Will EPA’s Climate Protection Rules Hurt US Economy?

Some of America’s most powerful business interest groups are opposing the Obama Administration’s landmark climate protection rules, claiming these will hurt the economy. The U.S. Chamber of Commerce’s Institute for 21st Century Energy warns that the new rules could cost the economy as much as $50 billion per year.

Posted on 06/3/14
By Jay Rover | Via ViewsWeek
U.S. Capitol Power Plant Coal Stack. (Photo by  jeveleth, Creative Commons License)
U.S. Capitol Power Plant Coal Stack. (Photo by jeveleth, Creative Commons License)

A day after the Obama administration announced new EPA’s plans to regulate carbon dioxide emissions from power plants, a report by the U.S. Chamber of Commerce’s Institute for 21st Century Energy — Assessing the Impact of Potential New Carbon Regulations in the United States — is warning it will cost the economy over $50 billion a year between now and 2030.


The Environmental Protection Agency (EPA) unveiled its draft proposal to cut carbon pollution from the nation’s coal-fired power plants on Monday (June 2), calling for cutting carbon emissions by 30 percent from 2005 levels. President Barack Obama is using executive authority under the Clean Air Act to implement the climate change measure.


President Barack Obama is receiving accolades from environmental groups for the initiatives. But opposition from powerful groups such as the U.S. Chamber, which is the world’s largest business federation representing the interests of more than 3 million businesses and organizations of every size, sector, and region, could create political complications especially during this November’s crucial mid-term elections.


“Americans deserve to have an accurate picture of the costs and benefits associated with the Administration’s plans to reduce carbon dioxide emissions through unprecedented and aggressive EPA regulations,” said Karen Harbert, president and CEO of the Energy Institute. “Our analysis shows that Americans will pay significantly more for electricity, see slower economic growth and fewer jobs, and have less disposable income, while a slight reduction in carbon emissions will be overwhelmed by global increases,” a news release quoted him as saying.


The analysis found that EPA’s potential new carbon regulations would:


  • Lower U.S. Gross Domestic Product (GDP) by $51 billion on average every year through 2030
  • Lead to 224,000 fewer U.S. jobs on average every year through 2030
  • Force U.S. consumers to pay $289 billion more for electricity through 2030
  • Lower total disposable income for U.S. households by $586 billion through 2030


With global carbon emissions expected to rise by 31% between 2011 and 2030, the Energy Institute’s analysis found that EPA regulations would reduce this overall emissions level by just 1.8 percentage points.


The Energy Institute commissioned the respected research and analytics firm IHS to conduct the modeling and analysis. As a basis for the study, the Energy Institute utilized a proposal from the Natural Resources Defense Council (NRDC) that many expect will be similar to EPA’s anticipated proposal. Using the NRDC policy framework, along with the IHS, Inc. proprietary energy efficiency and power demand outlook, the Energy Institute report then assesses the costs and market impacts of meeting the Obama Administration’s emissions target of 42% reductions below 2005 levels by 2030. The conclusions are those of the Energy Institute.


The Energy Institute’s analysis includes only the costs for the new and existing power plant carbon dioxide regulations. All other EPA regulations, such as the Mercury and Air Toxic Standards and the Cross-State Air Pollution Rule, are built into the reference case.


Different regions of the country will see profoundly different impacts from these rules. Generally, the largest impacts on jobs and the economy will be in the South Atlantic, West South Central, and East North Central census divisions. The South power region will see the biggest increases in electricity costs by far.


To read the entire report, visit www.energyxxi.org/epa-regs


The Institute is not alone in opposing the new rules. The American Farm Bureau Federation (AFBF) has also warned the Obama Administration that the new proposal would harm the nation’s rural economy as well.


AFBF and the National Rural Electric Cooperative Association (NRECA) issued reactions to the proposal, saying it would increase prices for electricity.


“U.S. agriculture will pay more for energy and fertilizer under this plan, but the harm won’t stop there,” a news release quoted American Farm Bureau Federation President Bob Stallman as saying. “Effects will especially hit home in rural America.”


Stallman said rural electric cooperatives that rely on old coal plants for cheap electricity would suffer if EPA implements the proposal.


NRECA CEO Jo Ann Emerson said: “It’s very disappointing and disturbing that the EPA proposed a regulation that goes further than the Clean Air Act allows by taking an ‘outside the fence’ approach to setting the emissions reduction requirements that states must accomplish.”


“The greenhouse gas proposal is yet another expensive and expansive overreach by EPA into the daily lives of America’s farmers and ranchers,” Stallman said. “Our farmers and ranchers need a climate that fosters innovation, not unilateral regulations that cap our future.”


National Farmers Union (NFU) President Roger Johnson offered an alternative perspective from the agricultural community when he encouraged the administration to work with agriculture by creating voluntary incentives for sequestering carbon, but also warned that regulatory action could cause rural job loss.


“The changing climate has already begun to affect agriculture, and it is clear that weather volatility will only continue to increase in the coming years unless our policymakers proactively address this challenge,” an Agri-Pulse report quoted  Johnson said. “I commend the administration for its leadership on climate change mitigation.”


However, he noted that rural electric cooperatives serve farmers and ranchers and are a significant source of rural employment, while accounting for 12 percent of total U.S. electricity sales.


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