ERCC Statement on Pending Executive Order on Energy Independence

March 27, 2017

Scott Segal, director of the Electric Reliability Coordinating Council, offered the following remarks regarding the pending executive order on energy independence reportedly ready for release by the White House tomorrow.  ERCC is a group of power-generating companies working on common sense and balanced energy and environmental policy.  Member companies provide power to millions of consumers across the United States:

“Yesterday, US Environmental Protection Agency (EPA) Administrator Scott Pruitt announced the intention of the White House to release an executive order directed at restoring principal elements of US energy independence.  Among other items, the executive order appears to include a formal statement of intention to rescind or revise regulations that address greenhouse gas (GHG) emissions from existing power plants under a stayed rule called the Clean Power Plan (CPP).  The order may also address rules targeting new power plants and may make best efforts to restore the proper balance of authorities between the federal government and the states.  The order may also call for reconsideration of the controversial methodology known as the Social Cost of Carbon, and may have the Council on Environmental Quality rescind its guidance document requiring considerations of climate impacts every time the government approves a project.  There are other provisions as well dealing with coal leasing on federal lands, the effect of various previous Presidential actions, and potentially other topics.
 
As Americans consider this important development, there are several key points to keep in mind.
 
Some have suggested that reversing the CPP constitutes a historic change in policy.  While it is clear that CPP has been the subject of much discussion over the past several years, the fact is that the regulation has been frozen by the US Supreme Court since February 2016 in the first stay of a rule of general applicability ever imposed in the history of the High Court.  This extraordinary legal result was indicative of the widespread belief that opponents of the rule were likely to prove that the rule was illegal.  Further, the continued diversification of the power industry with new sources of natural gas and better performance by renewables has continued to diminish the environmental significance of CPP and related rules.
 
In light of increasing use of natural gas, what is the significance of changing course on CPP?  The executive order still plays an important role.  Changes in the energy mix today have in large measure been driven by market principles.  The energy market has a significant degree of flexibility and pragmatism in making decisions that are cost-effective.  By contrast, CPP would lock in a particular energy mix based on governmental fiat, depriving the system of flexibility, locking in investments, endangering capital projects, and harming energy security.  So, there is a big difference indeed between market trends and rule by regulation.
 
What about the CEQ guidance on the National Environmental Policy Act (NEPA)?  President Trump and other leaders have long argued about the strategic and economic importance of renewing our nation’s energy infrastructure.  Indeed, the development of shale resources has played a major role in economic recovery and job creation across the country.  Moving oil, gas, and electricity around the nation is of critical significance to advancing economic and security objectives.  The uncertainty and delay created by the NEPA guidance and by the use of the Social Cost of Carbon methodology has undermined our energy and infrastructure goals to the detriment of job creation, security, global competitiveness, and the achievement of our geopolitical goals.  The executive order appears designed to put us back on the right path.
 
The executive order has been described as saving coal jobs – is that right?  In short, yes.  The executive order is focused around reliabile and affordable baseload power production, and policies which stress baseload production will continue to have a role for coal.  In addition, lifting the moratorium on leasing makes additional projects possible.
 
The bottom line for Americans to consider:  it is possible to have an effective climate change policy based more on market principles than command and control regulations.  It is possible to keep up international dialogue without the straight jacket of regulations that exceed legal authority.  And it is possible to review existing policies in ways that remove impediments to safe, affordable and reliable domestic energy production.  While we will review any final executive order, it appears that the executive order under discussion is a strong step in the right direction.”