EPA Case for Regulating Greenhouse Gas Emissions – Torn Apart by New Study

Washington, D.C., March 21, 2011- The Environmental Protection Agency is relying on accounting tricks and gimmicks in its claims that clamping down on greenhouse gas emissions will produce more financial benefit than harm. That’s the finding of a new Competitive Enterprise Institute report, “Clearing the Air on the EPA’s False Regulatory Benefit-Cost Estimates and Its Anti-Carbon Agenda,” by Garrett A. Vaughn, an independent economic consultant specializing in energy and the environment.

The EPA is poised to regulate greenhouse gas emissions under the Clean Air Act, in a vast and costly expanse of the agency’s regulatory reach. Vaughn takes apart the EPA’s case for such action. Among his specific criticisms:

• The EPA is claiming inflated benefits for clean air regulations, totaling $1.3 trillion net benefit or nearly twice the amount of U.S. military spending. However, EPA’s report does not consider capital expenditures of manufacturers to meet regulatory deadlines or the basic law of demand that higher prices will reduce demand (thus reducing economic output).
• The EPA claims that its past clean air enforcement has provided more than $30.00 of benefits for every dollar of cost, but unjustifiably implies future regulations of CO2 (and other GHG) emissions under the Clean Air Act will have such benefits, too. In fact, the EPA has also 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.
• 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.

“The EPA is now trying to dress up the even more expensive alternative of direct regulation with the same inflated net benefit estimates prepared for true [Clean Air Act] pollutants such as particulate matter and nitrous oxides,” explained Vaughn. “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,” he said.

> Read the CEI OnPoint, “Clearing the Air on the EPA’s False Regulatory Benefit-Cost Estimates and Its Anti-Carbon Agenda” by Garrett A. Vaughn