RALEIGH — North Carolina could lose 127,360 jobs by 2040, the economy could lose $150 billion in projected growth over that time, and obstacles could prevent the state’s launch of its oil and gas industry if the Environmental Protection Agency goes forward this year with a plan to implement a more restrictive smog control standard.
Those findings are included in a study released Thursday by the National Association of Manufacturers in opposition to a proposed tighter air quality standard.
North Carolina would be forced to close 24 percent of its coal-fired generating capacity to comply with the new ozone-lowering requirement, according to the study. NERA Economic Consulting, a global firm whose expertise includes public utility regulations, energy and environmental policy, conducted the research.
North Carolina’s total compliance costs would soar to $98 billion to meet the ozone standard from 2017-40, and North Carolina households’ buying power would drop $1,820 annually, the report concluded.
Nationwide, from 2017-40, household natural gas prices would rise 32 percent, electricity prices would increase 15 percent, and the economy would lose $3 trillion and 2.9 million job equivalents annually, the study concluded,
The ozone rule “directly threatens” North Carolina’s economic progress, “and deals a major blow to North Carolina jobs and manufacturers,” said Lew Ebert, president and CEO of the North Carolina Chamber.
“As the fifth-largest manufacturing state in the nation, the North Carolina manufacturing community widely recognizes the strong correlation between economic certainty and job creation,” Ebert said.
“By lowering the ozone standard to near unattainable levels, the EPA would create widespread government induced uncertainty that harms manufacturers’ ability to invest and grow,” he said.
The Obama administration seeks to reduce ozone concentration limits from the current 75 parts per billion to 60 parts per billion.
The reduction “was called for by environmental groups close to the administration,” said Jay Timmons, president and CEO of NAM, the largest manufacturing association in the United States representing companies with more than 12 million employees.
Ground-level ozone has fallen by 25 percent even as the economy expanded since 1980, Timmons said.
Ross Eisenberg, vice president of energy and resources policy at NAM, said the U.S has reduced more greenhouse gases than any other country in the world over the past decade, and even President Obama has acknowledged that.
“Manufacturing has lower greenhouse emissions than it did 1990, no other sector of economy can say that,” Eisenberg said. “There is a place for regulation, but this is regulatory overreach.”
Timmons called the new ozone rule “the most expensive regulation in the history of our economy.” He questioned the wisdom of imposing an even more onerous standard when manufacturers have not yet had time to meet the old one, and health improvement effects under the old regulation cannot be fully determined.
“Manufacturers could be forced to shut down facilities, cars, trucks, trains and other vehicles could be scrapped, a third of our coal-powered electricity fleet could be forced to shut down” under the new standard, Timmons said.
Under the proposed rule, manufacturers across the country would not be able to expand operations unless other businesses reduced their emissions “or worse yet, shutter[ed] their operations altogether,” he said.
“The proposed levels of reduction would leave nearly all of the United States in so-called nonattainment, ending the manufacturing boom, restricting development of our energy resources, and driving up the cost of nearly every manufactured good,” he said.
Eisenberg said there is reason to be “extremely worried” the new ozone rule, combined with restrictive new Obama administration greenhouse gas regulations, and the 111(d) carbon pollution rule, could affect future availability and reliability of electricity on the energy grid. “It raises a lot of alarms.”
According to information provided to NAM, ozone standards reduced to 60 parts per billion would substantially inhibit energy exploration and development for which North Carolina expects to issue its first permits next year.
“New rules on oil and gas exploration could cause us to lose the competitive advantage we have gained because of affordable and abundant energy,” Timmons said.
David Harrison Jr., senior vice president and co-chair of environment practice at NERA, said if a state were in nonattainment status under the ozone rule, various permitting requirements would be imposed including obtaining offsets for new-source emissions.
“Now there’s considerable uncertainty about how that would affect oil and gas drilling,” Harrison said. One economic model his firm looked at showed natural gas production levels would not increase after 2020.
Timmons called on action from Congress to thwart the EPA rule, and not cede its lawmaking authority to regulators.
“Congress has an oversight responsibility and they should be weighing in on real-world impacts of regulations and the costs of regulatory compliance,” Timmons said. “They’re elected to watch out for the economy and watch out for the jobs of those people they represent.”
Dan E. Way (@danway_carolina) is an associate editor of Carolina Journal.