President Barack Obama speaks about climate change, Tuesday, June 25, 2013, at Georgetown University in Washington. The president is proposing sweeping steps to limit heat-trapping pollution from coal-fired power plants and to boost renewable energy production on federal property, resorting to his executive powers to tackle climate change and sidestepping the partisan gridlock in Congress. / AP

Written by Maureen Groppe, Indianapolis Star Washington Bureau, Jun. 26, 2013

WASHINGTON — President Barack Obama’s plan to combat climate change by limiting carbon pollution from power plants would affect Indiana more than most states — and could harm its manufacturing-heavy economy, says Gov. Mike Pence.

Indiana is a top energy-using state, and most electricity comes from coal-fired power plants, the largest single source of greenhouse gas emissions.

Coal generates about 40 percent of U.S. electricity. But it is the source of more than 80 percent of the ­power in Indiana, where manufacturers are attracted by the state’s relatively low electric rates.

Obama’s proposal to limit emissions was part of a package of initiatives he announced Tuesday to ­address global warming.

“The question is not whether we need to act,” Obama said. “The question now is whether we will have the courage to act before it’s too late.”

Obama directed the Environmental Protection Agency to announce by Sept. 20 how it wants to regulate emissions for new power plants — rules that have been under development since several states and environmental groups successfully sued the EPA to regulate greenhouse gases. The EPA also must propose by next year, and finalize by mid-2015, new rules for existing plants.

Environmental groups said that cutting carbon emissions from power plants is the most important part of the president’s pledge to reduce greenhouse gases.

“The president is stepping up to reduce the climate-disrupting pollution that is threatening our economy and endangering our communities, farms and families with extreme heat, drought and more frequent severe storms,” said Jodi Perras, campaign representative for Indiana Beyond Coal, an effort by the Sierra Club to reduce the number of coal-fired power plants.

But industry groups said the regulations will cause power plants to close, costing jobs and ­affordable power.

“The regulations proposed by the president will invariably raise electricity costs and decrease service quality for major industrial customers, like the steel industry,” said Thomas J. Gibson, president and CEO of the Ameri­can Iron and Steel Institute.

Indiana has long enjoyed some of the nation’s cheapest power rates, a key reason the state is home to many manufacturers, including steelmakers.

Pence said the state’s competitive edge is in jeopardy because the new rules will drive up power costs.

“We will remain dependent upon coal for the major­ity of our electricity for the foreseeable future,” Pence wrote in a letter to Obama last month to object to the pending emission limits for new power plants. “Coal simply provides too great an energy resource for Indiana or the United States to ignore.”

The eight Republicans in the state’s congressional delegation, along with Democratic Sen. Joe Donnelly, wrote a similar letter to Obama this month.

But Jesse Kharbanda, executive director of the Hoosier Environmental Council, said Indiana’s utilities have been developing their business plans around the expectation of emission limits.

“So the emerging EPA policy that is at the heart of the president’s plan shouldn’t really affect what these utilities are already planning to do,” Kharbanda said. “Furthermore, utilities are likely to replace their decades-old coal plants with new natural gas plants, which will be cheaper, on a per unit of energy basis, than new coal plants.”

Ed Simcox, interim president of the Indiana Energy Association, which represents large electric utilities that own coal-fired power plants, said not enough details are available on the proposed regulations to determine the cost they would impose on the state’s power companies. One key detail will be how much time companies have to comply.

“One of the problems that we’ve faced in the past, and that we have sometimes successfully challenged in court, is the deadline,” Simcox said. “Because the industry can get there, but sometimes the time frames are the debatable points. And the time frames have an enormous impact on costs.”

A spokeswoman for Indianapolis Power & Light Co. said many of Obama’s proposed changes are already a priority. The company hopes to generate 57 percent of its power from coal and oil by 2017, compared with 86 percent in 2007. The company is adding new solar generation systems and said it ranks eighth in the nation for the amount of wind generation per customer.

Duke Energy, the state’s largest electric supplier, said in a statement that the company is prepared to work with the EPA and other stakeholders on a “plan for the ­future that will allow us to deliver a secure and reliable supply of electricity at affordable rates and that will not adversely ­impact the economy.”

The Center for Climate and Energy Solutions said states will play a major role in developing the regu­lations for existing power plants. While the EPA will set guidelines for states, states will develop the specific regulations that power plants must follow.

For example, states can follow the EPA’s “model rule” or come up with another way of achieving the same results, such as allowing power plants to trade “emission credits” so the overall emissions level is met even if some plants emit more.

States also might be able to meet emission targets by increasing their use of renewable electricity. Indiana is among the minority of states that does not set rules on how much of the state’s energy must come from renewable sources.

Industry groups say utilities have long relied on coal because it’s been a stable and abundant low-cost source of fuel.

Pence said Indiana’s 300-year supply of coal has enabled the state to offer some of the nation’s lowest electricity rates for years.

Most of the state’s coal has come from the southwestern Indiana district of GOP Rep. Larry Bucshon, who said Obama’s plan amounts to a war on the coal industry.

Although Bucshon believes the earth’s climate is changing, he has said the change has been minimally affected by human activities. In a recent exchange with Energy Secretary Ernest Moniz, Bucshon asked whether the United States should economically disadvantage itself by reducing carbon emissions “when it’s ­pretty clear to me that it’s very unlikely the rest of the world will do what you’re proposing to do.”

Obama said Tuesday that he’s willing to work with Republicans and is open to “maybe better ideas.” But he said he has little patience for those who deny there’s a problem.

“We don’t have time for a meeting of the Flat Earth Society,” Obama said. “Sticking your head in the sand might make you feel safer, but it’s not going to protect you from the coming storm.”