Ted Simons: The Environmental Protection Agency recently announced new carbon emission standards for power plants. The new rules call for states to come up with emission reduction plans by 2016. Henry Darwin, head of the Arizona Department of Environmental Quality, joins to us discuss the new rules and what Arizona needs to do to comply. And also here with us is Sandy Bahr, director of the Sierra Club's Grand Canyon Chapter. Good to have you both here. Thanks for joining us. These proposed new rules on carbon emissions -- what's new, what are the rules?
Henry Darwin: Well, EPA is using a provision of the Clean Air Act to set goals for each state in the country to meet by 2030. These goals are to reduce carbon dioxide emissions from existing power utilities that use fossil fuels as their source for energy.
Ted Simons: Reduce by how much?
Henry Darwin: Well, it varies by state. So the goal for the entire nation is 30% reduction by 2030. In their proposed rule, they have not set for each state a percentage reduction. What they’ve set is a goal to be reached by 2030.
Ted Simons: Does that mean -- I mean, seems like the goalposts are moving a little bit there. How does Arizona figure out what needs to be cut?
Henry Darwin: We have the numeric goal, and the numeric goal is set as pounds of CO2, carbon dioxide, per megawatt hour of power produced throughout the state. So we know what our goal is. We know where we are today, and what our goal is for 2030. So, we can calculate the percentage of reduction for Arizona. We're at about 1,400 pounds of CO2 per megawatt hour in Arizona, and our goal is around 700. The percent of reduction is about 52% for Arizona.
Ted Simons: That's a big percent reduction. That sounds -- From what I was reading, that’s among the highest we've seen in the west.
Sandy Bahr: Yeah, it is a big reduction. First of all, this is a draft. So we all have an opportunity to comment and make it stronger in the process until September. And the final rule will come out next year. The other thing is Arizona has a lot of opportunities to reduce carbon emissions. We have over 300 days of sunshine here, we have a lot more opportunity to invest in renewable energy resources, and that is one of the things that EPA is allowing states to do is look at renewables, look at energy efficiency, both at existing power plants and also what they call demand side, with the individual consumers. So there are a number of ways that we can get there -- retiring some power plant units. This doesn't only affect coal plants; it affects coal and natural gas, any fossil fuel plant.
Ted Simons: And again, the goal is 30% by 2030, but the idea is to get a plan in by 2016. But there are ways to extend that deadline, I understand?
Sandy Bahr: Yes. The state can get additional time if it is working cooperatively with other states in the area. For Arizona, what we need to do -- well, first of all, we should be doing this anyway. We shouldn't be waiting. This is a huge issue. Climate change is affecting us right now, most significantly here in the southwest. And so we should be doing these things anyway. But before the Department of Environmental Quality can begin to work on a plan, they need the legislature to act because the legislature decided to prohibit agencies from doing anything relative to reducing emissions.
Ted Simons: And that, I would imagine, means don't partner up with anybody else. It would seem a regional approach to this would make sense.
Henry Darwin: Well, we’ve tried that before. We tried that with the regional haze rules that have been adopted by the EPA. Working with other states seems like a good idea, but it's not always the most efficient way of getting something accomplished. We certainly will explore that opportunity the, but that's certainly not our biggest hurdle. Our biggest hurdle is the time frames the EPA has put us under in order to develop these plans and implement these plans. The fact of the matter is that the EPA is giving us an unprecedentedly short amount of time in order to develop our plans. We are normally given several years to develop these plans. But EPA is really only giving us a year to develop a plan for the entire state that would reduce carbon emissions going into 2030 by 52% in Arizona, which is a monumental undertaking.
Ted Simons: Well, with that in mind, Sandy mentioned shuttering some plants. What are some of the other options in Arizona? Do you make plants that exist more efficient? Do you basically say we're wind, we're solar, full speed ahead?
Henry Darwin: So what EPA has done is they’ve established an equation that they applied for every state in the country and they made certain assumptions based on the current portfolio of energy production for that state. So for state of Arizona, for example, they have assumed in their equation that we will be completely off coal in Arizona by 2020. So think about that. They are asking the state of Arizona to consider being completely off coal by 2020. In the best scenario, we will submit our plan in 2017, assuming we get an extension. And then they have a year to approve our plan. So, we wouldn't know with any degree of certainty whether or not EPA is going approve our plan. We would have between 2018 and 2020 in order to completely convert all of our coal generation to natural gas generation under the equation, under the assumptions they have made in the state of Arizona. That is something that is physically impossible.
Ted Simons: I was going to say, is that realistic?
Sandy Bahr: Well, first of all, we have flexibility. This is something the state's always asked for. There's a lot of flexibility in how we can get there. First of all, Arizona has a very strong energy efficiency standard. If we continue to implement that aggressively, that can be one part of the equation. The EPA also only assume only about 4% solar. You know, that's low. We can do better than that. And so that's another way that we can get there. We already have some plants where we're looking at retiring units or converting units, let's expedite that. It really -- this is not a minor issue. You know, climate change is happening now. The national climate assessment came out last month. It said, look, Arizona is already experiencing -- we're seeing longer droughts, more intense heat, more wildfires. Those are all connected. Less flows in our rivers and streams. If you look at the cost, including the cost to our economy, the cost to the health of the people of the Arizona, this is really an important investment to make. Plus, this rule helps us reduce other pollutants, the soot and the smog that are also harming our health. It's critical.
