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U.S. industry gears up to fight Obama's climate rules

James DeYoung Power Plant
James DeYoung Power Plant

By Roberta Rampton

WASHINGTON (Reuters) - A U.S. plan to curb carbon emissions from power plants is likely to come under attack this summer by industry opponents in a bid to stir voter anger ahead of elections in November, when voters in states such as Kentucky and West Virginia could decide whether Democrats keep control of the Senate.

The Environmental Protection Agency is expected to propose on Monday new rules to crack down on power plant emissions as part of President Barack Obama's efforts to combat climate change.

The U.S. Chamber of Commerce released a report on Wednesday that predicted the regulations would cost consumers $289 billion more for electricity through 2030 and crimp the economy by $50 billion a year.

The EPA called the report "nothing more than irresponsible speculation" and said it was based on unfounded assumptions about future requirements for natural gas plants.

"The chamber is using the same tired play from the same special interest playbook that is engineered to continue polluting and stall progress," EPA spokesman Tom Reynolds said in a statement.

White House spokesman Matt Lehrich said there is a "moral obligation" for the new climate change rule.

"Every time America has taken common sense steps to protect air quality and the health of our children, polluters have made doomsday predictions – and every time they've been wrong," Lehrich said.

BOTH SIDES ARMED WITH NUMBERS

Industry lobbyists plan to say the new rules will probably raise household electricity costs, prompt power brown-outs during heat waves and cold snaps and destroy jobs at coal mines and manufacturing plants.

"We fully expect that whatever comes out will be overly stringent, and will be something that is not good for American consumers or businesses," said Laura Sheehan, spokeswoman for the American Coalition for Clean Coal Electricity.

In March, Sheehan's group, which represents coal mining companies as well as owners of coal-fired plants like American Electric Power AEP.N and Southern Co SO.N, released a report warning that the EPA plan may kill more than 2.85 million jobs.

The National Mining Association, which represents large coal mining companies including Peabody Coal Co, Arch Coal Inc ACI.N, Alpha Natural Resources ANR.N and Cloud Peak Energy Inc CLD.N has spent $1 million on advertising in five states depicting shocked consumers opening expensive electricity bills.

Environmental groups plan to fight back with their own projections. On Thursday, the Natural Resources Defense Council is expected to release a report concluding the EPA rule would create "hundreds of thousands of jobs" and save consumers "tens of billions of dollars" on electricity.

"The chamber's so-called study is the latest in a long series of 'sky-is-falling' claims that cleaning up harmful air pollution will cost jobs," said David Hawkins, director of NRDC's climate programs.

Because the new U.S. rules would take years to implement, perception matters more than facts, particularly ahead of November elections, said Andrew Holland, a former Republican legislative aide who is now an energy analyst at the American Security Project, a nonpartisan think tank.

The industry's arguments have "the virtue of not being testable" before the midterm elections, he said, noting previous EPA rules have ended up being cheaper than industry feared.

"It turns out that engineers are better at this than the lawyers expect them to be," said Holland.

COST CONCERN

Industry groups made their concerns clear to regulators. For example, the National Rural Electric Cooperative Association sent three of its experts to a White House meeting to show how not-for-profit co-ops that rely on coal for fuel and provide power to some of the nation's poorest regions could be pinched by the new EPA proposal.

And some industry coalitions have said they will try to work with the EPA and state officials to craft practical rules.

After the EPA first said in 2008 that it would treat carbon as a pollutant, power companies including AES AES.N and NRG NRG.N and manufacturers including Boeing BA.N and 3M MMM.N formed the National Climate Coalition.

It wants the EPA to phase in standards, and eventually develop rules for companies and states to trade credits for carbon-reducing actions, said Robert Wyman, a partner with law firm Latham & Watkins, who represents the coalition.

The coalition will take at least a week to read and understand the EPA rule before responding, Wyman said.

"Obviously the more politicized the issue becomes, the more likely it is that rhetoric will overshadow some of the technical issues," he said.

(Editing by Caren Bohan and John Pickering)

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