The Corner

Study: EPA Low-Balled Costs of Carbon Regs

The Environmental Protection Agency may have significantly low-balled its cost estimates for its proposed Clean Power Plan rules, a new study by National Economic Research Associates suggests.

The rules, proposed in June, seek a 30 percent reduction in carbon emissions from 2005 levels by 2030, establishing state-specific targets. In practice, the Clean Power Plan would penalize traditional energy consumption while artificially generating demand for costlier green energy generation.

The new NERA study suggests staggering economic costs. Households in all but seven states would see a double-digit price hike on their electricity bills, and the cost of natural gas could spike by as much as 29 percent, the study says.

Assuming that no legal or practical challenges prevent states from imposing the EPA’s renewable-energy or energy-efficiency protocols—an unlikely scenario—the annual compliance cost will be $41 billion, NERA estimates. Factoring in these real-world potential obstacles, the cost rises to a mind-blowing $73 billion.

The latter NERA estimate is at least seven times what the EPA estimated when it looked at annual compliance costs for the Clean Power Plan rules.

The EPA’s supporters will doubtless mention that the NERA study was prepared on behalf of several traditional-energy trade groups. But the EPA’s numbers also look biased, and even the Government Accountability Office has recently questioned the objectivity and accuracy of the agency’s cost-benefit assessments.

This summer, the GAO called out the EPA’s slanted math, concluding that “without improvements in its estimates, EPA’s [regulatory-impact analyses] may be limited in their usefulness for helping decision makers and the public understand these important affects.”  

For instance, the GAO then noted that as the EPA tried to tally the job costs of draft regs for industrial boilers, commercial incinerators, and waste-water discharges, it used labor-market research that was old enough to buy a drink, and that looked at only four industrial sectors.

Nevertheless, even by the EPA’s own low-balled estimates, compliance with the Clean Power Plan rules would be equivalent to the total cost of all Clean Air Act rules promulgated by 2010.

The huge economic costs of the Clean Power Plan become even more startling in contrast with the tiny gains predicted by the EPA.  Though the overall price tag for compliance could rise as high as $479 billion, according to NERA’s estimates, the regulations would cut global temperatures by less than two-hundredths of a degree Fahrenheit.

— Jillian Kay Melchior writes for National Review as a Thomas L. Rhodes Fellow for the Franklin Center. She is also a senior fellow at the Independent Women’s Forum.


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