Jul 30, 2014 - 5:30pm

4 More Potent Arguments Against EPA’s Carbon Rule

Senior Editor, Digital Content


EPA Administrator Gina McCarthy. Photographer: Andrew Harrer/Bloomberg.
EPA Administrator Gina McCarthy. Photographer: Andrew Harrer/Bloomberg.

We’re into Day 2 of EPA’s public hearings on its proposed carbon regulations that are taking place across the country over the next few days—unless you live in one of the states most reliant on coal for electricity.

Yesterday, I noted three potent arguments for why the proposed regulations are bad policy. Here are four more based on President and CEO of the U.S. Chamber’s Institute for 21st Century Energy Karen Harbert’s testimony.

1. The proposal is a significant threat to American jobs and the economy.

The proposed regulation will cost billions of dollars resulting in significant jobs losses:

EPA itself estimates that its rule will increase electricity prices between 6 and 7 percent nationally in 2020, and up to 12 percent in some locations.  This is on top of the 13 percent increase already forecast by EIA over that time period. EPA estimates annual compliance costs between $5.4 and $7.4 billion in 2020, rising up to $8.8 billion in 2030. 

It is important to note that these are power sector compliance costs only, and do not capture the subsequent spillover impacts of higher electricity rates on overall economic activity.  Even if these costs were accurate, these increases will place an immense burden on U.S. businesses, and could eliminate the critical competitive advantage that affordable and reliable electricity provides to the American economy.

The United Mine Workers Association has estimated that this rule will result in 187,000 direct and indirect job losses in the utility, rail, and coal industries in 2020, and income losses from these sectors of $208 billion between 2015 and 2035.  

An IHS study found that less energy diversity that will result from EPA's regulations will mean higher and more volatile electricity costs, lost jobs, and reduced family incomes.

2. EPA’s proposal lacks flexibility.

EPA Administrator Gina McCarthy claims that EPA’s proposal is built on “flexibility.” She used that word eight times in her June speech announcing the regulations. Harbert explains that the actual proposal says otherwise:

[B]y incorporating reduction measures beyond affected sources, EPA was able to tighten individual state targets substantially. If the emissions reductions called for from one individual building block are not met, they must be made up for through even greater reductions in another building block.  Because individual building block targets were set at aggressive levels, there is little to no “wiggle room” between options.  As a result, and unless EPA incorporates true flexibility into the rule, we expect states will face major compliance challenges. 

3. There are transparency, process, and timeline problems.

EPA’s proposed carbon regulations run over 1,600 pages and establish carbon emissions targets for each state. However, the agency hasn’t offered the data or a rationale that justifies the different targets:

In order for states and stakeholders to fully evaluate the impacts of EPA’s proposal, EPA must better explain and disclose underlying assumptions and data that serve as the foundation for its binding emissions targets on states. EPA has to date failed to address these issues, provided little to no information regarding what authority it is relying upon to institute such an “outside the fence” [beyond a power plant] expansive regulatory regime, nor how it intends to proceed if it does not approve of individual state implementation plans.

In addition, more time is needed to examine this proposal that will force a redesign of America’s power system. Harbert advises that EPA should include an interactive component to public meetings “so impacted stakeholders can ask EPA direct questions and get answers regarding the proposed rule.”

4. It won’t result in meaningful carbon emission reductions.

Even if you ignore the harm it will have on electricity prices, jobs, household incomes, and the economy, the proposed regulations will have a negligible global impact [emphasis hers]:

The EPA estimates that in 2030, its proposed rule would reduce CO2 emissions 555 million metric tons below current projections which represents only 1.3 percent reduction of projected global emissions in 2030. Because non-U.S. CO2 emissions are projected to grow by 41 percent between 2010 and 2030, EPA’s proposed rule will offset the equivalent of 13.5 days of Chinese emissions in 2030, based on U.S. Department of Energy projections.

Senior administration officials have publicly emphasized that absent similar actions by other major economies, U.S. regulations to reduce carbon emissions will not succeed.  In fact would simply result in moving emissions to other countries that have not implemented similar restrictions.

Let’s review. EPA's proposed carbon regulations:

  1. Threaten American jobs and the economy.
  2. Aren't flexible.
  3. Lack transparency and are being rushed.
  4. Will have negligible effects on global carbon emissions.

In short, EPA’s proposed carbon regulations will be all pain with little gain.

Follow Sean Hackbarth on Twitter at @seanhackbarth and the U.S. Chamber at @uschamber.

About the Author

About the Author

Sean Hackbarth
Senior Editor, Digital Content

Sean writes about public policies affecting businesses including energy, health care, and regulations. When not battling those making it harder for free enterprise to succeed, he raves about all things Wisconsin (his home state) and religiously follows the Green Bay Packers.