This Letter to the Editor appeared in the Wall Street Journal.
March 18, 2011
by Eileen Claussen
Your March 15 editorial "Carbon and Democracy" accuses the Environmental Protection Agency of ignoring democratic principles and the rule of law in its efforts to protect the public from the harm caused by changes in our climate. Let's review the facts.
It was the Supreme Court, not the EPA, that decided in 2007 that carbon dioxide meets the definition of pollutant under the Clean Air Act—a law enacted by a democratically elected Congress and signed by a democratically elected President, George H.W. Bush. Responding to the court's decision, and after a thoroughly open process with more than 380,000 public comments, the EPA determined that greenhouse gas emissions do indeed pose a risk to public health and welfare, and are therefore subject to regulation under the act.
The EPA's initial step to reduce greenhouse gases was an agreement with auto makers to improve auto efficiency, reducing oil reliance and saving a car's owner $3,000 over its lifetime. Now the EPA is beginning to require the use of proven cost-effective energy-efficiency technologies in new factories and power plants.
One can argue whether the EPA has been too aggressive or too lenient in its approach. If Congress believes there is a better response to the court's ruling, it should amend the act or enact a new law. That's how democracy works.
The EPA's actions are not the work of an "unaccountable bureaucracy," but of an agency complying with a Supreme Court decision in carrying out a democratically enacted law.
Congress is debating whether or not to limit EPA’s authority under the Clean Air Act (CAA), and many are wondering if these environmental regulations are creating a burden to our economy. EPA has released a report that answers that concern head-on, and the results are nothing short of astonishing.
This report takes a hard look at the actual costs and benefits of the regulations implemented under the Clean Air Act Amendments of 1990 (CAAA), from 1990 through 2020. The report finds that while CAAA regulations have indeed imposed costs on society, estimated to be $65 billion in 2020, the benefits from cleaner air in 2020 will total $2 trillion – 30 times higher than the estimated costs.
Opening Keynote by Eileen Claussen, President of the Pew Center on Global Climate Change
State-Federal Workshop on Climate and Energy Policy: Where Do We Go From Here?
Hosted by the Pew Center and the Georgetown Climate Center
February 24, 2011
I want to welcome all of you to our 2011 workshop on state and federal climate and energy policy. The Pew Center on Global Climate Change is delighted to be working with the Georgetown Climate Center – and two of our favorite alumni in Vicki Arroyo and Kate Zyla – to present what we hope will be a very engaging and informative program over the next two days.
You know we established the Pew Center in 1998 as a nonpartisan, independent organization to provide credible information and help spur innovative solutions to climate change. For those of us who have been working on this issue for so many years now – and I am certainly not the only one in the room about whom this is true – right now could be a very discouraging time indeed. President Obama did not even utter the words “climate change” in his State of the Union address in January. In contrast, in his 2010 address he was effusive in praising the U.S. House of Representatives for passing a comprehensive energy and climate bill.
We have traveled a difficult road on this issue over the past year … a road jammed by partisan fighting over health care and the legislation on financial reform … and a road torn up by the poor state of the U.S. economy. It’s been hard to move forward in these conditions. Then in November, congressional elections brought a whole new group of climate change deniers and doubters to the halls of Congress.
Any time you have someone winning election to the Senate thanks in part to an ad where he uses a rifle to shoot a hole through cap-and-trade legislation, well … I guess you could be forgiven for feeling a little bit down and out.
But I am not here to give you a woe-is-me address. Well – not an entirely woeful address. And the reason why I won’t do that, and the reason why none of us should accept the argument that it’s impossible at the moment to move anywhere on this issue, is because the stakes are simply too high.
Before I get into the meat of my remarks though I know the Academy Awards will be broadcast in a few days and I was looking at the list of films that are nominated this year, and I noticed that a lot of these films have something in common. A lot of them tell stories about people overcoming seemingly insurmountable odds to succeed. And I thought they actually hold lessons for those of us working on climate change and energy issues.
- For example, there is The King’s Speech … the story of King George the Sixth overcoming a debilitating stammer so he can unite his people to enter World War II. The moral for the climate fight: It takes hard work and determination to communicate in ways that mobilize people. And for those of you who have seen the movie, there is also this: when you’re feeling really down, unleashing a string of profanities can be excellent therapy.
