Administrator Gina McCarthy, Remarks at CERA Week 2015, As Prepared

Thank you, Dan. It’s a pleasure to be back this year.

A lot’s happened in the past 12 months. EPA proposed our Clean Power Plan, the first-ever carbon pollution standards for U.S. power plants. To say “we’ve been a little busy” would be the understatement of the year. I want to start with a simple statement. A statement that explains the action we’re taking, and the investments you’re making: our low-carbon future is inevitable.

EPA’s rule is does not seek to swim against the current, it’s wind in our sails. Our Clean Power Plan lines up with the global trajectory toward a low carbon future. And it will help set a long-term market signal that can enhance the investments you’re already making.

First, I don’t think it’s accurate to look at compliance with the Clean Power Plan as a liability or cost. Here’s why: our rule creates a dynamic where cutting carbon pollution and investment decisions align. How am I so confident that this makes economic sense? Because you’re already making those investments. Our rule is not adding a line-item to your books, it’s informing one that’s already there. Here’s what I mean: you already invest billions of dollars, every year, to make sure the infrastructure you need to deliver your product is not just maintained, but improved, enhanced, and made to work better.

From 2000-2010, spending on electric and gas utility customer-funded efficiency programs more than doubled. Between 2006 and 2013, funding for utility efficiency programs quadrupled—and program administrators in 48 states reported huge savings. In 2013, investor-owned utilities spent nearly $17 billion on transmission, which is up almost $6 billion since 2001. That’s on transmission alone.

This is some serious investment, folks. And clearly, you’re spending that money increasingly on strategies that reduce carbon, like efficiency or solar, or just on making sure your operations are as up-to-date and high-performing as possible, because the economics make sense. On a levelized cost basis—new energy efficiency programs are about one-half to one-third cheaper than new power generation. That saves you and your customers money. Every dollar invested in energy efficiency pays back up to $4 to consumers, in lower energy costs during peak demand, avoided costs from building new power lines, and, my personal favorite, reduced pollution.

When efficiency is woven more and more into the fabric of our electricity system, more and more of our energy needs will be delivered by money-saving efficiencies, rather than by running old plants on peak-demand summer days, when air quality is at its worst. The future of American energy is one where a less carbon intensive sector is a more viable sector. Strategies to reduce carbon can double as investments that return value for your operations as they evolve over time. The latest energy forecasts show flattening demand even as economic activity increases, which makes the old model of more-power means more revenue, even more out of step with where the economy is going.

Business across all sectors see incredible value of a carbon conscious marketplace. Just ask the American auto industry, whose resurgence was fueled by ratcheting up fuel efficiency. EPA has 1,600 Energy Star partners—many of them are Fortune 500 companies that are all-in on efficiency. Banks like Citi Group are investing hundreds of billions of dollars in clean energy. Even energy companies now consider climate costs in their operations; for example, Shell Oil internally prices carbon at $40 a ton. Let me give you an example from a state I used to live in: a company in Connecticut called FuelCell Energy innovated a way to capture carbon as a cheap byproduct of running a fuel cell. They’re now working to scale their operation to coal plants. Companies like these are responding to your signals, as well as the signal of our rule.

The second point I want to make is about reliability. Let me be clear: there is no scenario I will accept where reliability comes into question. Period. We can look at stringency, timing, phasing-in, glide path, and we can look at unit by unit reliability directly, too. The final 111(d) rule will give you the time and space you need to take a reliability-first approach that’s in line with your long-term planning, and gives you the latitude to adapt as market demands change.

Reliability is a high priority for all of us, so it’s good to have it front and center where it needs to be. But let’s not waste our time and energy worrying about scenarios that cannot and will not happen. For example, instead of analyzing our proposed rule, one farfetched study analyzed a hypothetical one—which was far stricter. It even wrongly assumed CCS for new natural gas plants.

That study also assumed growth rates for energy demand completely out of line with reality. Here are the facts: EIA forecasts electricity demand growth at roughly 0.9 percent per year. But the study I just mentioned assumes a much higher rate of 1.4 percent per year—resulting in artificially inflated costs. The Washington Post Fact Checker gives anyone citing that erroneous study a “Four Pinocchio” rating. Their words, not mine. A few others studies claim to tally “economy-wide” costs of our rule, but completely ignore the economy-wide benefits of cutting air pollution. Come on, folks—that’s the entire reason EPA exists, and the entire reason we fight pollution in the first place! Reductions in particle pollution—an added benefit of cutting carbon—have enormous benefits: higher productivity, fewer sick days, and fewer hospital visits. Leaving those benefits out of the equation is incorrect and misleading.

No peer reviewed economic literature—no historical record—comes close to supporting the claims of massive job losses from reducing pollution. In EPA’s 45 year history, we’ve cut air pollution 70 percent while GDP has tripled. Environmental protection isn’t window dressing—it’s foundational to strong, lasting economic growth. You understand that. And I think you all should give yourselves more credit than you do! This sector knows how to innovate when facing pollution challenges. Frankly—regardless of snappy sound bites—underneath it all, industry is, right now, investing in cleaner energy. And I think investments speak louder than words.

Anybody taking an honest look at the future of the utility and power sector—and the jobs of the future—is looking at it through a low-carbon lens. And states have been leading the way, because they see the huge opportunity on the table.

Here’s more proof our plan is in line with ongoing trends: according to FERC, over the past 3 years the power sector brought online 60 gigawatts of cleaner generation—24 gigawatts of natural capacity and more than 27 gigawatts of new, renewable capacity. One study showed that states still skeptical about the value of our rule—would actually see an annual net economic benefit of up to $16 billion. That’s billion with a “b.” And that’s not even counting the benefits from cleaner air.

What makes energy sense, can make environmental sense, and what makes environmental sense, can make economic sense. There is a common denominator—and our rule is guided by it. The size of our climate challenge may be large—but it’s dwarfed by the size our opportunity. An opportunity to unleash the power of a carbon-conscious market that doesn’t have to look over its shoulder to see the ominous shadow of unmitigated climate change. And with that heavy burden lifted, is free to run as fast as it can to a safer, cleaner, opportunity-rich future for our kids.

EPA action is not about choosing winners or losers in our race to a clean energy future; it’s about choosing to lead that race. Thanks so much for having me.