EPA plan critic argues cutting carbon emissions could fail if U.S. endeavors alone

GWEN IFILL: We get a dissenting view on all of this now from a leading voice for many of the power companies opposed to this proposal.

Jeff Holmstead represents the Electric Reliability Coordinating Council, which is made up of major electric utilities that operate coal-fired power plants. He's a former assistant EPA administrator during President George W. Bush's tenure. He's also a lobbyist and partner with the firm of Bracewell & Giuliani.

So, what did you think of this plan today?

JEFF HOLMSTEAD, Electric Reliability Coordinating Council: Well, I think it's important for EPA and the administration to be honest about what this is.

It will significantly increase the cost for U.S. rate payers, for people who have to pay electricity bills. EPA's argument is, well, the rates will go up, but your bills will go down, because our program will require you to use less electricity.

That is just not very credible, and it will be expensive to reduce carbon. And the real question is, what do we get from that? And the answer is essentially nothing, except for something that the president can take credit for politically.

GWEN IFILL: OK. Assume for a moment that this is going to be more costly. Do you see another solution that doesn't involve cost, or is just that you don't see a problem that needs to be fixed?

JEFF HOLMSTEAD: Oh, I don't think there's any way to reduce carbon emissions without imposing costs. I think any economist would agree with that.

And — but I think there is reason — and we should be thinking about reducing carbon emissions — but it doesn't make any sense for the United States to disadvantage ourselves unilaterally, unless we get other major economies to go along with this. And that's the big problem with the president's approach.

And there's some concern, especially in the industrial sector, that, as we increase the cost for industries, they will have no choice but to go to places that have lower energy costs. So, ultimately, we could lose jobs and potentially increase emissions by shifting them to other countries.

GWEN IFILL: The administration presents this as a continuum, moving from fuel-efficient cars to other steps toward this. And they say that this is the natural next step.

If it's not, what should be, or should there be any next step?

JEFF HOLMSTEAD: Well, it's hard to know, if it's the natural next step, why they need a very aggressive regulation. Right?

If this is the way the world is going, there is no reason for EPA to have a regulation that compels states to do things that they don't want to do.

GWEN IFILL: Well, I mean natural next step as in natural next regulatory step.

JEFF HOLMSTEAD: Well, but, again, the question is, how much cost should be imposed on U.S. rate payers, on U.S. businesses, while our economic competitors continue to use low-cost sources of energy?

So, I think the approach that I believe in and that I think many analysts do is, we really need to look at this as a global problem. And it needs to be addressed by working with our economic competitors in China, in India, around the rest of the world that are continuing to build new coal-fired power plants, because that's the lowest-cost way to produce electricity.

GWEN IFILL: And the argument there is that U.S. should be the one leading these other countries around the world, and that, once we break through, they will follow.

JEFF HOLMSTEAD: I have heard that argument before, but I have never seen any example of where that has worked.

If you look at the history of international environmental agreements or other international agreements, I can't think of a case where somebody has said, OK, we are going to disadvantage ourselves, please come along and do the same thing.

The way it has always worked is, the United States sits down with other countries. We figure out collectively what we should all do at the same time, and then we do it. But it doesn't make any sense environmentally for us to do this, unless other countries are willing to do the same thing.

GWEN IFILL: Administrator McCarthy also says that when you do something like this, you spur new technology and innovation and, in fact, provide the kind of certainty that a lot of businesses say they long for.

JEFF HOLMSTEAD: Businesses certainly do want certainty, but they don't want necessarily a very costly, expensive certainty.

And that's one of the big problems with this regulatory approach. I have a great deal of respect for Administrator McCarthy. And I think she would acknowledge that there's really enormous legal uncertainty here. What EPA is doing really stretches the Clean Air Act beyond anything it has ever accomplished before.

So this creates a lot of uncertainty for people, because the whole system is really untested and untried. And the way to actually get uncertainty is to come together politically, to have Congress decide on a way forward that can be mandated in statute. And that's the way we would actually have certainty here.

GWEN IFILL: Can you imagine this Congress as — with the political pressures we were just discussing, coming together on something like this?

JEFF HOLMSTEAD: I think it's very hard in this Congress with this president.

I think there is an opportunity for people to come together and develop a system going forward. But I do think it would have to include the rest of the world as well, because, as I have said several times, this is truly a global issue. And what EPA has proposed today will essentially do nothing to address global climate change, except symbolically.

GWEN IFILL: Why do you think — speaking of symbols, why do you think that the administration focused so heavily today and in rolling this out on talking about health concerns, asthma, children, and focusing so much on those issues?

JEFF HOLMSTEAD: Well, I think they believe that doing things to address climate change is not a very high priority politically, and so they emphasize these other things that, in fact, the rule won't do.

These other pollutants that Administrator McCarthy refers to are already subject to many other regulatory programs. EPA, by law, sets standards that — that, by law, are required to protect everyone, even the most sensitive people. And, so, to somehow say that — that this will add to that is just nonsensical. There are other programs that deal with those issues.

GWEN IFILL: Well, EPA is empowered to set the law. And, in fact, that's what the Supreme Court said they ought to do, so they're doing it. But you still have a problem with that? You still think they should be going to Congress?

JEFF HOLMSTEAD: No, no. I — well, I agree that EPA has authority under the Clean Air Act to regulate carbon emissions. I don't think there is any question about that, after the Supreme Court has spoken.

But the way they have done it here is essentially to require all 50 states to come up with a cap-and-trade program. The EPA says, well, states can do it in any way that they want to, but, if you look at EPA's analysis…

GWEN IFILL: They said, regionally, some states could band together. They didn't say all states have to do it.

JEFF HOLMSTEAD: Well, all states have to either have their own program or be part of a regional cap-and-trade program. That's the only way to accomplish these reductions.

So, the idea that EPA would mandate something by regulation that's actually been rejected by the U.S. Congress, I think is troubling just on constitutional grounds.

GWEN IFILL: So, you think that there's no way for this to work, this idea of allowing certain states who have a bigger carbon footprint to reach — meet these goals in different ways than other states?

JEFF HOLMSTEAD: Oh, no, no, no, I do think — I do think that there is some flexibility allowed under the Clean Air Act.

And EPA has emphasized flexibility, while not paying attention these ultimate goals.

GWEN IFILL: How — sorry.

JEFF HOLMSTEAD: Flexibility in reaching a very aggressive goal is still enormously expensive, and I don't think EPA can do that.

GWEN IFILL: How is someone at home going to make sense of all these numbers? How do they know what to believe?

JEFF HOLMSTEAD: I think it's very hard.

I think most people are skeptical when EPA says, here's this regulation that is going to save you money by increasing your power bills or by — I'm sorry — by increasing your electricity rate, we're somehow going to bring down your power bills by — by making you use less electricity.

I think people are skeptical of that. And I do think, just as a matter of good government, the idea that EPA would discover this new authority in the Clean Air Act to mandate a cap-and-trade program or a carbon tax is just not consistent with the way our government normally works.

GWEN IFILL: Jeff Holmstead of Electric Reliability Coordinating Council, thank you very much.