- Another Oscar contender is the film The Fighter, about boxer Mickey Ward and his half brother, Dickie … and Mickey’s unlikely road to the world boxing title with Dickie’s help. The lesson: don’t ever count yourself out. And, if you’re a parent, please think twice before giving your children rhyming names.
- Of course, there is also True Grit … about a young girl’s venture into hostile Indian Territory to find the man who killed her father. The lesson for those of us pushing for climate action: stay the course, and follow your journey to its end. And, if by any chance you’re staffing up for this work, don’t overlook the gruff, hard-drinking, one-eyed man in the cowboy hat who dropped his resume off the other day. He might be able to help you out.
So maybe there is something in the culture right now. Maybe we need these stories about people taking on big things, overcoming big challenges in their lives. And maybe those of us working on the climate change issue should take note. We may feel unlucky from time to time, but we cannot let it get in the way of our work to help shape solutions to the climate challenge facing this country and the world. The simple fact is that the evidence of climate change continues to pile up in front of us. We ignore it at our peril.
2010 tied 2005 as the warmest year on record. Nine of the 10 warmest years have happened since 2001. Last year, Russia faced the worst heat wave and droughts in its documented history. Unprecedented flooding in Pakistan left 2 million people homeless and millions more requiring emergency aid. There was also unprecedented seasonal flooding in Australia. And nearly all of the Northern Hemisphere was dealing with a massive heat wave last summer.
Each of these events, every one of them, is consistent with what scientists say we should expect in a warming world.
Even the record cold and snowfalls that much of the United States has been dealing with this winter can be seen as a glimpse of what we’re in for as atmospheric greenhouse gases increase and the climate becomes more unstable. It simply defies common sense to ignore the link between man-made climate change and these numerous extreme weather events. I am not saying climate change caused these particular storms and bitter cold, but this is exactly the kind of thing scientists say we should expect more of in the years to come. Add to that the declining sea ice in the Arctic, receding and disappearing glaciers, and the many other signs of irreversible change, and it’s hard not to feel that we are loading the dice. I have three young grandchildren, another is on the way. And it is hard not to wonder about the world they will grow up in.
What kind of world will it be? To what extent will their generation have to pay for the things we didn’t do today?
This is what’s at stake. And this is why we need to persist in our work on these issues. Over the next two days, we will be talking about many important topics, from transportation and land use to adaptation to what it will take to build a clean-energy economy here in the United States and around the world. We will also be talking about the varying yet complementary roles of the state and federal governments in addressing these issues.
I want to use my remarks here this morning to share what I believe is a realistic outlook of the challenges we face and draw your attention to a few small signs of hope. Because while the politics can look bleak, there are a few indications that action on this issue might still be possible in the months and years ahead.
The first positive sign I want to point out is the commitment of this White House to clean energy as a priority for the United States. In his State of the Union address, the President set a goal for the nation: to get 80 percent of our electricity from clean energy sources by 2035. He may not have used the words “climate change” in making this proposal, but the implication for the climate is clear.
The White House knows full well that public support for renewables and other alternative energy sources remains strong. A recent Gallup poll found that more than 80 percent of voters favor clean energy legislation … although voter support does drop, sometimes below 50 percent, when people are asked to consider the costs of shifting to cleaner sources of energy, however manageable those costs might be.
Adopting a clean energy standard would obviously be a big deal and a significant step forward. But is it politically possible? My guess is no – not right now. Not to say that there isn’t real interest in a CES – but realistically, the chances of such an initiative passing the Senate are very small – and probably zero for getting through the House. Still – it’s useful to set a goal – and start the conversation.
This takes me back to the lesson from The King’s Speech that I mentioned: It takes hard work and determination to communicate in ways that mobilize people. Even in the face of considerable opposition, those of us who believe in the need for action on this issue must continue our efforts to connect with the public. We must continue to make our case. And we must continue to connect our cause to other related causes for which there is considerable public support.
This is why we should all be pleased that the White House has placed clean energy issues front and center as it continues to develop its “Win the Future” innovation agenda for the nation. As the Obama administration very rightly points out, China leads the world right now in clean energy investment, and we have a lot of work to do just to keep up, let alone overtake China as the world’s clean energy leader.
And the White House’s commitment on these issues is not all talk; it’s not all about photo opps and messaging. One unmistakable sign that the Obama administration wants to see real action on climate and energy issues comes from the Environmental Protection Agency.
