EPA’s McCarthy: New CO2 Restrictions Not About Climate

EPA’s McCarthy: New CO2 Restrictions Not About Climate
August 20, 2014

Bonner R. Cohen

Bonner R. Cohen is a senior fellow with the National Center for Public Policy Research, a position... (read full bio)

EPA’s recently announced restrictions on carbon dioxide emissions have nothing to do with reducing pollution, EPA Administrator Gina McCarthy admitted in Senate hearings. Instead, said McCarthy, EPA imposed the restrictions based on a belief imposing expensive renewable energy on the electricity marketplace will stimulate the economy.

‘Not About Pollution Control’
“The great thing about this proposal is that it really is an investment opportunity. This is not about pollution control,” McCarthy told the Senate Environment & Public Works Committee July 23. “It’s about increased efficiency at our plants. It’s about investment in renewables and clean energy. It’s about investments in people’s ability to lower their electricity bills by getting good, clean, efficient appliances, homes, rental units.”

McCarthy’s comments came as a shock to utilities facing steep costs attempting to comply with the proposed restrictions. The comments also came at a time when the Obama administration’s prior EPA restrictions have pushed U.S. electricity prices to an all-time record high.

Contradicts Prior Testimony
McCarthy’s Senate testimony represents a significant departure from the way EPA defended its proposal before lawmakers just a month earlier. At a June hearing before the House Energy and Commerce Committee, Acting Assistant Administrator for Air and Radiation Janet McCabe offered a different explanation. Citing Section 111 (b) of the Clean Air Act, which authorizes EPA to regulate certain pollutants, McCabe made that argument in her testimony:

“Chairman Upton, this is not an energy plan. This is a rule done within the four corners of 111 (b) that looks to the best system of emission reduction to reduce emission.… This is a pollution control rule as EPA has traditionally done under section 111 (d).”

McCarthy’s comment didn’t escape the attention of climatologist Roy Spencer.

“This gaffe could come back to bite the EPA,” Spencer wrote on his website. “The Endangerment Finding was all about the negative effect of ‘carbon pollution’ on the environment. Now we find out ‘this is not about pollution control’?”

In her testimony, McCarthy repeatedly emphasized EPA views its rule as an investment opportunity for the business community, while downplaying the cost it would impose on consumers.

“This is an investment strategy that will not just reduce carbon pollution but will position the United States to continue to grow economically in every state, based on their own design,” she said.

$50 Billion Annual Price Tag
The U.S. Chamber of Commerce, which would certainly welcome profitable investment opportunities, contradicted McCarthy’s rosy predictions about CO2 restrictions stimulating economic opportunity. The Chamber published a report finding EPA’s proposal will cost the U.S. economy $50 billion per year through 2020. That is the equivalent of $500 per household per year.

The Chamber’s findings reminded many of President Obama’s campaign promise in 2008 that he would seek to try to bankrupt those who build coal power plants and would impose skyrocketing electricity prices throughout the economy.

"Under my plan of a cap-and-trade system, electricity rates would necessarily skyrocket," Obama told the San Francisco Chronicle in January 2008. "Coal-powered plants, you know, natural gas, you name it, whatever the plants were, whatever the industry was, they would have to retrofit their operations. That will cost money. They will pass that money on to consumers."

According to a May 2014 MIT study, “Market versus Regulation: The Efficiency and Distributional Impacts of U.S. Climate Policy Proposals,” EPA’s new restrictions are even more costly than the cap-and-trade programs Obama acknowledged would cause skyrocketing electricity prices.

Series of New Restrictions
On June 2, EPA released its long-awaited “Clean Power Plan” targeting existing power plants. Despite the EPA initiative’s name, carbon dioxide is colorless and odorless and is essential to plant and animal life, and its only asserted negative environmental impact is on global temperatures. Unlike another EPA proposal unveiled earlier this year targeting new power plants, the June 2 rulemaking focuses on existing facilities. The new plan requires a 30 percent reduction in carbon dioxide emissions from existing power plants, though EPA designated certain states as requiring greater reductions than other states.

A 120-day public comment period expires Oct. 16, and a final rule is expected sometime in 2015. Legal challenges to the proposed rule are a virtual certainty, and Administrator McCarthy’s surprising statement that EPA’s move “is not about pollution control” stands a good chance of being cited in the litigation.

‘Remarkably Bad Investments’
McCarthy’s insistence that EPA’s move should be seen more as an investment opportunity than an environmental initiative drew skepticism from energy expert Daniel Simmons, director for state policy at the Institute for Energy Research.

“Other countries have seized the ‘investment opportunities’ McCarthy claims this regulation creates,” Simmons said. “Spain heavily ‘invested’ in wind and solar in the form of taxpayer subsidies and preferential treatment and subsequently lost 2.2 jobs for each green job created. The UK similarly ‘invested’ in wind and solar and lost 3.7 jobs for each green job created. Those were remarkably bad investments.”

“Germany heavily subsidized solar jobs to the tune of $240,000 per job. Now Germany has realized its mistake and is pulling back from these subsidies. These are the types of ‘investments’ McCarthy is calling for in the United States,” Simmons noted.

With or without EPA’s asserted economic benefits, the carbon dioxide restrictions will have no real-world impact on pollution or global climate, Simmons noted. Carbon dioxide has no discernible impact on air quality other than as a greenhouse gas, he observed. Even if global warming were a concern, Simmons said, the United States is responsible for only a small portion of global carbon dioxide emissions. Whereas U.S. emissions have declined since the beginning of the century, global emissions continue to rise sharply.

“While McCarthy is wrong to say these are investment opportunities, she is correct in saying the regulation is not about pollution,” said Simmons.

Bonner R. Cohen, Ph. D., (bcohen@nationalcenter.org) is a senior fellow at the National Center for Public Policy Research.

Bonner R. Cohen

Bonner R. Cohen is a senior fellow with the National Center for Public Policy Research, a position... (read full bio)