Realizing the costs and folly of instituting a massive greenhouse gas regulatory regime, Members of Congress stopped cap-and-trade legislation to cut greenhouse gas emissions, most notably carbon dioxide (CO2), from becoming law in the last Congress. But their job is not complete. Now unelected bureaucrats at the EPA are attempting to bypass the legislative process through regulatory dictate by using The Clean Air Act to regulate carbon dioxide. The problem is that Congress never intended The Clean Air Act to cover CO2 and the result of doing so would extract trillions of dollars from our economy and destroy over one million jobs. Worse yet, there would be no demonstrable benefit to the environment.
Both the House of Representatives and the Senate are expected to vote today on a number of measures with regards to the EPA and greenhouse gas regulations. Congress should use all means possible to stop the EPA permanently from regulating GHGs and seek to prevent other agencies from doing the same.
Although the EPA is first targeting facilities emitting over 75,000 tons annually, the burden of the regulations will be paid for by every American. Two of the first major targets of EPA regulations are fossil fuel power plants and petroleum refineries, and since the nations gets 85% of its energy from fossil fuels, regulating these entities would significantly increase the cost of energy for all Americans. Not only will these rules directly raise the cost of electricity, gasoline, diesel fuel, and home heating oil, it will also indirectly hurt American consumers because higher energy costs are incorporated into the cost of virtually everything, increasing costs to businesses. The businesses, in turn, will pass those costs onto consumers.
What is the reasoning behind the EPA’s restrictive CO2 regulations? In April 2007 the Supreme Court ruled that carbon dioxide is a pollutant within the definition of the Clean Air Act and may be regulated under the CAA if statutory conditions were met. The Court ordered the EPA Administrator to determine whether CO2 was dangerous to human health and the environment and whether the science on the health and environmental effects of GHGs was settled. The EPA concluded CO2 was in fact a threat to public welfare because of carbon dioxide’s supposed contribution to warming the planet. The EPA lists potential environmental and public welfare effects that result from increased CO2 emissions as: sea level rises, stressed water resources, increased size and quantity of wildfires, insect outbreaks, threats to ecosystems and national security, among others. The problem with the agency’s finding is that it relies on questionable science and ignores vigorous dissention among the scientific community.
Even if we set aside the abundance of scientific dissention when it comes to the EPA’s endangerment findings or the supposed effects of CO2 on climate, the EPA’s regulations will not reduce CO2 enough to have any meaningful effect. Attempting to reduce CO2 unilaterally will have an insignificant impact on overall global emissions. China and India’s CO2 emissions are rapidly increasing as they continue to expand their respective economies and they have no intention of scaling back economic growth to curb emissions. Even if the EPA were to reduce U.S. carbon emissions 83 percent below 2005 levels by 2050 (what recent cap-and-trade bills called for), it would constitute a very, very small portion of emissions worldwide.
China and India’s reluctance to cut emissions also affects the U.S. from a competitiveness standpoint. Higher energy prices and unnecessary regulations in the United States compared to other countries will drive businesses to more investment-friendly parts of the world.
Legislative Fixes: The Bad and the Good
Policymakers have introduced number of legislative fixes, both bad and good, to address the regulation of greenhouse gas emissions. Temporary fixes and exemptions will not suffice. Congress needs to enact policy that would permanently prevent unelected bureaucrats from regulating CO2 and the catastrophic economic consequences that come along with it. Only this approach would provide the regulatory certainty American businesses need.
- The Bad: Two Year Delay or Codifying the Tailor Rule: Senator Jay Rockefeller (D–WV) introduced legislation that would delay the EPA’s ability to regulate CO2 for two years, but this is not the right approach for Congress to take. It is not a step in the right direction and will do more harm than good by creating uncertainty and leaving the endangerment finding intact. One problem with a two-year delay is that it creates uncertainty for energy-intensive businesses looking to build new projects or make major expansions. From planning to construction and operation, such projects have much longer time horizons than two years. Not knowing whether a two-year delay will be renewed in two years or if the energy tax will go into effect in two years will deter businesses from making new investments and creating jobs at a time when they’re most needed. Another serious problem with a two-year delay, specifically the Rockefeller bill, is that the EPA can still regulate CO2 under the National Ambient Air Quality Standards (NAAQS) program. If CO2 becomes an NAAQS, it would trigger requirements that could be met only by severely curtailing economic activity. As David Lungren of the Senate Environmental Public Works Committee put it, “A CO2 NAAQS would twist the CAA into knots and spread EPA’s regulatory tentacles into every corner of the economy.”
Another bad legislative fix is to permanently exempt small emitters of greenhouse gas emissions from CO2 regulations. Senator Max Baucus (D-MT) introduced an amendment that would in effect codify 75,000-ton-per-year threshold and prevent small businesses and farms from regulation under the Clean Air Act’s (CAA’s) Prevention of Significant Deterioration (PSD) preconstruction permitting program and Title V operating permits program. Doing so would remove the legal questions surrounding the Tailoring Rule but would provide no protection from higher energy costs that small businesses, farms and consumers would face since larger emitters, such as energy producers would still be taxed. Further, the EPA could still regulate greenhouse gases under the NAAQS program.
- The Good: Stop the EPA & Stop All Climate Change Regulations. House Energy and Commerce Committee passed legislation introduced by Representatives Fred Upton (R-MI) and Ed Whitfield (R-KY) that would repeal the EPA’s endangerment rule and block the EPA from regulating CO2. Senator Mitch McConnell (R-KY) added a rider to a small business bill that adopts language initially introduced by Senatore James Inhofe (R-OK). Specifically, The Energy Tax Prevention Act would “amend the Clean Air Act to prohibit the Administrator of the Environmental Protection Agency from promulgating any regulation concerning, taking action relating to, or taking into consideration the emission of a greenhouse gas to address climate change, and for other purposes.”
The most effective and comprehensive approach would be to permanently prohibit any federal regulators from using greenhouse gas emissions as a reason to slow or prevent economic activity. Senator Barrasso (R-WY) introduced legislation that would prevent the EPA and other Federal regulators such as the U.S. Fish and Wildlife Service from using any environmental act to impose regulations based on climate findings, including Clean Air Act, the Endangered Species Act, the Clean Water Act and the National Environmental Policy Act. The Defending America’s Affordable Energy and Jobs Act would “preempt regulation of, action relating to, or consideration of greenhouse gases under Federal and common law on enactment of a Federal policy to mitigate climate change.”
The burden of the EPA regulations will be paid for by every American. The regulations would have the same impact on our economy and employment as would a major new energy tax as passed through cap and trade, but they would be worse, since they would entail more compliance, administrative, and legal costs. Permanently preventing the EPA from regulating CO2 is the only acceptable solution.
Nicolas Loris is a Research Assistant at The Heritage Foundation’s Roe Institute for Economic Policy Studies. Loris studies energy, environment and regulation issues such as the economic impacts of climate change legislation, a free market approach to nuclear energy and the effects of environmental policy on energy prices and the economy.
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