Kyotos Regulatory Burden II
In our last issue, we discussed a new study by Mark P. Mills of Mills-McCarthy Associates. It demonstrates that if the Environmental Protection Agency classifies carbon dioxide as a pollutant, over a million small businesses would become regulated stationary sources. This would include 28 percent of all schools and 25 percent of all health-care buildings.
Mills has now looked at the actual monetary costs of compliance. To comply, small businesses would have to hire staff “who will install, identify, evaluate, and operate emissions monitoring equipment; some other people to undertake record-keeping and documentation control; yet another team to become expert in and monitor regulatory compliance; still others to consider and implement engineering solutions to the problem of complying with emissions reduction.” Finally, legal staff will also be needed to “consider the entire trajectory of legal exposure and compliance under current rules as well as the interpretations of the regulations as they evolve through inevitable legal battles.”
Mills estimates that these compliance activities will require one person-year of effort. He assumes for the sake of his calculations that a small firm can meet its compliance needs by contracting one-half of a person-year of effort. This, Mills conservatively estimates, will cost about $30,000. Since the threshold for coming under the regulatory purview of the EPA is $8,000 in fossil fuel purchases this means that the cost of fossil fuel for small businesses will jump from $8,000 per year to $38,000 per year.
For firms that purchase $100,000 of fossil fuel their cost will rise by 30 percent. Assuming that a firm would need to use one person-year to comply (a far more realistic assumption) would raise costs by 60 percent. Mills calculates that the total collective cost to American businesses could reach $100 billion. The article is at www.nhes.com/current_issue/fueling.html.
Joint Implementation to Offset CO2
A new report by the Government Accounting Office states that the 32 joint implementation (JI) projects that were approved under a U.S. pilot program to reduce greenhouse gas emissions will offset 200 million metric tons of carbon dioxide and 1.3 million tons of methane over the next 60 years if fully implemented. JI allows developed countries to earn emission credits by funding projects in developing countries that would reduce greenhouse gas emissions.
The reliability of the estimates are not known, according to the GAO. “Standard methods for estimating projects emissions reduction benefits specific to the U.S. initiative have not been developed,” the report said.
Seventeen of the approved projects would reduce emissions directly by, for example, reducing methane leakage in the natural gas distribution system in Russia. The other 15 would reduce emissions by planting trees or protecting forests from logging in developing countries (BNA Daily Environment Report, July 21, 1998).