Remember the message from The Fighter? Don’t count yourself out. Well, EPA is making an effort to stay in the fight despite some very long odds, and some very tough opponents in the opposite corner of the ring.
Even as he talked about reducing “unnecessary” government regulations in his State of the Union address, the President made a point of saying that he – quote – “will not hesitate to create or enforce common-sense safeguards to protect the American people.” This was an obvious shot across the bow to those members of Congress who have stated their interest in depriving EPA of the ability to regulate carbon dioxide emissions.
Let’s be clear here. The Supreme Court in 2007 decided that greenhouse gases meet the definition of pollutants under the Clean Air Act. The Court left it to EPA to decide if emissions of these gases presented a risk to public health and welfare. And EPA decided they did, based on overwhelming scientific evidence underlying the risks of climate change. It’s not just the Obama EPA that feels this way. We recently learned that the previous EPA Administrator under President George W. Bush came to exactly the same conclusion … and other senior Bush administration officials agreed.
In fact, EPA’s recent actions on this issue aren’t all that different than the step-by-step plan spelled out by the agency under President Bush, a plan that was described at the time by the Administration as “prudent and cautious yet forward thinking.” Today’s actions are largely the same, and yet they’ve come under attack by a vocal contingent in Congress.
What regulatory road is EPA headed down? The initial rules requiring mandatory reporting of emissions, substantially improved fuel economy for cars and vans, and best available control technology for large new and modified sources are a good start. Later this year, EPA is expected to propose additional stationary source controls, with a focus on the electric power and oil refinery sectors. And even in these cases, EPA’s actions are extraordinarily modest.
And so they may be pulling some punches, but the fact remains that EPA is staying in the fight. Of course, opponents of these and other reasonable EPA actions will continue to raise a ruckus, and there have already been loud cries in Congress to take away the agency’s regulatory authority and cut its funding. Indeed, the budget bill passed by the House of Representatives last week would repeal EPA’s authority to regulate greenhouse gases from stationary sources, although it leaves regulations of automobiles intact.
The House budget also proposes major cuts in climate-related programs at EPA and other agencies. EPA funding was reduced 30% overall, including the Global Change program, with even larger cuts to the greenhouse gas reporting program. NOAA’s Climate Service program was zeroed out as well. Among the many Energy Department programs with reduced funding, Energy Efficiency and Renewable Energy face a 40 percent cut. And for a high-profile hit, funding for the Assistant to the President for Energy and Climate Change, recently held by Carol Browner, was eliminated. Looking internationally, nearly all funding for U.S. commitments under the UNFCCC process was slated for elimination, including funding for the IPCC and the U.S. Special Envoy for Climate Change.
It’s not a pretty picture, and I cannot honestly tell you how it will be resolved. Certainly there will be cuts, certainly there will be policy riders to appropriations bills, and certainly there will be attempts to legislate away EPA authorities directly. But those seeking these changes will not have an easy ride, and I would guess that many of these attempts will fail.
So – sticking with the ‘fighter’ theme – on the budget front, we’re probably only in round 2 or 3 of a 12 round match.
More positive signs come from the world of business.
As all of you know, the White House right now is making a very deliberate effort to build business support for its policies. The President’s recent address to the U.S. Chamber of Commerce was just one part of this effort. It came, you will recall, shortly after he appointed Jeffrey Immelt of GE to head the President’s Council on Jobs and Competitiveness. GE and its CEO have been leaders in the American business community on the issue of building a clean-energy economy, so the Immelt appointment makes sense. And it’s a reminder to the American public that there is considerable support among U.S. business leaders for reasonable action to promote clean energy industries and jobs, reduce U.S. dependence on foreign oil – and, incidentally, reduce U.S. emissions of greenhouse gases, too.
There remains great interest in the business community in clear and certain U.S. energy policy. “Certainty.” You hear the word again and again today in conversations with business leaders. Dow CEO Andrew Liveris was on NPR last month and in simple, eloquent terms he stated that businesses need to know the regulatory rules of the road to have a better idea of what types of investments will pay off down the line. He clearly articulated the need for government to engage proactively with business to create public-private partnerships to spur innovation and create jobs in clean energy and other sectors.
