Heather Zichal, deputy assistant to the President for energy and climate change, took to the White House blog to defend the Administration’s climate-change plan in a “myths vs. reality” post. What she calls “claims” from those expressing concerns with the President’s plan—that regulating carbon will increase energy prices, hurt the economy, destroy jobs, and wage war on coal—more accurately reflect the facts.
What the White House is saying: “[B]y taking action to reduce carbon pollution, we can spark new jobs and industries building cleaner and more efficient American-made energy technologies.”
The reality: Energy intensity has been in decline long before a national energy-efficiency policy. Zichal claims that regulations spark innovation and that businesses will try to adapt and innovate to comply with the Environmental Protection Agency’s (EPA) carbon regulations. But those regulations are not the driver of economic growth. Competition and providing better products for consumers drive the American economy. The federal government’s regulation of CO2 would drive up operating costs for businesses and contract growth—destroying more than 500,000 jobs by 2030.
Further, government spending and regulations will “create” jobs in the sense that subsidies allocate labor and capital to build windmills and solar panels, or that regulations force investments to meet new standards. Without the subsidies and regulations, those resources could be spent more efficiently. The result of the government’s action, on net, is a slower economy and lost jobs.
What the White House is saying: “Utility industry leaders say they can reduce carbon pollution without raising utility bills. At the same time, renewable energy has never been more affordable.”
The reality: Carbon regulations and other proposed regulations would reduce coal as an energy source and would increase electricity prices 20 percent by 2030. If the carbon regulations the Administration imposes on new and existing power plants affect natural gas plants as well, the economic pain only gets worse. Furthermore, if the Administration is confident that renewable energy is affordable, it should be willing to remove the subsidies for all energy sources to see how competitive renewables are in the marketplace.
What the White House is saying: “President Obama has invested nearly $6 billion in clean coal technology and research and development—the largest such investment in U.S. history.… [T]he Administration will make up to $8 billion in loan guarantee authority available for a wide array of advanced fossil energy and efficiency projects to support investments in innovative technologies.”
The reality: Subsidizing clean-coal technologies is a near-term non-solution. President Obama’s own climate adviser recently said that “a war on coal is exactly what’s needed.” The EPA’s regulations on new and existing power plants are only two of the many ways the Administration is making it increasingly difficult to build and operate coal-fired plants. The utility MACT rule, the cross-state air pollution rule, coal ash regulations, and national ambient air quality standards would make building a new coal plant extremely difficult while significantly decreasing the lifespan of existing plants. Regulations from the Department of Interior and Department of Labor are also attacking the coal mining industry.
Carbon capture and sequestration is infeasible, because it has challenges in terms of scalability, storing liquid CO2, and cost. Attempting to help pay for the technology with taxpayer money is not the solution.
President Obama’s climate plan is not just a war on coal. It’s a backdoor energy tax that hits American families again and again through direct and indirect higher energy costs. That’s the grim reality.
Nicolas Loris, an economist, is a Policy Analyst at The Heritage Foundation . http://www.heritage.org/ Roe Institute for Economic Policy Studies. Loris researches and writes about energy prices and other economic effects of environmental policies and regulations, including climate change and “cap and trade” legislation. He also articulates the benefits of free market environmentalism.