This week’s “Daily Journal” guest columnist is Dr. Roy Cordato, Vice President for Research and Resident Scholar at the John Locke Foundation. This article is based on information compiled in the recent John Locke Foundation Spotlight report, The Clean Smokestacks Bill: A Retrospective.
RALEIGH — In 2002 North Carolina passed the Clean Smokestacks Bill. It required that Duke Power and Progress Energy dramatically reduce nitrogen oxide and sulfur dioxide emissions. While the bill was touted as putting North Carolina on the cutting edge of the fight against air pollution, reality hasn’t lived up to the hype.
The bill originated as model legislation from the pressure group Environmental Defense. While that group shopped its legislation to many states, only North Carolina showed interest. An overwhelming majority of legislators approved the bill.
Supporters made extravagant claims regarding environmental benefits, but neither the Department of Environment and Natural Resources nor the legislature produced any studies quantifying those benefits.
Originally Environmental Defense estimated the bill would cost under $450 million. When it passed in 2002, this number had climbed to $2.3 billion. According to a 2009 annual status report to DENR, Progress Energy’s costs had increased 72 percent above the 2002 estimate. Duke’s costs were up 22 percent. Officially, the bill’s costs are now projected at $3.2 billion.
But even this is an understatement. Progress Energy announced that rather than incur the expense of meeting Clean Smokestacks requirements, it would convert coal-fired plants in Wayne and New Hanover Counties to natural gas. Cost? $1.5 billion, not officially attributed to the Clean Smokestacks Bill. This conversion will be part of upcoming rate hearings and will likely result in higher utility bills. Since electricity production costs from gas are two to three times greater than coal, expect even higher utility rates. With the state burdened by an 11 percent unemployment rate, this “smokestacks tax” on electricity customers will make recovery more difficult and less robust.
While costs are skyrocketing, benefits are questionable. In 2005, DENR’s press releases began to suggest that air quality improvements were partially attributable to Clean Smokestacks regulations. An October 2005 release says, “The decline in high ozone days goes hand-in-hand with … The Clean Smokestacks Act.” After North Carolina experienced only 11 high ozone monitor readings in 2009, DENR stated “contributing to the decline … are … actions to reduce ozone forming emissions … [including] the N.C. Clean Smokestacks Act.”
But there are no studies linking observed “declines” in smog to Clean Smokestacks regulations. Such claims need analysis. The mere fact that North Carolina experiences a good ozone season is not evidence of DENR’s claims. Variables including temperatures, rainfall, and clouds affect ozone levels. Rigorous analysis would hone in on what ozone levels in the state would have been without the Clean Smokestacks Bill. Similar analysis also should be performed with respect to particulate matter, the other pollutant targeted by Clean Smokestacks regulations.
In spite of the lack of rigorous analysis, we can get a sense of whether DENR’s claims have merit. The agency refers to “declines in high ozone days” as partially attributable to the 2002 law. If North Carolina is experiencing better year-to-year changes in ozone because of Clean Smokestacks rules, this should be reflected in cross-state comparisons before and after the bill began to have an effect. According to DENR press releases, this means the 2005 ozone season. North Carolina should be doing relatively better than Virginia, South Carolina, Tennessee, and Georgia, none of which has similar regulations. “Better” is defined as experiencing a comparatively greater annual percentage decline or a smaller percentage increase in the number of high ozone days. If the bill is working as suggested, there should be an observable improvement in North Carolina’s performance relative to its neighbors after 2005.
The data show no difference. From 2005-2009 North Carolina’s annual improvement rate was at the median twice, worse than the median twice and better than the median once. This is exactly the same result seen from 2000 to 2004.
As with so many government programs, the Clean Smokestacks Bill is not living up to expectations. Costs are skyrocketing, increasing energy prices and adding insult to an already injured economy. Furthermore, benefits in terms of improved air quality are questionable. At this point, little can be done to ease the Clean Smokestacks burden. Most costs have been incurred. But future electric rate hikes could be ameliorated.
Lawmakers should repeal recent regulations like Senate Bill 3’s renewable energy requirement. They also should abandon all attempts to regulate production and use of energy in the name of fighting global warming.