President Obama’s War on Coal Will Hurt Wisconsin Economy

June 28, 2013

by James Wigderson
Special Guest Perspective for the MacIver Institute

On Tuesday, President Barack Obama announced a series of steps his administration is planning regarding our country’s energy policies. Critics of the Obama Administration are calling it a War on Coal, and the collateral damage may be Wisconsin consumers and our economy.

Obama’s plan is to reduce greenhouse gas emissions to combat climate change, aka global warming. Comparing CO2 to mercury and arsenic, the administration will bypass Congress when enacting the tougher standards through the EPA.

The administration’s plans will hit Wisconsin especially hard. According to data from the United States Energy Information Agency, Wisconsin generated over 63% of its electricity from coal in 2011. Wisconsin is 14th among the states for coal use as a percentage of its power generation, well ahead of Pennsylvania (25th).

Wisconsin is also more coal dependent that its neighbors Minnesota (16th), Michigan (15th), and Illinois (24th). Only Iowa (12th) is more dependent on coal. However, the closeness of the states in coal dependency shows that the entire region will be adversely affected by the Obama Administration’s policies.

The result will be to make energy produced from coal more expensive. As we saw with the $900 million retrofitting of the Oak Creek coal power plant, complying with the tougher emission standards will necessarily raise rates for struggling families and job creators alike.

As energy rates rise, Obama’s policies will hurt the poor the most because they pay a higher percentage of their incomes for energy. It will also hurt as employers pay higher utility rates, leaving less to invest in business growth. Household energy consumers will have less disposable income after paying higher energy rates, having a depressive effect on Wisconsin’s economy.

In addition to paying more for electricity from Wisconsin’s utilities, Wisconsin residents can expect to pay more for goods and services – and food. When the EPA first considered regulating greenhouse gas emissions, the 2008 report said how much consumer food prices could go up.

Of every $1 spent on U.S.-grown foods, 3.5 cents went toward the costs of electricity, natural gas, and other fuels used in food processing, wholesaling, retailing, and food service establishments. An additional 4 cents went toward transportation costs. This suggests that for every 10 percent increase in energy costs, retail food prices could increase by as much as 0.75 percent if fully passed onto consumers. The resulting impact to the consumer of higher energy prices will be much higher grocery bills. More important, however, will be the negative effect on our abundant and affordable food supply.

This will only be made worse by the Administration’s announced intention to further regulate emission standards and fuel efficiency standards for heavy trucks.

Wisconsin’s rich agricultural tradition could be affected as well. Wisconsin’s farmers will be affected by the higher energy costs with the rest of us. But dairy, beef cattle and pig farmers could all be subject to either new taxes or new regulations for methane emission controls. Or both.

While over the last three years the Obama Administration has been encouraging (subsidizing) the use of methane digesters in the dairy industry, only a small number of farms have taken advantage. According to the EPA, agriculture is the leading source of methane. Methane is considered to be a more powerful greenhouse gas than CO2.

As the Obama Administration completes the “interagency methane strategy” (Environmental Protection Agency, and the Departments of Agriculture, Energy, Interior, Labor, and Transportation) called for on page 10 of the Climate Action Plan, they may revisit an idea to tax dairy farmers $175 for each dairy cow that was briefly considered as Obama took office in 2009.

On a broader scale, regulating methane as a greenhouse gas will also have an effect on natural gas energy supplies. Natural gas is cleaner than coal and competitive in price thanks to controversial fracking technology. However, concerns about methane have made natural gas a target of global warming alarmists, too.

All of this comes at a time when climate predictions of global warming appear to be more unreliable than ever. As the New York Times reported earlier this month, global temperatures have “plateaued” the last fifteen years instead of following the predictive models. Obama says we can’t wait for the “Flat Earth Society,” but he might want to consult with the climate scientists who are admitting they don’t understand why the Earth isn’t conforming to the predictions.

Wisconsinites already pay higher rates because of global warming science and state level renewable energy mandates. Obama’s announcement and his energy plan will only make matters worse at a time when climate change predictions are not measuring up. Perhaps the real measure of global warming is how much the hot air from the teleprompter is going to cost Wisconsin’s energy consumers.