RMI member offers advice on new limits.

Rick SchaeferBy Rick Schaefer, Partner at CohnReznick LLP in Baltimore.

Will manufacturers soon have yet another cost to contend with?  A proposal made by the Environmental Protection Agency (EPA) earlier this fall seeks to further limit carbon emissions for future and existing power plants. What could this mean for Maryland manufacturers? In a nutshell, it means an increase in compliance costs should the proposal be enacted.

The September 20, 2013 proposal defines carbon emission limits from newly constructed power plants as well as regulations for existing plants. If enacted, this legislation will require power plants, particularly coal plants, to incur significant technology costs to capture and store carbon emissions. The new requirements will limit coal-fired plants to 1,100 pounds of carbon dioxide, down from 1,800.   Under the new rule, utilities would be required to either build natural gas-fired power plants or build coal plants that capture and then bury or ship the carbon dioxide by pipeline for use by the petroleum industry. The bill has been criticized for being too stringent, ultimately driving up the cost of energy and weakening the economy. The industry argues that the capture and sequestration (CCS) system technology is largely unproven, expensive, and challenging to implement. Manufacturers, who are already struggling with energy costs, are likely to incur additional costs should the proposal pass.

From our experience working with manufacturers across the country, we understand the significant environmental and health concerns stemming from carbon dioxide emissions in the atmosphere. This proposal is meeting staunch opposition by utility companies and manufacturers who are worried that the new rules could lead to an electricity supply shortage or rising prices for consumers. Further, the CCS system technology is largely unproven and has not been demonstrated at a commercial scale. Our main concern is that the stringent rules will further impede the competitiveness of manufacturing firms due to the rising cost of energy.

Contact: For more information, please visit the CohnReznick webpage and contact Rick Schaefer, Partner, at 410-895-7806.

This has been prepared for information purposes and general guidance only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.