So this idea that all of business is some scary villain standing in the way of action on these issues is inaccurate. In fact, the business world appears to be taking a lesson from the third film I mentioned, True Grit. Many of these companies started on their journey years ago to reduce emissions, increase efficiency, and pursue business opportunities in the clean energy sector. And they aren’t about to be dissuaded from staying on the trail. It may be tough sometimes, and the political winds may be blowing against them at the moment, but they are intent on pursuing this to the end.
Up to now, my remarks have been mostly Washington-centric, and I apologize. That’s what you get for coming to the nation’s capital to talk about climate change. But, of course, all of the action (or inaction) on this issue does not happen in Washington, and so let’s take a look at the picture at the state level. The news from the state capitals on this issue in recent months has been decidedly mixed. While regional climate initiatives continued to push forward in the past year, the November elections brought to the nation’s statehouses a group of new leaders who adopted strong stands against climate action in their campaigns. In the State of Montana, a bill was introduced that would overturn the laws of science and nature and simply declare that carbon dioxide does not cause global warming.
But this is another case where we should remember the story of Mickey The Fighter and not count ourselves out. Because there was an important bright spot in the elections. I am talking about the overwhelming defeat in California of Proposition 23. This measure, as you know, would have suspended a 2006 law intended to reduce the state’s greenhouse gas emissions. Shortly after the vote, the California Air Resources Board formally approved the state’s cap-and-trade program, which is designed to reduce California emissions to 1990 levels by 2020. While further legal challenges are pending, California is still in the fight. And there is strong public support for what the state wants to do.
Yes, Californiawill always provide a more hospitable climate for action on this issue. But the fact that the most highly populated U.S. state will soon be implementing a cap-and-trade system and other measures to reduce emission has to be a positive sign. It is a sign that the issue is not going to quietly disappear into the night. Much of the financial support for the “No on Prop 23” campaign came from the venture capital and tech industries in California. These companies understand the market opportunities that clean energy and energy efficiency provide, and despite the millions of out-of-state dollars poured into the Prop 23 campaign, they were willing to invest in making those opportunities real.
And, of course, California is not alone among the states in advancing serious measures that reduce emissions. Here at this workshop over the next two days, we will all learn more about what’s happening on this issue in states across the country.
For instance, Maryland has new energy laws to increase renewable energy production and create more incentives to purchase electric vehicles, which are especially well-suited to the state’s compact land use. And Maine has recently adopted laws to expand energy efficiency and boost clean electricity generation with the aim of preserving the Pine Tree State’s scenic landscape for its many vacationers.
As they have since the dialogue began way back in the 1990s, many U.S. states are taking the initiative, advancing solutions, and providing a learning laboratory for the rest of the country so we can see what works in practice. And that is definitely a positive sign.
The final very small positive sign I want to talk about is what’s happening outside the United States. The agreement reached by international negotiators in Cancún in December fills in many key missing elements of the 2009 Copenhagen Accord, including a stronger system of support for developing countries and a stronger transparency regime to better assess whether countries are keeping their promises. The Cancún Agreements also mark the first time that all of the world’s major economies have made explicit mitigation pledges under the U.N. Framework Convention on Climate Change.
Of course, the ultimate goal of the continuing international talks must be a comprehensive binding climate treaty. That’s the goal of the journey we started on this issue way back in 1992 at the Earth Summit in Rio. But in Cancún we saw countries agreeing on incremental steps that will deliver stronger action in the near term and keep the world on course toward someday (we hope) agreeing to binding commitments.
So to recap, I see four small but positive signs amid what I acknowledge is a very challenging environment. They are: 1) the White House’s continuing commitment to doing something on this issue in the face of very strong political headwinds, in part through common-sense steps at the EPA; 2) support for reasonable action on energy and climate issues among U.S. business leaders; 3) some progress on these issues in California and other states; and 4) continued progress in the international climate talks.
I don’t want to be a Pollyanna here. I understand as well as anyone else that all of these small positive signs I have mentioned are positive only when you compare them to all of the negative things that are happening out there today. We are like all of the leading characters in the movies I have mentioned. In a very difficult fight. On a journey in hostile territory with the odds sometimes appearing overwhelmingly stacked against us. Facing enormous challenges in communicating, getting our message across, getting more people on our side.
I cannot promise a Hollywood ending to this drama we’re in but I can say this: all is not lost. And getting to a place where we are confident about the prospects for action on this issue that we all care about so deeply is going to require each and every one of us to recommit ourselves to this fight. To recommit ourselves to staying the course in our journey. And to recommit ourselves to communicating in more compelling and more coherent ways about what’s at stake here, and about what we can and must do.
