January 2014

On Christmas eve, the Department of Energy (DOE) rejected the Landmark Legal Foundation’s petition to reconsider the agency’s final rule establishing first-ever energy-efficiency standards for microwave ovens.

LLF argues that the rule violates the Administrative Procedure Act, the federal law governing how agencies develop and adopt regulations. The final rule’s cost-benefit analysis incorporates the Obama administration’s revised (higher) 2013 social cost of carbon (SCC) estimates. Those estimates were not in the proposed rule, so the public had no opportunity to comment on them. In addition, LLF warns, with this “unilateral change,” all agency cost-benefit analyses “will be drastically affected,” potentially influencing administration policy on “everything from power plants to the Keystone XL pipeline.”

Whether or not the microwave rule itself has such wide-ranging implications, SCC analysis is a potent weapon in the war on coal and other fossil fuels. As a pretext for expanding government control of the economy, redistributing wealth, and rigging energy markets, nothing beats the social cost of carbon.

The SCC is an estimate of damages allegedly inflicted on society by a ton of carbon dioxide (CO2) emissions in a given year. Ratchet up carbon’s estimated social cost by about 50%, as the administration did in 2013, and every mandated or proposed reduction in CO2 emissions suddenly appears to be 50% more valuable — i.e., 50% less costly. This is a critical political asset, notes Cato Institute scholar Chip Kappenberger, “as costs are often the greatest barrier to approval.”

DOE’s argument for rejecting the LLF petition may be summarized as follows: [click to continue…]