In June 2014, the United States Environmental Protection Agency (“EPA”) proposed several new greenhouse gas regulations intended to reduce carbon dioxide emissions produced by electricity generating sectors. The EPA’s stated goal is to reduce overall carbon emissions in the nation by 30 percent by requiring each state to meet a specific emission reduction goal. Under the proposed regulations, Kentucky would be required to reduce carbon dioxide emissions 18 to 20 percent by 2020. If enacted, the regulations would have the greatest impact on the production of coal and coal related industries. Currently, Kentucky is the third largest producer of coal in the United States and the coal industry is a huge economic generator in the Commonwealth. The Kentucky Energy and Environment Cabinet estimates that in 2013 severance taxes on coal production were $212,443,519.59, and overall, the coal industry directly contributes billions of dollars to the economy of Kentucky. Thus, the proposed regulations have the potential to have a significant effect on Kentucky business and the economy.
Understandably, many in Kentucky’s business sector have serious concerns regarding the EPA’s proposed regulations. The Kentucky Chamber of Commerce has voiced its opposition against the proposed regulations, arguing that the “there is nothing positive we can find in the president’s announcement of a 30 percent reduction in carbon emissions for the state’s economy.” Mike Duncan, spokesperson for Americans for Clean Coal Electricity, a non-profit advocacy group for coal producers, contends that if the regulations are enacted, Kentucky’s manufacturing industry will suffer significantly, as many depend on “…reliable-and inexpensive-energy.” The group also believes that the proposed emission reduction goal would have the most impact on low income Kentuckians who will see their electricity bill skyrocket. Many are also concerned that the proposed regulations will hinder employment and economic growth because many coal-fired power plants will be prohibited from operating due to the fact that they will not be able to achieve compliance or they will not be in compliance by the 2020 deadline.
It appears that EPA’s proposed regulations will be enacted in a form that will be economically detrimental to Kentuckians. There has been significant pushback from various business sectors and lawmakers across the United States. Several states, including Kentucky, Indiana and West Virginia have even taken legal measures to either preclude the enactment of the EPA’s proposed regulations or modify them so that they impose realistic standards that allow the use of established proven technology that can be economically achieved. Whatever the outcome, you can be sure the Kentucky business community will be closely watching.