Affordable energy is critical for a prosperous economy. Yet, despite the fact that the U.S. is still in the middle of a pronounced economic slump, the U.S. Environmental Protection Agency (EPA) is in the process of proposing or finalizing a number of air-quality regulations that would limit energy choices and increase energy prices, thus seriously retarding the economic recovery.
Economists estimate that just four of these dozens of rules could alone cost the economy trillions of dollars annually. In addition, the rules will cost millions of jobs and raise energy prices, and all with little or no public-health benefit.
On July 6, 2011, the EPA finalized the Cross-State Air Pollution Rule which will require power plants in 27 states to significantly reduce sulfur-dioxide and nitrogen-oxide emissions. By 2014, power plants will need to cut their sulfur-dioxide emissions 73 percent and nitrogen-oxide emissions by 54 percent below 2005 levels.
A second rule concerning mercury and air toxics would require existing coal- and oil-fired power plants to reduce emissions of mercury and other air pollutants to the average level of emissions of the least polluting 12 percent of plants currently operating using the same type of fuel.
The EPA is also proposing a new, more restrictive ozone standard. Though the current primary standard of 0.075 parts per million (ppm) was only set in 2008 — and is just now being implemented — the Obama administration’s EPA decided to create a new, even stricter standard — somewhere between 0.060 ppm to 0.070 ppm. Finalization of the new standard has been delayed several times and no firm date has been set for a decision.
Finally, despite little if any provable health effects from current emissions, the EPA has decided to regulate greenhouse gases as pollutants.
What does it all mean?
Just looking at the proposed restrictions on ozone, most monitored counties — many in urban areas — will not meet the new standard. In fact, up to 76 percent of the 675 U.S. counties where ozone is monitored would not meet a 0.070 ppm standard, according to a 2010 Congressional Research Service report. Up to 96 percent would not meet a 0.060 ppm standard. These so-called non-attainment areas will be subject to additional regulation and EPA oversight, making business expansion difficult and encouraging businesses to move to counties that do attain the standard or to leave the country entirely. Communities in non-attainment areas could also lose federal highway funding.
Estimates vary, but researchers agree that complying with a new ozone standard will be costly. Indeed, a 0.070 ppm standard could cause a $14.8 billion decline in production and the loss of 91,700 jobs by 2030 in the Cincinnati-Dayton, Ohio, region alone, according the U.S. Senate Committee on Environment and Public Works. Other analysts place the costs far higher — at more than a $1 trillion.
In 2007, when the U.S. Supreme court opened the door to the EPA to regulate greenhouse gases as pollutants, I, along with a host of others, predicted costly mischief — and now we’ve got it. Regulating greenhouse gases as pollutants will increase the number of emissions sources that need operating permits from approximately 20,000 at present to roughly 6 million. At a cost of up to 2.5 million jobs lost and a decline of economic output of nearly $7 trillion (in 2008 dollars) by 2029.
Unfortunately, the EPA’s efforts will be futile. Even if the entire Western Hemisphere suddenly eliminated all carbon dioxide emissions, the effect on global emissions would likely be offset within a decade by the growth of China’s emissions alone.
Combined the Cross-State Air Pollution rule and the new Mercury and Air Toxics standards have been estimated to lead to an additional 1.4 million jobs lost and will result in a shuttering of more than 5 percent of the nation’s electric power supply. The North American Electric Reliability Council, the government’s watchdog responsible for ensuring the nation’s electricity supply and transmission, notes that this forced shutdown — with no way to replace the losses in a timely fashion — will lead to inadequate supplies, power shortages, and instability in the national grid.
These regulations, taken individually, or as a set, are arguably unnecessary since, as I detail in a recent NCPA report, at current levels American air is so clean that there is little benefit to additional pollution reduction.
The economy is still struggling and many people remain unemployed. The loss of more than 8 million jobs and soaring energy costs over the next decade will stifle economic recovery. Current clean air standards and technological improvements are already improving air quality. Accordingly, Congress should rein in the EPA’s ongoing assault on our already weakened economy.