Obama's Carbon Rules Can Boost the Economy

As the debate heats up over the EPA's new greenhouse gas rules it's worth keeping the end-times wailing of the fossil-fuel lobby in perspective.
Why not turn this into economic growth? Photographer: Tomohiro Ohsumi/Bloomberg  

With the Obama administration's new carbon dioxide emissions limits for the nation's aging power plants coming out today, the drumbeat of lost jobs, economic devastation and a liberal "war on coal" has once again reached a crescendo.

Just last week, the U.S. Chamber of Commerce issued a damning impact report on the pending new rules, concluding, among other things, that over the next 15 or so years the nation's gross domestic product would be slashed, 3.5 million jobs would be lost and nearly $600 billion in household disposable income would evaporate. And all this, the trade group said, to achieve an incremental reduction in global carbon emissions.

The chamber's report had much in common with one issued last week by the American Petroleum institute, which predicted economic collapse should Environmental Protection Agency also implement new rules on smog-forming chemicals -- pollutants that, along with CO2, the nation's high courts have held are within the agency's purview to regulate. Virtually the entire country would be "closed for business," declared the API's director of regulatory and scientific affairs, Howard Feldman, in a phone call with reporters.

When the federal government moves to clear the air, fossil-fuel interests hyperventilate. That's not surprising on its face. Businesses are programmed to jealously guard the bottom line, and they are right to do so. But as the debate heats up over the EPA's new greenhouse gas rules -- and there will be substantial debate -- it's worth keeping the end-times wailing of the fossil-fuel lobby in perspective.

Some key points:

Pollution, including CO2, costs a lot, too. This is the fundamental point that undermines nearly every argument against reasonable curbs on emissions of all kinds. Polluting industries naturally like to think of their under- or unregulated byproducts as "externalities" for which they must make no accounting. Fans of "The Hitchhiker's Guide to the Galaxy" will understand externalities as the classic case of an SEP, or "Somebody Else's Problem."

But they are everyone's problem -- and cost a lot in terms of lives and treasure. Consider just one 2011 peer-reviewed study from the EPA, which found that reductions in both fine particle and ozone pollution achieved since 1990 had likely prevented more than 160,000 premature deaths, 130,000 heart attacks, millions of cases of bronchitis and asthma attacks, 86,000 hospital admissions and -- for the task masters out there -- 13 million lost workdays and 3.2 million lost school days.

What that represents in dollar terms is difficult to quantify, but several studies have made a stab at it, including one published in 2011 in the Annals of the New York Academy of Sciences. That analysis, which focused on coal, estimated the real social costs of its production and use was at least $175 billion annually, and perhaps as high as $523 billion annually. The authors added that these were almost certainly underestimates, given that they did not account for myriad other "externalities" like the effects of coal sludge and slurry, the prolonged effects of acid rain, and the costs associated with a warming planet.

These debates aren't new. Let's flash back to an article from the Van Nuys Valley News, dated Sept. 10, 1970 -- when the Clean Air Act was young and eager and taking aim at unchecked, noxious emissions from U.S. cars. "Ford Motor Co. said yesterday in Dearborn, Mich.," the item begins, "that some of the proposed changes in the Federal Clean Air Act could cut off automobile production in just five years, lead to huge price increases for cars even if production were not stopped, do 'irreparable damage' to the American economy -- and still lead to only small improvements in the quality of the air."

Sound familiar? Are you driving a car nearly half a century later? Yes, those controls had a cost -- and so too will future efficiency mandates that the Obama administration has put in place -- but in the long view, the view that matters, life will go on and be cleaner for it. Not so sure? Consider that between 1970 and 2011, aggregate emissions of common air pollutants dropped by 68 percent, even as U.S. gross domestic product grew by 212 percent and vehicle miles traveled increased by 167 percent. The number of private sector jobs increased by 88 percent during that same period.

Worth noting: The "war on coal" business is itself largely a smokescreen. Sure, coal tends to be the most severely affected resource because it has the highest profile. But to the extent that jobs are being shed in coal country, the EPA's actions are hardly the key culprit. Rather, the rise of cheap and plentiful natural gas and the rapid development of mechanized surface mining -- which requires far less manpower per unit of coal -- are chiefly to blame.

The courts have upheld EPA's authority to regulate. Industry may not like what the EPA is doing, but court challenges on these fronts have so far generally failed. The most recent decision came at the end of April, when the Supreme Court held that the agency did indeed have the authority to regulate drifting, smog-forming pollution from coal plants. Most experts interpret this as a signal that the high court will likely knock down looming challenges to the agency's rules on greenhouse gases as well.

It's not a zero-sum game. While some jobs will almost certainly be lost if companies decide that it's not worth it to outfit their aging coal plants with new pollution-control technologies, those losses will almost certainly be offset by the creation of new jobs elsewhere, as the new regulations drive investment in cleaner technologies, efficiency upgrades and other areas. A recent analysis from the Natural Resources Defense Council estimated that new greenhouse gas limits on power plants could reduce electric bills for U.S. households and businesses by as much as $37.4 billion by 2020, and create more than 274,000 jobs.

Sure, the NRDC isn't exactly an impartial observer, but then neither is the API or the U.S. Chamber. The larger point is that most regulations have upsides and downsides, and short-term pain is often offset to some degree by long-term benefits that industry likes to ignore.

They brought it on themselves. Lest we forget, American businesses and their Republican patrons in Congress worked double-time to water-down and then ultimately kill the passage of comprehensive cap-and-trade climate legislation back in 2010. After all the concessions that the House-approved version of that bill had granted to utilities, coal interests and other industries, it's highly possible that they would be enjoying a comparatively gentler journey into the era of carbon limits. Now, they've got the grip of the executive branch around their necks.

Americans overwhelmingly support tough pollution rules. Whether its curbing cross-state pollution from power plants, reducing the amount of mercury and air toxins that they produce, or limiting the amount of planet-warming gases they emit, polls routinely show strong support among American voters. In a survey published by Yale University last week, 64 percent of respondents said they supported strict lints on carbon dioxide from power plants -- even if it meant electricity rates would be higher.

Asked whether carbon dioxide should be regulated as a pollutant, 68 percent said yes.

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