, families and small businesses will end up paying more to keep the lights on.

In its proposed rule, the Environmental Protection Agency says power plants must reduce carbon emissions 30 percent by 2030, as compared with emissions levels in 2005, but that's just an average. The target level varies by state. Some states need to reduce emissions even more. Under the agency's proposal, Kentucky would have to reduce emissions by 18.3 percent.

The EPA would let each state decide how to achieve its goal. There are a few options. One is that states could dictate specific cuts for each plant, but that could lead to politically difficult decisions, and it's doubtful many politicians would have the stomach for that. States could help coal-burning plants transition to cleaner natural gas, although power companies may well decide that isn't worth the cost.

States also could try to generate more wind or solar energy, although those options might not be practical in a state like Kentucky. Besides, there are questions about whether wind or solar would work at such a large scale.

Regardless, any of these "clean energy" solutions will not generate enough jobs in Eastern Kentucky to replace coal industry related employment.

That leaves one last alternative, a system called "cap and trade," which is something the Obama administration tried — and failed — to get through Congress several years ago.

Without getting bogged down in the details, cap and trade means the government would set a cap on emissions but allow plants to trade the emission levels needed to achieve the state's goal.

For example, if Kentucky needs to reduce emissions by 18 percent, one plant may agree to cut emissions by 27 percent so another plan can reduce its emissions by only 9 percent.

Whichever approach the state uses, the cost of electricity would increase as power companies pass along the additional costs to their customers in the form of higher rates. The EPA estimates it will cost power companies $8.8 billion a year to comply with its proposed regulations.

Higher energy costs would hurt everyone, but they would be especially harmful to small businesses. Even before the administration proposed its new rules, energy costs ranked as one of the three biggest challenges facing small businesses, according to the most recent National Federation of Independent Business survey, Small Business Problems and Priorities.

Small businesses need affordable energy not only to stay competitive, but to simply stay open. Businesses will have no choice but to pass the higher costs onto their customers — people like you and me.

In order to create an environment that supports families and small businesses and helps create jobs, the administration needs to expand our energy options, not limit them. If the administration is allowed to impose these drastic new rules on coal, then I'm afraid it will be lights out for Kentucky.

Tom Underwood is the Kentucky state director of the National Federation of Independent Business.

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