Senate Republican Policy Committee

Post image for NERA Economic Consulting Releases Study on Combined Impacts of EPA Utility MACT Rule and Clean Air Transport Rule

File this one under regulatory trainwreck. NERA Economic Consulting has just published a study on the combined economic impacts of EPA’s Clean Air Transport (CATR) Rule and Utility Maximum Available Control Technology (MACT) Rule.

NERA estimates the rules will impose $184 billion in cumulative costs on the electricity sector, increase average U.S. electricity prices in 2016 by 12%, and reduce net U.S. employment by 1.4 million jobsduring 2013-2020.

“It is important to note that this report only covers CATR and Utility MACT,” comments Brandon Plank of the Republic Policy Committee. “It does not include the costs of EPA’s greenhouse gas regulations under the Clean Air Act, New Source Performance Standards for refineries and utilities, ozone and particulate matter standards, reclassification of coal ash, etc.” (See chart below.)

Here is the NERA study’s summary of key results: [click to continue…]

A recent study by the Manufacturer’s Alliance/MAPI finds that EPA’s proposed revision of the “primary” (health-based) national ambient air quality standard (NAAQS) for ozone would have devastating economic impacts, such as:

  • Impose $1 trillion in annual compliance burdens on the economy between 2020 and 2030.
  • Reduce GDP by $687 billion in 2020 (3.5% below the baseline projection).
  • Reduce employment by 7.3 million jobs in 2020 (a figure equal to 4.3% of the projected labor force in 2020).

In a companion report, the Senate Republican Policy Committee estimates the job losses and  “energy tax” burden (compliance cost + GDP reduction) each State will incur if EPA picks the most stringent ozone standard it is considering.

The costs of tightening ozone standards are likely to overwhelm the benefits, if any, as Joel Schwartz and Steven Hayward explain in chapter 7 of their book, Air Quality in America: A Dose of Reality on Air Pollution Levels, Trends, and Health Risks

So let’s see — we have emission regulations that function as de-facto energy taxes, and the costs far outweigh the putative benefits. Sound familiar? The resemblance to Waxman-Markey is more than superficial, because if stringent enough, air pollution regulations can restrict fossil energy use no less than carbon taxes or greenhouse cap-and-trade schemes.

For more information on EPA’s proposed ozone NAAQS and the MAPI study, see my post today on CEI’s Open Market.Org.