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You would never know from reading Paul Krugman’s recent blog post and column that the Environmental Protection Agency is about impose--without any input from the Congress--the most expensive regulatory program in its history. Instead, he would have you believe that new regulations governing carbon dioxide emissions from power plants costing $859 billion in lost economic growth over 17 years—nearly a trillion dollars—is no big deal. One wonders how much of a hit the economy has to take before Krugman takes notice.
So what do we get for such a bargain? Why, nothing less than “dramatic steps on climate — steps that would transform international negotiations, setting the stage for global action.”
Except none of that is true.
The Institute for 21st Century Energy’s analysis shows that $859 billion in lost economic growth would buy about 6 billion tons of carbon dioxide reductions at an average cost of $143 per ton. That’s remarkably expensive, about 74% higher than the comparable cost per ton ($82) based on the Energy Information Administration’s analysis of the Waxman-Markey cap & trade bill. To put this in perspective, the going price for a ton of carbon dioxide in Europe today is about seven bucks.
More telling, the cost per ton is much higher when compared to the Obama Administration’s latest and wildly inflated social cost of carbon estimates. In other words, the economic costs of the regulations far outweigh their climate benefits, and it’s not even close.
Of course, the rest of the world will continue to emit carbon dioxide with abandon. Even with these rules, by 2030 global emissions will still be about 29% higher than in 2011. So it’s all pain for no gain.
Anyone who thinks this job-killing gesture will transform the international negotiations hasn’t been paying attention these last 20 years. Krugman seems to be completely unaware that Europe tried leading by example, and it didn’t work. And little wonder. The primary interest of developing countries is providing affordable energy to their people to lift them out of poverty. They have little interest in making cheap energy expensive, and they’ll continue to develop using fossil fuels. Nothing EPA does is going to change that.
Finally, it’s a bit rich for Krugman, just appointed distinguished professor at City University of New York’s new income inequality institute, to pooh-pooh 224,000 fewer jobs each year out to 2030. But I guess when you’re not earning an income, you can hardly contribute to income inequality. Problem solved!
To conclude, EPA’s regulation of carbon dioxide emissions from power plants will cost the economy nearly $1 trillion, result in hundreds of thousands of fewer jobs each year, provide no climate benefit according to the administration’s own exaggerated estimates, and do virtually nothing to lower global emissions. Krugman thinks that’s “remarkably cheap.” Consumers and businesses know better.