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Clearing the Air on the EPA's False Regulatory Benefit-Cost Estimates and Its Anti-Carbon Agenda

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Clearing the Air on the EPA's False Regulatory Benefit-Cost Estimates and Its Anti-Carbon Agenda

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The U.S. Environmental Protection Agency (EPA) recently initiated a multi-pronged campaign to restrict the nation’s emissions of greenhouse gases (GHGs), particularly carbon dioxide (CO2) from the use of fossil fuels, under the Clean Air Act Amendments of 1990 (CAAA). The EPA’s anti-carbon campaign threatens to greatly undermine future U.S. economic growth and job creation, while doing virtually nothing to restrict global CO2 emissions. In fact, the EPA’s campaign may actually stimulate global CO2 emissions by handing a competitive advantage to the more carbon-intensive economies of China, India, and several other countries. In doing so, the EPA’s anti-carbon agenda takes direct aim at the U.S. manufacturing sector’s reliance on stable, reliable, affordable energy supplies.
 
The EPA’s anti-carbon agenda has three main prongs:
1. Standards for energy-using equipment, e.g., the recently proposed mileage standards for new medium- and heavy-duty vehicles;
2. Regulating the CO2 emissions of facilities that provide essential forms of energy throughout the U.S. economy, such aselectric utilities and petroleum refineries; and
3. Restricting the ability of states to issue air permits necessary for large power and industrial projects, such as the EPA’s recent action to strip Texas of that state’s authority to issue air permits.
 
Each prong of the agenda will make energy more expensive for Americans to use, directly or indirectly.
 
In August 2010, using many of the same accounting tricks and gimmicks discussed in an April 2006 Manufacturers Alliance/MAPI report, the EPA once again claims that its past clean air enforcement has provided more than $30.00 of benefits for every dollar of cost, thereby implying that its future regulations of CO2(and other GHG) emissions under the CAAA will perform the same dubious magic. Yet, during the last Congress, the EPA implicitly contradicted its own claim of enormous net benefits (gross benefits less costs) from its direct regulations already on the books, by supporting cap-and-trade” legislation as a more efficient way to restrict GHG emissions than direct regulation.
 
If the Obama administration actually believed the EPA’s enormous net benefit estimates, it would have gone immediately to direct regulation and not put the Democratic Party’s congressional majorities in the 2010 mid-term elections in jeopardy by pressing for House and Senate votes on cap-and-trade. The specter of EPA regulation served as a threat precisely because members of Congress and the administration understand well that EPA regulations actually impose costs far in excess of benefits, the EPA’s official claims to the contrary notwithstanding.

For backgorund information please read Garret A. Vaughn's 2006 study, Regulatory Sleight of Hand.

Image Credit: Clearing Sky, by Chris Campbell.  Originally accessed at http://www.flickr.com/photos/cgc/1041374615/.

Garrett Vaughn - Clearing the Air