Stranded Carbon Democrats: Obamas new EPA rule hits some states much harder than others. WSJ Editorial: Updated June 4, 2014 5:42 p.m. ET One consequence of President Obamas new anticarbon energy rule will be to create what economists call stranded assets, in this case still useful fossil-fuel plants that are suddenly made noneconomic. This is part of the plan. But if this grand design ultimately fails, it will be because Mr. Obama is also creating stranded Democrats from energy-producing states. The Environmental Protection Agencys mammoth rule is an important political moment because it shows that national Democrats have come down decisively on the side of modern environmentalists over the working-class voters who were once their base. The richer coasts dominated by gentry liberals now trump the union jobs of the Midwest. Finance (New York and San Francisco) is more honored than manufacturing (Ohio and Indiana), notwithstanding the vestigial Democratic rhetoric about made in America. Tom Steyer of Farallon Capital fame has trounced Cecil Roberts of the United Mine Workers. This will have far-reaching implications, especially for Democrats in energy-rich states and especially this year. Twenty years ago, Bill Clinton would never have dreamed of rolling out this EPA regulation five months before an election. Mr. Obama is willing to risk it now because his second term is winding down and he wants to put in place as a much of a legacy as he can. But hes also gambling that money from green liberals like Mr. Steyer can help stave off the loss of the Senate in energy states. You wont be surprised that Washington, D.C., which runs on hot air, is at the bottom of the carbon list. But note that the others in the bottom 10 are all in New England or on the East and West coasts. These are by and large liberal states that produce or use less carbon energy, depend less on manufacturing, and have already imposed some limits or higher costs on fossil fuels. Contrast those with the top 10 states in carbon intensity, led by Wyoming with more than 11 times the CO2 per million dollars of GDP as New York. The other nine are all major fossil-fuel producing states, either oil and gas (Louisiana and North Dakota) or coal (Kentucky and West Virginia), or still rely heavily on coal to produce their electricity (Indiana). We should add that this carbon sorting by state isnt a perfect proxy for the impact of Mr. Obamas carbon rule. The energy-producing states export their energy to other states, while California imports much of its electricity. The figures also need to take into account that the GDP of New York and California are large enough that they reduce their relative carbon intensity compared to some smaller states. But the comparison is still a good indicator of which states will have to adjust the most as the Obama carbon rule gradually raises the cost of carbon energy. The first to be squeezed hard will be the coal states, because coal emits more CO2 than natural gas. But sooner or later oil and gas states will also feel the squeeze because the ultimate green goal is to replace all fossil fuels with renewables, no matter the economic cost. The carbon contrast also explains why Mr. Obama and the national Democrats arent all that worried about the political impact of their new rule. The hardest hit states arent Democratic states. Democratic candidates easily carry the electoral votes each presidential year of the least-carbon-intensive states, while they essentially write off all of the electoral votes of the top 10. Dont expect Hillary Clinton to repudiate the EPA rule as she campaigns in 2016. She also knows where the muscle is in the new Democratic coalition. There is one political catch, however, and that is the composition of the Senate, where North Dakota gets as many votes as California. That reality might haunt Democrats this year because they are trying to hold or gain Senate seats in Kentucky, West Virginia, Montana, Alaska and Louisiana, among other right-leaning states. If voters ever figure out what Mr. Obamas carbon rule really means to their state economies, Democrats would lose every one. So its no surprise that the Democrats running in those states are already denouncing the new EPA rule as if it had been written by some alien force. Incumbent Mary Landrieu (La.) is vowing to offer a bill in the Senate to overrule it, as is Democratic challenger Alison Lundergan Grimes in Kentucky. Ms. Grimes is running ads in local newspapers showing an image of a miner in a hard hat with the text: President Obama and Washington Dont Get It . . . Alison Grimes Does. Her problem, however, is that such a bill will never pass the Senate as long as Democrats control it. The same is true for approving the Keystone XL pipeline. All of the energy-state Democrats know this but cant afford to admit it to their states voters. The political truth is that as much as she campaigns against the new EPA rule, a vote for Ms. Grimes in Kentucky is essentially a vote to ensure that it will stay in place. All of which makes the stakes for energy policy much larger than usual this election year. If Democrats can hold the Senate despite having so many energy-state candidates on the line, and despite the new EPA rule, they will assume with some justification that their anticarbon crusade is no great political liability. On the other hand if they lose the Senate, they may want to second guess their strategy of creating stranded carbon Democrats.
Posted on: Wed, 04 Jun 2014 23:48:05 +0000