The Sustainability Buzz

Why the EPA’s Clean Power Plan Is Good for Your Business

Clean Power Plan“On August 3, 2015, President Obama and EPA announced the Clean Power Plan – a historic and important step in reducing carbon pollution from power plants that takes real action on climate change. Shaped by years of unprecedented outreach and public engagement, the final Clean Power Plan is fair, flexible and designed to strengthen the fast-growing trend toward cleaner and lower-polluting American energy. With strong but achievable standards for power plants, and customized goals for states to cut the carbon pollution that is driving climate change, the Clean Power Plan provides national consistency, accountability and a level playing field while reflecting each state’s energy mix. It also shows the world that the United States is committed to leading global efforts to address climate change.”

That quote from the EPA’s website on the Clean Power Plan is an excellent summary of the Plan and its intended effects, but what does it really mean for your business? Most of us are not in the power plant business, so why does it matter that the EPA has taken this action?

Of course there are the obvious benefits for us as individuals and communities – cleaner air, reduced costs, reduced carbon emissions, more jobs – but as business people, the biggest advantage of the Clean Power Plan can be reduced to two words – mitigated risk.

Risk is the greatest challenge a business faces. It’s those inconvenient, unfortunate occurrences that threaten business survival. Accurate analysis of risk and the identification of appropriate mitigation strategies are what separate successful companies from those that are buffeted by unforeseen circumstances. The availability of reliable, affordable energy is critical to all businesses, especially those in the manufacturing sector. Price spikes and supply disruption create unanticipated costs and loss of profit.

The Clean Power Plan addresses those risks through a number of mechanisms.  The flexibility of the plan allows each state to adopt its own implementation path based on what works best for its current environment and energy mix.  Pennsylvania needs to reduce its power plant emissions by 32% by 2030. Our current mix of energy – 36% from coal, 24% from natural gas, 36% from nuclear and 2% from renewables – serves as the baseline for developing the plan. States can use any combination of improved energy efficiency at the consumer (demand) level, improved energy efficiency at the power plant (supply) level, and adjustment of the energy mix towards more renewable energy to reach their goals.

By permitting states to develop the plans that work best for them, the Clean Power Plan provides the leeway to make the best decisions to mitigate cost impact for the consumer, including businesses. The EPA estimates that by full-plan implementation in 2030, individual consumer energy bills will drop by $7/month. That may not seem like much, but multiplied by the amount of energy that a business uses, that is considerable. More importantly, it shows a downward trend in energy costs over a 15-year period. From a risk perspective, this is a much better trajectory than the spiking that’s been all too common in the last decade. And while energy costs have leveled off in recent years due to the greater use of natural gas, businesses still face the risk of high costs due to disruptions to the supply.

And that is the second way that the Clean Power Plan addresses business risks. Although we are far less dependent on Middle Eastern oil for power generation these days – and in Pennsylvania apparently not at all – we are still at the mercy of weather and accidents. The Fukushima reactor disaster in Japan following a tsunami is just one example. While it’s unlikely Pennsylvania will ever experience a tsunami, our increasingly extreme weather can cause accidents. The distressing number of train derailments and explosions and pipeline breaks can create disruptions to the natural gas supply. Mining accidents are not unheard of, nor are nuclear plant mishaps. Any of these can create energy disruption. With an implementation plan that supports a greater renewable energy component to Pennsylvania’s energy portfolio, power generation shifts to more reliable sources than fossil fuels. After all, the sun’s going to keep shining and the wind’s going to keep blowing, at least for the foreseeable future.

Perhaps you’re thinking that long-term dependence on renewable energy is improbable or impractical. The state of Iowa already produces 30% of its energy from renewable sources. The state of Colorado has reached 14%. With the incentives from the Clean Power Plan, any state can make a stronger move into renewables and Pennsylvania’s Renewable Portfolio Standard already requires that 18% of Pennsylvania’s generated energy come from alternative energy resources by 2021.

It’s not just the EPA that thinks broad-based renewables are the future. As part of Climate Week in September, nine more giant corporations pledged to transition to 100% renewable energy. Nike, WalMart, Goldman Sachs, Johnson & Johnson, Proctor & Gamble, Salesforce, Starbucks, Steelcase, and Voya Financial joined 27 other companies that have already pledged to make the transition. Steelcase already gets 100% of its energy from renewable sources.

In the broader picture, reduction in carbon emissions mitigates climate change. The cost of climate-related natural disasters in Pennsylvania in 2012 alone was $1,219 per taxpayer. Imagine the costs to business. Every ton of avoided carbon emissions lowers that cost.

The EPA’s Clean Power Plan mitigates the risk to businesses of increased costs and interrupted energy supply. Pennsylvania’s implementation of the Plan will have a direct impact on your business. Keep your eyes open for potential incentives for energy efficiency programs and adoption of renewable energy in connection with the Plan’s implementation. Make sure the Clean Power Plan works for you.

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