Michigan says greenhouse gas proposal unfair

A federal proposal to reduce greenhouse gas emissions from power plants punishes Michigan for acting early to reduce carbon dioxide pollution while going relatively easy on its lagging neighbors, the state maintains.

That will put Michigan at a further economic disadvantage in the region unless changes are made to the draft regulation, state officials said in their public comments to the Environmental Protection Agency.

“The targets must be reworked to take early actions into account and ensure that states are treated in an equitable manner,” wrote the heads of the Michigan Department of Environmental Quality, the Michigan Public Service Commission and the Michigan Economic Development Corporation.

The proposed rule — which could be a legacy issue for the Obama administration unless opponents are able to block it in Congress or the courts — is intended to reduce nationwide carbon dioxide emissions from power plants 30 percent from 2005 levels by 2030. That’s the equivalent of taking two-thirds of the nation’s cars and trucks off the road, according to the EPA.

Michigan generates 49 percent of its power from coal, which sends more carbon dioxide into the atmosphere for the amount of energy produced than any other energy source. That’s higher than the 39 percent national rate, but a lot less than Indiana’s 81 percent and Ohio’s 66 percent.

Michigan says its willingness to diversify its power sources, even while the state went through difficult economic times, is one reason electricity rates are higher than rates in Wisconsin and much higher than rates in Ohio, Indiana and Illinois.

But while Michigan plants are already putting less carbon dioxide into the air for the amount of electricity generated than are others in the region, it’s being asked to make even greater reductions than the other states.

For example, Michigan’s carbon pollution rate is already 12 percent lower than the highest rates in the region, but would be 24 percent lower after the rule goes into effect. That could at least double the disadvantage Michigan now has on power rates, the state says.

“EPA is hearing from a lot of states that the targets vary widely,” said Becky Stanfield, deputy director for policy for the Natural Resources Defense Council’s Midwest Program. “And Michigan is not entirely wrong.”

Stanfield said some states — like Minnesota and Pennsylvania — got more aggressive reduction targets while other states — such as Ohio, Indiana and Iowa — got less aggressive targets.

The main reason for the difference is how much the EPA calculated that a state could increase operation of its existing natural gas plants. Stanfield said the federal government should also take into account a state’s potential to build new gas-fired plants or to reconfigure a coal plant to a gas plant.

“If you do that,” she said, “you will see a lot of these widely varying targets look a lot more evened out.”

After the EPA reviews the more than 1.4 million comments received on the proposed rule, the agency will come up with a final version by June.

States would have another year to come up with a plan to meet their reduction target. The Michigan Department of Environmental Quality said that’s not enough time and should be extended a year.

Like other states, Michigan has also criticized the proposed rule for requiring too much of the reduction by the interim goal of 2020 with less additional cuts required by 2030. Michigan calls that “completely unworkable.”

And the state says the EPA should give states credit for reductions in energy use from energy efficiency programs that are starting now, otherwise there will be a perverse incentive to delay those programs so they fully count toward the target.

The Michigan Municipal Electric Association and the Lansing Board of Power & Light made similar comments to the EPA.

They also said they’re concerned that the regulations would hit municipal power companies the hardest because of the “drastic dis-economies of scale involved with changes to small units with small customer bases.”

BWL is the state’s largest municipal utility and, it says, the first utility in Michigan to voluntarily reduce its greenhouse emissions.

“At the BWL, we agree that greenhouse gas regulations are necessary, but we strongly advise they be implemented in a manner that does not undermine the viability of public power entities,” wrote George Stojic, executive director of strategic planning.

Stojic said the proposal threatens the existence of its coal-fired unit at its Erickson Station. And while the utility is already evaluating when to retire its multiple coal units at the Eckert Station near downtown Lansing, the units must continue operating until new power sources are available, he said. Stojic said he fears the state would force the retirement of the Erickson Station, Eckert Station and another plant that supplies power to BWL to meet the reductions in the proposed rule.

But Stanfield of the Natural Resources Defense Council, which supports the proposed rule, said Michigan is in good shape to meet the targets because of the progress it’s made on energy efficiency and renewable energy sources. In addition, the EPA’s target did not factor in the reductions that will come from the retirement of seven coal generating units owned by Consumers Energy, the state’s largest utility. Consumers Energy is retiring the units as part of a settlement agreement with the EPA and the Justice Department.

“Of the states in the Midwest,” Stanfield said, “Michigan has enormous potential to just crush the target in this rule.”

Email Maureen Groppe at mgroppe@gannett.com. Follow her on Twitter: @mgroppe