Think about transportation. With gas prices rising and oil now exceeding $100 a barrel, it’s hard to argue against realistic solutions that can lessen our oil dependence while reducing greenhouse emissions. The Pew Center just last month released a report that showed it’s possible to get to a cleaner, more secure transportation system that could deliver up to a 65-percent reduction in emissions from the sector between now and 2050.
Solutions are out there. We can meet the challenge of building clean energy industries and creating clean energy jobs. We can reduce U.S. and global emissions of greenhouse gases. But we are going to need true grit to get this done.
Thank you very much, and I hope you enjoy the conference.
Last Wednesday’s House Energy and Power Subcommittee hearing on the Energy Tax Prevention Act lived up to its billing as being the first clash between the new majority and minority on the committee. For eight hours, the Members opposing regulation argued that EPA was overstepping its authority in regulating greenhouse gas (GHG) emissions. They asserted that such action would kill jobs and harm the economy. Members supporting regulations argued that EPA is required to act and is doing so in the interest of public health.
The Energy Tax Prevention Act, a draft proposal jointly released by Rep. Upton (R-MI), Rep. Whitfield (R-KY), and Sen. Inhofe (R-OK), would prevent EPA from regulating GHGs, remove GHGs from the Clean Air Act, and specifically repeal all actions related to climate change, including the scientific Endangerment Finding, the Tailoring Rule, New Source Review regulations, reporting requirements for GHG emissions, and proposed New Source Performance Standards. The lone exemption is the Clean Car rule, which would remain untouched.
It’s instructive to look at the funding levels recently proposed by the House leadership for the remainder of this fiscal year in light of the eight hour hearing on climate change held last week before the House Energy and Power subcommittee.
At the risk of oversimplification, the key messages from the Members who organized the hearing were that the science behind and risks associated with climate change are uncertain, EPA regulations will impose substantial costs and result in job losses, and U.S. industry needs regulatory certainty in order to invest in new facilities here in the United States.
February 15, 2011
By Eileen Claussen
This op-ed first appeared in Politico
A vocal contingent in the House is now attacking the current Environmental Protection Agency administrator for the very thing her predecessor in the Bush administration wanted to do.
EPA Administrator Stephen Johnson wrote a letter to President George W. Bush laying out the legal and scientific rationale for regulating greenhouse gases under the Clean Air Act. Johnson explained steps that the EPA would take to begin to do so.
Johnson’s letter surfaced last week at the House Energy and Power subcommittee hearing on proposed legislation to strip EPA’s authority to regulate greenhouse gas emissions.
Remarkably, it proved that Bush’s EPA administrator had reached the same conclusions and planned almost identical actions to what the current EPA administrator, Lisa Jackson, has begun implementing.
What exactly does Johnson tell Bush? He insists that the EPA must respond to the Supreme Court’s 2007 decision in Massachusetts v. EPA with a finding that greenhouse gases represent a risk to public health or welfare. This is EPA’s “endangerment finding,” which would be overturned by legislation now being proposed in the House.
Johnson also noted, “the latest climate change science does not permit a negative finding, nor does it permit a credible finding that we need to wait for more research.”
What is most telling is that Johnson states that a positive endangerment finding was “agreed to at the Cabinet-level meeting.” Apparently senior Bush administration officials agreed that climate change poses a risk to our nation’s public health and welfare.
Johnson describes his plan as “prudent and cautious yet forward thinking,” and says it “creates a framework for responsible, cost-effective and practical actions.” Sound familiar?
Jackson, in her statement at the hearing last week, called EPA’s actions a “reasonable approach,” one that “will reflect careful consideration of costs and will incorporate compliance flexibility.”
Indeed, the step-by-step plan of action spelled out by Johnson could be a checklist for the EPA’s recent actions — largely the same actions being aggressively attacked today by some in Congress.
These actions include the endangerment finding; a joint rule-making with the Transportation Department to require more fuel-efficient cars; rules to modify the agency’s requirements for new sources to reduce the number of facilities that would be covered (EPA’s tailoring rule), and proposals to respond to specific petitions (EPA has acted on ones for the utility and oil refinery sectors).
Given these striking similarities, attacks on current EPA actions — that the agency is “an instrument of job destruction” and would “put the American economy in a straitjacket” — now resonate as particularly empty political rhetoric.