Ted Simons: But does the rule become counterproductive if the deadlines are so tight that it's almost, as some would say, impossible to get to those levels in time?
Sandy Bahr: First of all, again, it's not final. And we don't -- we haven't even tried to put together a draft plan. We think it's possible. You know, the state unfortunately -- the state's first reaction on everything is to drag its feet. We understand the state doesn't like the federal government, but you know, this is EPA's responsibility. And Department of Environmental Quality and the Governor, they need to step up on this. Unfortunately, the Governor has been denying climate change and has been pulling us out of things that reduce carbon emissions. One of the early things that she did is repeal the clean car rule. There are all kinds of things we can and should be doing. Unfortunately, we have been going opposite directions.
Ted Simons: A direction has to be taken here relatively soon. I would imagine stakeholders are being rounded up as we speak? I mean, how’s that going?
Henry Darwin: Because of the short time frames, we're left with no other choice but to move forward with the developing of a plan. So, we’re going to start developing that plan. Well, the first thing we’re going to is we’re going to evaluate the proposed rule, and we're going get together with our stakeholders and figure out what type of impact this has on Arizona as proposed. So evaluating the information we get through that process, we'll make comments on the rule and hope to change EPA's mind with respect to the goal they have set for Arizona. We think that the goal they have chosen for Arizona is overly optimistic. We just simply don't think we can make that. But we are going to work with our utility sector and see what they think about the goal and look at the equation that EPA has used and see if there's anything we can suggest to EPA about whether or not that rule makes sense for Arizona.
Sandy Bahr: As the Department of Environmental Quality, our lead agency for protecting the environment in Arizona, I think it's really important that you look at the benefits, as well, the public health benefits. And this is a big issue, and this agency ought to be leading on it.
Ted Simons: Again, back to the idea, though, of how you can get this done. What happens if a future governor or the legislature says no? We're just not going do this.
Henry Darwin: What that would mean is the EPA would be given the direct authority under the Clean Air Act to develop a plan themselves.
Ted Simons: So, there really is no choice, you better do something.
Henry Darwin: If the rule is finalized and not overturned by the courts, then absolutely. The EPA would have the obligation and the authority to come in Arizona and develop a plan that they believe to be in the best interests of Arizona.
Ted Simons: President Obama has said nationally this will spur innovation and spur investment, these sorts of things. Will the stakeholder, whenever you get these guys all corralled up together here, will business and economic leaders or minds be there to try to figure out, yeah, these are the numbers, this is the carbon index, intensity, the whole nine, but here's how we can maybe move forward businesswise.
Henry Darwin: I think the recent experience we've had with the particulate matter plan for Maricopa County and the model there can serve well in this context. The fact of the matter is we got industry together in a room and worked with them to decide what they could do in order to reach a goal set by EPA that we as an agency are required to develop a plan to achieve. And working with stakeholders, we developed a plan, implemented that plan. And just recently EPA approved that plan because we were able to demonstrate through the implementation of that plan that we were able to meet the attainment standards for particulate matter in Maricopa County for the first time since the 1970s.
Ted Simons: Real quickly before we go. Critics say this will harm the economy. It will cost cost the national economy $50 billion a year. The new rules will raise energy prices and these new rules will disproportionately hit lower income folks and minorities.
Sandy Bahr: Well, those are the same arguments that are made every time. If you go back to when the Clean Air Act was first passed, those arguments were made. It's going to drive people out of business. And it's usually a lot of exaggeration. What we see are health benefits, again, lots of opportunity for clean energy businesses, a lot of opportunities for energy efficiency to reduce the energy that we use, and plenty of opportunities for flexibility. You know, we hear all the time that they want flexibility. There's flexibility in this for how we get there. Arizona is well positioned. Not every state has this great resource, the 300-plus days of sunshine. We have much opportunity for solar, a lot for efficiency, a lot of opportunities to retire some coal plants.
Ted Simons: But could there be an early impact at disproportionately hits lower income folks?
Sandy Bahr: One of the things that hits lower income people disproportionately is living in inefficient homes. And that's one of the reasons we've been working a lot on building codes, having energy efficient building codes. That's one of the best things we can do to make sure that people aren't paying too much of their income in electric bills. We do see how much energy they use. Plus, they’re going to be a lot more comfortable, as well. That needs to be a big part of what we do in Arizona.
Ted Simons: Last question: what's the timetable for this now in terms of getting folks together, getting public hearings, I would imagine, together? What are we looking at?
Henry Darwin: We had our first public hearing in the House Environment Committee yesterday. We plan to meet with stakeholders including an invite Sandy at the table as well.
Sandy Bahr: You added me.
Henry Darwin: We will start meeting at the end of this month. We have until about October of this year to submit our comments on the proposed rule. Then once the final rule is published in June of 2015, then we'll have a year to implement our rule or to -- sorry, to submit our plan. So by June of 2016, we have to submit our plan. Then we hope for an extension into 2017. Then EPA approves in 2018. Then we're off and running.
Ted Simons: Well, we’ll see how it goes. We'll check each marker as we hit it. Thank you both for being here.