North Carolina’s centerpiece air quality regulation is touted as a success. But a recent report concluded that the 2002 Clean Smokestacks Bill would cost much more than projected and that there’s really no evidence of its benefits for ozone levels or any other air quality measure. Dr. Roy Cordato, John Locke Foundation vice president for research and resident scholar, discussed the topic with Donna Martinez for Carolina Journal Radio. (Click here to find a station near you or to learn about the weekly CJ Radio podcast.)

Martinez: What was [the Clean Smokestacks legislation] supposed to do?

Cordato: Well, it was essentially supposed to reduce ozone and what’s called particulate matter, and that was going to be done by forcing power companies, on their coal-fired power plants, to put in very expensive scrubbers for nitrogen oxide and sulfur dioxide.

Martinez: So this was focused on coal-burning plants.

Cordato: Yes, strictly on coal-burning plants — 14 coal-fired plants across the state — because those are the plants that emit these particular pollutants. That’s correct.

Martinez: So in the years since 2002, this has been in force in North Carolina. And you say in your writings on this that it’s being cast as a success, that you have some environmentalists here in the state saying, “Well, our air is now cleaner, therefore the Clean Smokestacks bill was needed, and it’s been a success.” But you question that.

Cordato: Right. There are a couple things. First of all, it was put forth with really no evidence, no data, to show what its impact would actually be. It was pushed by Environmental Defense, which is a left-wing environmental pressure group. It was model legislation written by them. They shopped it around to lots of states. North Carolina was about the only one that actually thought it was a good idea, and it passed overwhelmingly by both Democrats and Republicans. That said, now we are a number of years later, eight years later. Ozone, in particular, has been declining. And every year, the Department of Environment and Natural Resources comes out and says, “Look, it’s because of the Clean Smokestacks bill.” Or, at least, it’s partially because of the Clean Smokestacks bill. So what I did was, I wanted to go and look at that claim.

Martinez: What did they base that [claim] on?

Cordato: That’s the problem. We called and asked them, what did they base that on? And nothing. They have absolutely no studies that the decline in ozone is due to the Clean Smokestacks bill. So what we did was say, OK, if this is the case, and all our surrounding states did not pass the Clean Smokestacks bill, or a similar bill, then we should be doing better than them. So I went and looked at declines, rate of decline in ozone, in all of our neighboring states five years before the Clean Smokestacks bill was passed and five years after. I said, OK, we should see an improvement in our rate of decline compared to those other states starting in 2005, which is when DENR said that the Clean Smokestacks bill was beginning to have an effect.

Martinez: What did you find?

Cordato: We found essentially no difference at all, that North Carolina is doing about the same — in fact, is doing exactly the same — relative to our neighboring states, as it was before the Clean Smokestacks bill regulations were claimed to begin to have an effect.

Martinez: Our neighboring states did not have this kind of regulation.

Cordato: Oh, no, they have nothing like this. In fact, they all refused to impose these very high costs of this regulation on their citizens and ratepayers. I’d say smartly so.

Martinez: Let’s talk more about the cost situation because you also say in your analysis that this is costing much more than was ever projected. Tell us about that.

Cordato: That’s right. Well, Environmental Defense, when they first proposed this, said it was going to cost about $450 million to implement the entire set of regulations. Then by the time it was passed, the estimate by Duke and Progress Energy was, I believe, $2.2 billion. And now, eight years later, the latest report to DENR says it’s going to cost $3.1 billion.

Martinez: That’s a huge increase.

Cordato: Huge increase. But that’s an understatement. And this is because Progress Energy — and more things like this might be coming up — Progress Energy has decided because of the expense of the Clean Smokestacks bill for converting, for retrofitting these coal-fired power plants, that they were going to convert two of their plants to natural gas. That’s going to cost $1.5 billion to do that.

Martinez: In fact, you say the cost differential between coal and natural gas is key to this question. Explain that.

Cordato: Absolutely. This $1.5 billion, first of all, is not going to be considered part of the cost of the Clean Smokestacks bill, even though Progress is doing it to avoid the cost of the Clean Smokestacks bill. They wouldn’t be doing it otherwise. There’s going to be a rate hearing, and that will cause our rates to go up — our electricity rates. Plus, it costs anywhere from two to three times more to generate electricity from natural gas as it does from coal. So that’s going to be an ongoing cost that ratepayers are going to have to incur just because it costs more to generate the electricity that they’re using.

Martinez: When you say “ratepayer,” that’s the consumer of electricity.

Cordato: That’s us. That’s anyone who pays an electric bill. That’s right.

Martinez: I think this discussion of coal is really interesting. … There is a student organization affiliated with the National Sierra Club, and they are pressuring UNC-Chapel Hill administrators to stop burning coal at their cogeneration plant that helps create the power for the campus. They appear to be having success at pressuring the chancellor to look into this. So we see this discussion of coal versus natural gas, even coal versus nuclear. [Editor’s note: After this interview took place, UNC-Chapel Hill announced it would end campus coal use by 2020.]

Cordato: That’s right. I personally don’t think there’s a problem with burning coal, especially for the reasons that they’re talking about. They’re talking about not burning coal because of carbon dioxide emissions, which is really separate from the Clean Smokestacks bill and what that controls. I personally don’t think there’s any problem with carbon dioxide emissions. That’s all about global warming, which I think is blown way out of proportion. I do not think carbon dioxide is a pollutant. If it was, we would all be polluting every time we exhale. So I think that’s a red herring. Interestingly enough, though, I do think given UNC’s focus on “the environment” and their concern, it is somewhat hypocritical, especially [since] they are exempt from what are called new source review regulations that private companies have to go through when they upgrade their plant or whatever, which saves them a lot of money. So it’s an interesting thing. Actually, I think the university would be wasting taxpayers’ money by converting.

Martinez: Roy, when it comes to the Clean Smokestacks bill itself, is there any thought that perhaps this will be revisited by the General Assembly? Is there going to be any change to these regulations whatsoever?

Cordato: I don’t think so. And in fact, right now, it almost wouldn’t matter because, for the most part, the costs are sunk. In other words, they’ve already been incurred — not completely, but almost completely — by Progress and Duke.