Governors Who Hate EPA’s Carbon Regs: Your States May Benefit The Most

CREDIT: A.P. Images

Members of the Republican Governors Association speak during a press conference about Environmental Protection Agency regulations on Monday, June 16, 2014, in Houston.

The governors of coal-dependent states like Texas, Louisiana, and Oklahoma have been among the most outspoken in their objections to the Environmental Protection Agency’s proposed carbon rules for existing power plants. Numerous polls have shown that these governors are seriously out of step with how their constituents feel, but new research now shows that they may also be out of touch with what’s best for the economy of their states.

A study conducted by the Rhodium Group and the Center For Strategic and International Studies, released Thursday, concludes that many of the states protesting the new rules the most also stand to benefit the most from the anticipated shift away from coal and toward natural gas.

According to Trevor Houser, an analyst at the Rhodium Group and a co-author of the study, that’s because many of these states are leaders in natural gas production, which is expected to replace coal as a power source as states strive to meet the nationwide 30 percent reduction in carbon emissions by 2030 proposed by the EPA.

The study found that the predicted shift from coal to natural gas has the potential to increase total U.S. gas consumption by up to 40 percent between 2020 and 2030, compared to the projected increase without the new regulations. Furthermore, 90 percent of that increased demand for natural gas is expected to be met through U.S. production. On the flip side, there will be up to a 47 percent reduction in coal demand.

The transition is predicted to translate into a 20 percent increase in the amount of money U.S. natural gas producers will bring in.

Houser points out that a lot of attention has been given to how energy prices will change in the country, but very little has been said on what happens upstream.

“Total nationwide energy expenditures will increase by $3 billion per year on average,” said Houser during an event launching the report. “But you have an order of magnitude larger than that change in production revenue when you shift from coal to gas.”

Combined, Louisiana, Texas, Arkansas, and Oklahoma stand to see their revenue from natural gas production soar by $18 billion. While these states will also take a $1 billion loss in revenue as coal demand falls, their total fossil fuel revenue will still go up by $17 billion.

“These states have some of the largest compliance obligations, nearly twice that of Midwest or New England states,” said Houser. “But they will also see the largest benefits from increased natural gas production.”

Despite this, Texas governor Rick Perry led a group of nine governors, which included Louisiana governor Bobby Jindal in a protest letter to President Obama regarding the rule, citing the devastating economic effects of the EPA’s proposed rule.

Earlier this month, nine states including Oklahoma, joined a lawsuit against the EPA’s proposed carbon rules, initially brought by coal company owner and climate denier, Robert Murray.

While natural gas burns more cleanly than coal, recent reports have found methane leakage rates throughout the system at high enough levels to gut gas’ climate benefit compared to coal.