States that depend on coal to produce the electricity that powers their economies are unnerved by President Obama’s latest call to reduce carbon emissions.
One of those states is Wisconsin, where the head of the state’s chamber of commerce says that the president’s plan threatens the state’s largest business sector, manufacturing.
“What the President is proposing threatens the reliability and affordability of the energy supply, not only for Wisconsin industry, but for our country,” says Kurt R. Bauer, president and CEO of Wisconsin Manufacturers & Commerce, in an extensive interview with Alexa Lawson of Industry Today.
“If you remember, in the campaign, he indicated that he wanted to grow manufacturing jobs, but with the policies he is pursuing, there is no way that is going to happen,” he says.
In fact, he says, the Badger State could lose jobs – much-needed middle class jobs. Wisconsin currently has over 400,000 manufacturing workers, by far its largest business sector. “We are known for agriculture, but the bottom line is manufacturing is still king,” Bauer says.
Bauer also claims that rising taxes, regulations and healthcare costs have or will soon hurt U.S. competitiveness worldwide.
In a recent blog post, Bauer says that the U.S. started the year with 13 new federal taxes and the President wants to add more.
The Administration, he says, promulgated 2,605 new rules last year, 69 of which reportedly had an economic impact of around $100 million per year. Likewise, the annual price tag for complying with federal regulations is now $1.8 trillion.
“It’s truly bad national policy to jeopardize reliable and affordable energy,” he adds. “We’re looking to replace fossil fuels with unreliable, expensive sources of energy, and it will jeopardize our international competitiveness.”
WAR ON COAL
Bauer claims that the severe threats to Wisconsin’s manufacturing sector are occuring, directly or indirectly, from the President’s latest plan to reduce carbon emissions and his war on fossil fuels. In addition, his new policies not only affect Wisconsin and the U.S., but globally, too.
Nearly 65 percent of Wisconsin’s electricity is generated from coal-fired plants – higher than 36 other states, the U.S. Energy Information Administration reports – and Indiana and Ohio are two states where energy derived from coal exceeds 80 percent, he says. Removing or reducing coal as an energy producing option leaves not only Wisconsin wobbling on unstable legs, but other coal-dependent states as well.
Finding sustainable options is “not that easy” either, he adds.
“We are the Saudi Arabia of coal,” he says. “We have centuries of supplies if we use it right.”
SOLAR AND WIND
Removing coal leaves few proven alternatives, Bauer says. More renewable options, like solar and wind, are “unreliable, expensive, and don’t supply the grid with the kilowatts” needed to power Wisconsin industry.
In addition, solar and wind are not compatible with Wisconsin’s climate, its weather patterns, or its geographical makeup. Few Midwest states are, Bauer says.
“We’re not in a wind corridor, so a wind turbine in Wisconsin is probably going to be producing energy 30 percent of the time,” he explains.
He adds, looking out his window, “The sun is shining today, but a couple months from now, when we get into the colder months and it’s not sunny as often, solar won’t be a reliable form of energy, either.”
There is also a lack of proper and efficient storage mechanisms for wind and solar for times when the sun is not shining or the wind is not blowing.
“With fossil fuels, when you have an automobile, you have a fuel tank, that’s how you store the energy until you need it,” he says. “You turn the ignition, you put the car in gear, you put your foot on the accelerator, and the car goes. You have energy when you need it. You don’t have that with solar and wind, and that’s a problem.”
In addition to incompatibility and a lack of the infrastructure, solar and wind have proven to be expensive, too – so much so, Bauer says, that without mandates and subsidies, many companies would not consider them as economically viable options.
“As the use of coal to generate electricity becomes limited by the President’s regulatory fiat, energy rates will ‘necessarily’ go up for every household and business in the state,” he explains in the aforementioned blog post.
He adds that competitors in states less dependent on coal and in countries that have not imposed similar restrictions on carbon emissions will have a pricing advantage.
Not only does Obama’s carbon emission plan concerning coal threaten Wisconsin’s economic stability, but it affects other industries as well.
Most notably, Wisconsin’s once vibrant paper and pulp industry is shrinking, hobbling its way through an endless stream of environmental regulations, and growing electronic mediums.
The new Boiler MACT regulation will be another hit on the pulp and paper industry, Bauer says, as it threatens 7,000 jobs and five or more of the oldest paper and pulp plants in the state.
A majority of these plant owners, Bauer says, will soon need to decide whether they will move forward with plans to retrofit their facilities and shops with up-to-code boilers – a decision that can potentially cost millions of dollars.
When it comes down to it, Bauer suggests, it may not make total economic sense to keep these plants, which means the losing of jobs.
One of Bauer’s biggest concerns, as a prominent voice is manufacturing statewide, is keeping Wisconsin competitive, at home and globally.
The majority of the new mandates and regulations are not beneficial for manufacturers residing in fossil fuel-dependent states, like Wisconsin, Bauer says. It simply prevents them from keeping up with competitors in states who are not dependent on coal. Washington, for example, uses hydro energy, leaving them less vulnerable to any energy regulations.
However, the real threat, Bauer suggests, comes from Asia.
“China and India are industrializing more rapidly than Western nations did in the 19th and 20th centuries,” he says. “They’re emitting carbon pollutants into the atmosphere with impunity, and they’re not changing their ways. They see no reason to.”
He adds, “Initiating what amounts to unilateral energy disarmament will cause great harm to the U.S. and Wisconsin economies without solving the global problem.”
By achieving the lowest carbon emissions rate in 20 years, the U.S. has reached an appropriate balance between protecting the environment, public health, and industrial jobs, Bauer says.
Any further regulations, he suggests, just ends up, in his words, being “a law of diminishing returns to the point that you’re jeopardizing the overall industrial competitiveness of the U.S. at a critical time when you’ve got Asia industrializing at a pace never seen before in the history of the world.”
MAKING THINGS MORE UNCERTAIN
Because these mandates and regulations have not yet gone into affect, no one can accurately estimate the full range of consequences, Bauer included. It is something of a guessing game.
However, if there is one thing that is constant in this post-recessionary climate, it is uncertainty.
For instance, Bauer says manufacturers statewide remain skeptical of the Patient Protection and Affordable Care Act – otherwise known as Obamacare.
Apprehensions stretch far beyond Wisconsin. Citing recent U.S. labor statistics, he says the labor force countrywide has more part-timers and contractors than “it has ever had in its history.”
As a result, overall hiring – full-time hiring, that is – remains uncomfortably stagnant.
“Manufacturers just do not know what is going to happen,” Bauer says. “Government should not be in the business of making things more uncertain, and that is exactly what they are doing.”
He continues, “I think what we have to do is get the implementation date, tell businesses and manufacturers what the rules are, and let them figure it out. One way or the other, they’ll figure it out. Businesses always do.”
About the Wisconsin Manufacturers & Commerce
Founded in 1911, Wisconsin Manufacturers & Commerce (WMC) is the state’s chamber of commerce and largest business trade association representing more than 3,500 employers of every size and from every sector of the economy.