You only need to know one number about the Obama administration’s much-ballyhooed restrictions on greenhouse gas emissions: 1.8 percent.
That’s how much the restrictions will reduce global CO2 emissions: 1.8 percent.
That’s not nothing, but it’s not much. And it’s that number that we need to keep in the back of our minds as we consider the massive costs the president is asking you, me, and every other American to bear if his proposed regulations are enacted.
That’s the number on the benefit side of the equation. But what about those costs?
The GHG regulation would result in a reduction in U.S. Gross Domestic Product by $51 billion on average every year through 2030, 224,000 fewer U.S. jobs on average every year through 2030, and an expected $289 billion increase in electricity costs through 2030.
All for a reduction in emissions of 1.8 percent.
The combination of increased costs and reduced investment are estimated to result in lower total disposable income for U.S. households by $586 billion by 2030.
Some have argued that the GHG rule will also have a positive impact on public health. However, forcing businesses to lay people off is not a good strategy for improving overall public health. Employers provide important assistance such as health insurance and a regular income. When business can no longer afford to continue or expand their operation because of tightening regulations, working Americans receive the brunt of the blow.
Increasing the input costs for energy intensive industries such as manufacturing are a sure way of slowing many important aspects of economic activity such as investment and job creation. Not only do these new regulations threaten the aggregate growth of the American economy, the negative impacts disproportionately affect those of middle and lower incomes, who spend more of their monthly income on energy.
Some may consider the negative economic effects of tighter emissions standards as “acceptable” if they significantly improve public and environmental health. However when we consider the results of the most recent EPA regulations, it is very difficult for anyone to make that argument.
Global emissions rise
Global emissions are expected to rise by 31 percent between 2011 and 2030. The president’s proposed EPA regulation might make a lot of people feel good, but it’s really a drop in the ocean.
Worse, the regulations actually work against the objective of solving climate change. That’s because the regulations represent a de facto ban on developing clean coal technology in the United States. The regulatory environment has become so volatile and the administration has set the bar so incredibly high, that very few are interested in investing in building coal-fired generators. If we’re not building them here, there’s no reason to work on the technology.
The cost-benefit analysis of this decision is pretty straightforward. The American people are being asked to pay an incredible amount in terms of higher prices, lost jobs, and reduced economic opportunity. Is it worth it for what we’re getting in return?