The Obama Administration's Clean Power Plan was released in June of 2014 and is seeking public comments until December 1st so if you want to yell about liberals or Big Oil, you are running out of time.
The plan is like most government policies, they picked a number out of thin air and will tell businesses to meet the standards or close up shop. The government lost a gigantic amount of money subsidizing legacy solar power technology and have realized that the only way solar can be viable without funding actual basic research is to make everything else expensive, so existing power plants have to reduce emissions by 30 percent below 2005 levels by 2030.
Who has to pay the cost? The states. The EPA gets to create new rules and force states to pay for them, that is how a county in Virginia got told they had to spend $500 million to have less river water in a river so canoers could enjoy themselves more. Academic economists are unsurprisingly rushing to support the Obama administration in the waning weeks of public comment. Schools from three loyal hotbeds, Illinois, Massachusetts and California, say it can all be done. On paper. By creating a cap-and-trade program.
They note it might be possible to improve the efficiency of existing power plants, though that is the least likely scenario for people who actually know economics. Using more natural gas makes sense, renewables are unlikely to help more than they have as long as we keep subsidizing them, and consumers are already energy efficient compared to electricity usage in countries like Canada and others. It is difficult to know which of these approaches will reduce emissions at the lowest cost.
Little surprise then that the economists bring carbon trading out of mothballs. They claim they are successful in areas where they live, like the northeast and California, but forget to note that California has 50 percent higher utility bills than every other state because of that program and green energy subsidies.
They worry that the EPA will not be able to get rid of enough businesses to meet the emissions targets, because instead of directly specifying an emissions reduction target for states to meet, the plan proposes that states reduce their emissions intensity - the ratio of emissions released to electricity generated. That means, a state could help to meet the EPA's requirement by increasing electricity generation.
They instead advocate an emissions cap for each state. That's bad for energy-producing states like Pennsylvania, and for poor people who will be freezing in their homes. But that is not an economics issue.