This article was originally published by Forbes on May 31, 2014.
At 3 o’clock in the afternoon on September 4, 1882 with the first glowing light bulbs at the Pearl Street power station in southern Manhattan, America’s electric power sector was born.
In recent decades, however, we have become acutely aware of the severe health costs tied to coal-fired power plants, from asthma to heart disease. In 1970, Congress voted overwhelmingly in favor of the Clean Air Act, and charged the US Environmental Protection Agency to protect Americans from air pollutants like smog, mercury, arsenic, and soot.
But to this day, carbon pollution—the main driver of climate change—has not been controlled from power plants. No industry has been given free rein to pollute the air so much in our nation’s history.
That’s why the EPA’s upcoming rules are so momentous, putting federal limits on carbon pollution from existing power plants for the first time. With the power sector representing a third of America’s carbon footprint, these rules are the biggest single action the administration can take to drive down greenhouse gases.
The new standards will protect Americans at home and provide a strong signal to the international community. But, what does it mean for business?
Here are three reasons why the EPA power plant rules make sense:
Reason #1: The New Rules Will Accelerate the Transition to Clean Energy
Coal-powered electricity is already trending downward in the United States. According to EIA, while coal power plants represented over 25 percent of new generating capacity in the U.S. in the mid-1980s, it has accounted for only 5 percent of new capacity built since 2000. Only a handful of new coal plants are currently planned or under construction.
Citigroup recently projected that by 2020, all new electricity generation in the U.S. could come from renewable energy sources if recent price trends continue. With the new rules, the price signals will be even clearer, encouraging more investment in clean energy.
In states like Georgia, New Mexico, Texas and Minnesota, renewable energy is increasingly emerging as the cheapest option for new electricity generation. And leading companies—Wal-mart, Google, Coca-Cola, AT&T, Facebook, Staples, IBM, Dow Chemical, General Motors, Procter & Gamble, Volkswagen, and more—are all investing heavy in renewables because they are cost-effective energy sources.
Reason #2: The Rules Will Provide Flexibility and Keep Costs Low
Different states have different needs and ways of generating energy. Some states have more renewable energy potential while others can be more efficient. The new standards will take these differences into account.
By realizing emission reductions throughout the entire electric grid, states can have a menu of cost-effective options to choose from, including flexible, market-based approaches that can drive innovation. This will keep costs down for consumers and businesses alike.
In fact, a new report by NRDC finds that the EPA power plant rules could help save customers and businesses $37.4 billion in 2020, while also creating 274,000 jobs, from roofers and carpenters to solar installers and beyond.
Furthermore, WRI’s analysis shows that many states are already well-positioned to achieve EPA’s proposed reductions. For instance, Pennsylvania can reduce its carbon dioxide emissions 21 percent below 2011 levels by 2020 using existing state policies and infrastructure. Colorado can reach 29 percent reduction by 2020. And Wisconsin could cut a remarkable 43 percent.
More and more often renewable energy is the affordable choice. Four recent studies of four major grids in the United States (NY ISO, MISO, PJM and Western Interconnection)—which collectively supply power to 60 percent of the U.S. population—show that renewable energy provides system-wide cost savings each year. According to these studies, savings from switching to renewable energy will save tens of billions of dollars annually.
Reason #3: Businesses are Already Paying the Price from Global Warming
More extreme weather, shifting weather patterns (like heat waves, drought, and precipitation), and rising seas are all disrupting the ability to produce goods and services efficiently. Climate change can lead to increased water risk, compromised transportation systems (e.g. flooded roads and low river levels), threatened coastal infrastructure (e.g. from high-rises to water treatment plants) and rising insurance costs.
We have already seen how extreme weather events can disrupt supply chains like Hurricane Sandy or Katrina that crippled major cities and the recent wave of severe droughts that have disrupted waterways and reduced crop yields.
That global warming poses significant risks to businesses is certain. Businesses are increasingly recognizing these risks and understand that reducing emissions is essential for their infrastructure and operations.
The science is clear. Climate impacts are here—and people are the main cause of it. The U.S. National Climate Assessment is the latest report which lays out in painstaking detail the far-reaching consequences that climate change poses to our homes, health and natural resources.
With Monday’s announcement, the Obama administration will send a clear signal from Washington to Beijing that the U.S. is serious about tackling the global climate threat. The proposed standards will lay the foundation for climate action for the next generation.
While detractors will undoubtedly grumble, the reality is that these rules are both entirely reasonable and long overdue. It’s good for the planet and simply makes sense for business in the 21st century.