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:

• Coal unit retirements would increase by about 48 GW
• Electricity sector costs would increase by $184 billion (present value over 2011-2030 in 2010$) or $17.8 billion per year
  • Includes coal unit compliance costs (including $72 billion in overnight capital costs), fuel price impacts, and costs of replacement energy and capacity
• Coal-fired generation in 2016 would decrease by about 13% and electricity sector coal demand in 2016 would decrease by about 10%
• Natural gas-fired generation in 2016 would increase by about 26% and Henry Hub natural gas prices 2016 would increase by about 17%
  • Increased natural gas prices would increase natural gas expenditures by residential, commercial, and industrial sectors by $85 billion (present value over 2011-2030 in 2010$) or $8.2 billion per year
• Average U.S. retail electricity prices in 2016 would increase by about 12%, with regional increases as much as about 24%
• Net employment in the U.S. would be reduced by more than 1.4 million job-years over the 2013 – 2020 period, with sector losses outnumbering sector gains by more than 4 to 1.

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.