How could the right thing to do in the Bush administration suddenly become the wrong thing to do in the Obama administration?
Eileen Claussen served as assistant secretary of state for Oceans and International Environmental and Scientific Affairs. She is now president of the Pew Center on Global Climate Change.
With EPA’s recent announcement of timelines for additional regulation of greenhouse gases (utility and refinery sectors) and the arrival in town this week of the new Congress, the shouting about EPA’s regulatory actions has already begun. Many of these claims are clearly political posturing – the facts are that schools, churches, and libraries will NOT be subject to regulations, there will NOT be a moratorium on all new industrial facilities for at least 18 months, and new coal plants will NOT be banned. But it is also true that regulating greenhouse gases (GHGs) has the potential to substantially impact our economy and is critical to reducing the risks and costs associated with climate change. The critical challenge facing EPA is how to properly balance the costs of reducing GHG emissions against the benefits of limiting climate change. How EPA balances these interests demands a serious discussion. In an effort to lower the volume and better inform future discussions about EPA’s use of its regulatory authority, the following are key factors that should be considered.
1. EPA is not overreaching by regulating greenhouse gases (GHGs) under the Clean Air Act but is doing so in direct response to the Supreme Court’s 2007 ruling in Mass. v. EPA.
Some have incorrectly claimed that EPA has overstepped its authority in regulating greenhouse gases and is attempting to regulate GHGs even though Congress failed to pass climate legislation last year. In fact, it is the Supreme Court in 2007 that clarified that EPA had the authority to regulate GHGs under the existing Clean Air Act. EPA had denied a petition by some states and environmental groups calling on it to begin regulating GHGs under the existing Clean Air Act. The Supreme Court rejected EPA’s claim that the Clean Air Act does not apply to GHGs and held that these emissions meet the definition of an “air pollutant” under the Act. The court held that “under the Act’s clear terms, EPA can avoid promulgating regulations only if it determines that greenhouse gases do not contribute to climate change or if it provides some reasonable explanation as to why it cannot or will not exercise its discretion to determine whether they do.” Based on its extensive review of the scientific evidence in its endangerment finding, EPA reached the only conclusion that the evidence supported – that GHG emissions cause or contribute to air pollution, which may reasonably be anticipated to endanger public health or welfare and, therefore, are subject to regulation under the Clean Air Act.
2. EPA’s regulations will not require unproven technologies, impose excessive costs at a time when our economy is hurting, or harm small and previously unregulated sources.
There are legitimate concerns that the Clean Air Act was not developed specifically with GHGs in mind and these emissions are different in fundamental ways from traditional hazardous and criteria pollutants covered by the Act. As a result, EPA has gone to great lengths to “tailor” its regulations -- for example, with respect to new source permitting -- in such a way that only the largest sources of GHGs are covered. This tailoring rule has been challenged in courts (along with all other GHG regulations). If it is overturned, Congressional intervention would likely be necessary. But the Clean Air Act includes many provisions that minimize compliance costs, and many of its fundamental requirements apply equally well to regulating GHGs. For example, the Act requires that technological feasibility and costs be considered in setting emission performance standards and allows for different requirements for new and existing sources. In its guidance to states on what constitutes “best available control technology,” EPA has focused on energy efficiency technologies as a means to achieve both reductions in GHG emissions and cost savings to firms. The agency has also made it clear that the use of coal as a fuel can be continued under its guidelines. While EPA regulations will impose some costs on firms, based on guidance to date, those costs are likely to be modest and will result in far greater benefits than costs to society.
3. Delaying any EPA regulatory actions would be bad for business and bad for the climate.
Delaying regulations by EPA will allow some firms to avoid compliance costs in the near term but will increase overall costs over the longer term. For firms in states already facing GHG requirements (e.g., utilities in 10 northeast and mid-Atlantic states, large emitters in California), any delay in EPA regulations are not likely to alter the requirements they face. For firms in other locations that are planning facilities with long lifetimes, some are likely to install the same technology that would be required by EPA in an effort to avoid more expensive retrofits in the near future. These firms would prefer the certainty of knowing what regulatory requirements they must meet prior to making large capital investments. Finally, delay in reducing GHG emissions will result in greater economic harm throughout our society as families and communities face the costs associated with increases in extreme weather (droughts and floods), impacts from sea level rise, limits on the availability of water resources, and other climate impacts.
