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KSM Blog | Katz, Sapper & Miller CPA

EPA Rule "Reigns" on Manufacturing

Posted 7:49 PM by

U.S. EPA Administrator Gina McCarthy recently introduced the Clean Power Plan, a sweeping initiative to curb national power plant emissions by nearly a third by 2030. The announcement is meant to be the centerpiece of President Obama’s plans to tackle climate change, and it is characterized as “ambitious but achievable.” However, passionate debate has erupted in response to the proposal, which is set to be finalized next year.

The regulations are going to require individual emission-cutting “target” plans from each state, based upon reliance on coal and recent efforts to reduce emissions. In one instance, Patrick Morrisey, attorney general of West Virginia, said the EPA cannot “blatantly violate the law in order to achieve its policy goals.” If the rule is not struck down, Mr. Morrisey intends to pursue any legal avenue. Nearly 95 percent of West Virginia’s electricity is currently coming from coal.

Not only are lawmakers speaking out, but National Association of Manufacturers (NAM) President and CEO Jay Timmons made it clear that NAM views this rule as short-sighted and toxic to manufacturers nationwide. Instead, domestic manufacturers should be able to focus on their competitive advantage: innovation. However, these increased regulations will only make it more challenging for manufacturers to compete globally, let alone grow and invest in future technologies.

If jobs were to shift abroad to China and India, where carbon energy may be cheaper, it will be counterintuitive to the stated purpose of the rule in the first place. Not only does it jeopardize our energy security here at home, but it shrinks an important part on the energy mix that contributes to economic growth.

China adds the equivalent of the entire U.S. power sectors’ annual emissions to its environment every five years. It also continues to operate with limited oversight. However, there have been pledges and efforts from many other countries to reduce emissions. Some believe the new EPA rule will reduce emissions to a comparable level globally.

It is important to note that the United States has actually reduced its total carbon emission more than any other nation on earth since 2005. I would consider that progress. There must be a middle-ground to this issue. There must be an approach that weighs economic costs with perceived environmental gains. Our economy depends on it.

About the Author
Tim Murphy is a manger in Katz, Sapper & Miller’s Audit and Assurance Services Department. Tim audits and reviews financial statements, and he advises clients on accounting, reporting, compliance, and internal control matters. Connect with him on LinkedIn.

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