Economist: Clean Power Plan Could Have Major Impacts on State Economy

Centerpiece of Obama’s effort to fight climate change in limbo as Supreme Court temporarily halts Clean Power Plan

By Justin Franz
Powerlines. Beacon File Photo

The power plant and mine at Colstrip are 530 miles from the Flathead Valley. And while many in Northwest Montana rarely give second thought to the coal-fired plant in the other corner of the state, its closure could have widespread impacts across Big Sky Country.

That was the message Patrick Barkey, director of the University of Montana’s Bureau of Business and Economic Research, presented at the Kalispell Chamber of Commerce’s monthly luncheon during a presentation about the possible impacts of the U.S. Environmental Protection Agency’s Clean Power Plan.

“This would be one of the biggest economic events to hit the state in three decades,” Barkey said at the Kalispell luncheon on Feb. 11.

What has been heralded as a centerpiece of President Barack Obama’s plan to combat climate change is now in limbo after the U.S. Supreme Court temporarily halted its implementation until a series of lawsuits are sorted out.

The Clean Power Plan would require every state to significantly reduce its carbon emissions. The new regulations would hit coal-producing states especially hard, including Montana, which holds about 25 percent of the nation’s recoverable coal reserves. In order for the state to comply with the new rules it is possible the Colstrip Steam Electric Station and associated mine would be shuttered.

According to a report by the Bureau of Business and Economic Research that was commissioned by NorthWestern Energy, implementation of the power plan could result in a loss of 7,100 jobs in Montana within three years. It would also result in a loss of over $500 million in annual income received by state households and a loss of $1.5 billion in gross output by Montana businesses.

While the vast majority of impacts would be felt in eastern Montana, the Flathead Valley would feel the effects, Barkey said. According to the study, Northwest Montana could lose up to 1,000 jobs as a result of the power plan. That’s attributed to a possible fluctuation in utility costs that would negatively impact businesses while the state searches for new energy resources. Barkey notes the state currently benefits from homegrown energy, but if Colstrip were shuttered more of it would have to be imported, thus raising prices.

The decline of the coal industry would also negatively impact the state’s coffers.

“Coal is a high-octane fuel for the state’s tax revenues,” Barkey said.

Since 1992, the Treasure State Endowment Program has awarded more than $200 million to local governments to help with infrastructure projects. That fund heavily relies on coal revenues. In the last 25 years, Flathead County alone has received more than $7.7 million from the fund; Lincoln County has earned $5.9 million; and Lake County has earned upwards of $11 million.

In the months since the EPA announced the Clean Power Plan, 27 states have sued the federal government. Last week, the Supreme Court announced that the EPA plan was stayed until the legal issues are resolved sometime this summer. The news was greeted with mixed reviews.

“The Supreme Court decision to issue a nationwide stay on the Obama administration’s misguided, job-killing rule is great news for Montana,” said Republican U.S. Sen. Steve Daines. “The so-called Clean Power Plan will kill Montana jobs and leads our country in the wrong direction – away from being an energy leader.”

But environmental groups lamented the decision and said if the courts killed the Clean Power Plan it would set the nation back in the battle against climate change.

“The Clean Power Plan is the largest step the United States has ever taken to tackle global warming pollution and is supported by nearly three-quarters of all Americans, including mayors, faith leaders, small businesses and public health professionals,” said Corey Bressler of Environment Montana, a state advocacy organization. “This decision is a huge loss for our kids’ future and for all Americans who care about the health of our planet, and a huge win for the polluters and the deniers.”