4. EPA’s regulatory actions are not a form of backdoor cap and trade or an energy tax.
Congress rejected a comprehensive cap-and-trade approach to regulating GHG in its last session. EPA’s approach does not rely on a cap-and-trade regime and is far from comprehensive. EPA’s regulations focused first on the transportation sector with the issuance of widely supported standards for light-duty vehicles and proposed standards for medium and heavy-duty vehicles. On the stationary source side, EPA first targeted the largest new sources and major modifications of existing sources and recently announced plans to develop new source performance standards for the electric utility and refinery sectors. Such standards are the traditional approach used under the Clean Air Act and are generally implemented through state programs.The regulations are being developed on a timeframe consistent with Clean Air Act requirements covering other pollutants to allow covered sources the flexibility of developing compliance plans that cost-effectively meet a comprehensive set of requirements.
5. EPA is not attempting to meet the same reduction requirements that were rejected by the last Congress.
The House-passed climate change bill called for reductions in GHG emissions of 17 percent of 2005 levels by 2020, increasing to reductions of over 80 percent by 2050. EPA’s use of the Clean Air Act is not likely to produce emission reductions of the magnitude or in the timeframe set forth in the legislation proposed last year.
6. Important questions do need to be addressed in moving forward.
EPA’s initial set of regulations represent an important beginning in addressing the risks associated with climate change but also raise important issues. In moving forward, several questions will need to be addressed:
* How will EPA’s regulation be implemented in a manner consistent with current and future state actions?
* Given market forces driving utilities toward increased use of natural gas, the regulatory uncertainty that currently exists, and the age and fuel mix of the current utility fleet, what is the likely future role of coal in this sector?
* As EPA moves forward in regulating stationary sources through the use of emission performance standards, how might it be able to provide flexibility to regulated sources to achieve cost-effective reductions?
* How might EPA regulatory actions specific to utilities interact with possible Congressional interest in a clean energy standard?
Steve Seidel is Vice President for Policy Analysis
The Supreme Court announced on December 6 that it would hear an appeal in one of the several common law nuisance cases against greenhouse gas (GHG) emitters that are making their way through the courts. By granting ceritiorari in AEP v. Connecticut, the Supreme Court has signaled its intention to weigh in on the appropriate role of the courts in addressing damages caused by climate change. As explained below, possible future regulatory actions by EPA or, alternatively, action by Congress to restrict EPA’s regulatory authority, could be factors that influence the Court’s decision.
At a time when political gridlock in Washington has blocked climate legislation, EPA and NHTSA have jointly come forward with a sensible proposal that will substantially reduce oil consumption and greenhouse gas (GHG) pollution from heavy-duty trucks. EPA and NHTSA’s proposed new rules build on their recent success in finalizing GHG and fuel efficiency standards for cars and light-duty trucks. Once again, the two agencies collaborated with industry to make sure their standards accomplish environmental and energy security goals in a practical manner.
The transportation sector is responsible for 27 percent of our nation’s GHG emissions. Within this sector, heavy-duty vehicles are the second largest source of emissions (after light-duty vehicles), accounting for 20 percent of the sector’s total. The new proposal covering heavy-duty vehicles (long-haul trucks, large pick-ups and vans, school and transit buses, and utility trucks) manufactured from 2014 through 2018 is estimated to reduce emissions by 7-20 percent from these vehicles (depending on the category of truck) from current levels, achieving an overall reduction of 250 million metric tons of carbon dioxide over the life of the vehicles sold during this five-year period. As a result, emissions in 2030 from this fast growing subsector will be 9 percent below what they would have been in the business as usual case. The proposed rule is also estimated to reduce oil consumption by 500 million barrels over this same period.
Cost and Benefits
To achieve the proposed standards, truck manufacturers will need to modify their vehicles drawing from a range of existing technologies including improvements in aerodynamic designs, lower rolling resistant tires, advanced transmissions, and reduced idling. The agencies report that the cost of meeting the standard for many trucks will be recouped in less than 2 years in the form of fuel savings. The regulatory impact analysis accompanying the proposed rule looks at both the costs and benefits of meeting the proposed standards. It shows the following:
Estimated Lifetime Discounted Costs and Benefits for 2014-2018 Model Year Heavy-Duty Vehicles
|3 percent discount rate||$ billions|
The bottom line is clear – with a net benefit to society of $41 billion, the proposed rule is a worthwhile investment in reducing both our reliance on foreign oil and our emissions of greenhouse gases.
Steve Seidel is Vice President for Policy Analysis
Steve Seidel, vice president for policy analysis, co-wrote this post.
With the failure of the Senate to act on climate change legislation, the focus of attention now shifts to possible regulatory actions by EPA. The Supreme Court in 2007 made it clear that greenhouse gases (GHGs) are pollutants under the existing Clean Air Act (CAA), and the overwhelming scientific evidence (spelled out in great detail in the endangerment finding) demonstrates that such pollutants represent possible harm to public health and welfare.
Opposition to EPA action rests in part on concerns that any regulations will be excessively costly and burdensome to households and U.S. manufacturers. While it is certainly true that regulating GHGs will result in costs, it is also important to look at whether the economic benefits from those regulations will be greater than the costs they impose. In other words, will societal costs of allowing global GHG emissions to continue unabated (costs that will come in the form of impacts from rising sea levels, increased extreme weather including heat waves and droughts, among others) be greater than the costs of regulating those emissions responsibly?
This basic regulatory framework – that regulatory costs should be less than the resulting benefits – is codified in OMB review of all major federal regulations by both Republican and Democratic Administrations, has historically been applied to all EPA regulations, and would certainly be applied to any future regulations of GHGs.
So what have been the costs and benefits of past EPA regulations under the CAA historically? Congress required EPA to undertake a retrospective assessment of the costs and benefits of regulations under this statute. The conclusion of this retrospective review is that the CAA resulted in total benefits that are around $37 trillion, while total costs were $0.874 trillion (in 2010 dollars) – an astounding 40 to 1 benefit to cost ratio!
EPA has also produced a prospective assessment of the costs and benefits of the CAA – this time for the time period of 1990 through 2010. In this review, EPA estimated that the most likely benefit to cost ratio of the CAA for this period is 4 to 1. While a very strong and positive value, the ratio is substantially lower than the estimated benefits for the first 20 years of the CAA.
This is not unexpected – early gains are usually greater, and more cost effective, because simple or cheap remedies are the first to be applied in response to regulatory requirements. As those requirements become more stringent, creating additional benefits becomes more costly (from an economics perspective this is described as moving up the marginal cost curve).
How credible is EPA’s assessment of its regulations? Alan Krupnick, formerly of the President’s Council of Economic Advisors, has testified before Congress about the credibility of EPA’s analyses: “Under the auspices of the agency’s Science Advisory Board, both studies were scrutinized throughout the decade-long preparation by at least three expert committees of outside economists, air quality modelers, epidemiologists, and other health experts.”
In addition to these EPA assessments, there have been a handful of quality external analyses of the costs and benefits of the CAA. The Office of Management and Budget (OMB) found that the “major rules” from EPA’s Office of Air resulted in total benefits between $145 and $218 billion annually, for the years between 1992 and 2002. This is compared to costs of between $22 and $25 billion over that same period. A study by researchers at MIT found total annual benefits rising from $50 billion in 1975 to $400 billion in 2000. This report accounts for the monetary benefits of avoided premature death differently than the EPA studies, and as a result reports lower values for the total benefits. A sum of the total discounted benefits yields a total benefit of $6.85 trillion from 1975 through 2000 – a figure still substantially greater than the EPA estimate for the costs of the regulations.
So how might this play out in terms of future regulations of GHGs? EPA’s first GHG regulations were standards set for light duty vehicles (which it coordinated with the efficiency standards set by NHTSA). These standards are expected to lead to net benefits of between $0.5 and 1.2 billion dollars (discounted back to present values using 7 percent and 3 percent discount rates, respectively) without even including a social cost of carbon. If a value is assigned to the avoided GHG emissions associated with this regulation, the net present benefits are even greater!
If there is a lesson that can be drawn from these previous regulatory efforts it is that while regulations do impose real costs, EPA’s actions under the CAA have consistently led to positive environmental and economic outcomes. By not regulating, we would have foregone these positive net benefits and incurred the social costs imposed by unabated pollution.
So the next time someone tells you that the costs of reducing air pollution are too high, ask them what would be the costs to society of not reducing those emissions.
Russell Meyer is the Senior Fellow for Economics and Policy. Steve Seidel is Vice President for Policy Analysis.