The Environmental Protection Agency announced Thursday that it has finalized a pair of new regulations on power plants expected to produce massive economic damage and unemployment in coming years. The regulations aim to reduce pollution in down-wind states, and replace similar regulations created by George Bush’s EPA in 2005 and struck down by a federal court.
President Obama was quite clear on the campaign trail that under his cap and trade plan, “electricity rates would necessarily skyrocket.” The EPA resumed the effort to regulate emissions after cap and trade died in the Senate, but evidence suggests that the effects on Americans’ electricity bills will be the same.
The EPA’s move to implement the Clean Air Transport Rule and the Utility Maximum Achievable Control Technology, both of which will hit coal power plants hardest, comes less than a month after the release of a high-profile study showing the extent of the regulations’ damage to the energy sector – and, consequently, to the American economy generally, and the country’s employment situation.
The study, conducted by the National Economic Research Associates and commissioned by the American Coalition for Clean Coal Electricity, found that the regulations will increase electricity rates by nearly 12 percent nationwide in the next five years, and by more than 23 percent in certain regions. The regulations will add an average of $17.8 billion to the nation’s electricity costs every year for the next 20 years, NERA found.
The employment picture will not be pretty, either: NERA estimated that the regulations would cost the American job market 1.88 million job-years. Those losses more than offset the 450,000 job years the study anticipates will be created by the new regulations.
Since the vast majority of consumer products depend somehow on technologies that use electricity, higher electricity rates mean a higher cost of doing business. That leads, inevitably, to higher prices for those products, either directly though companies charging their customers more, or indirectly through a shortage of supply as those companies produce less (or even go out of business).
“American households will be hit hard, as will American businesses,” wrote Heritage Foundation Policy Analyst Nicolas Loris of the regulations’ effects. Their economic ripples will not be confined to the energy sector, Loris predicted. “Producers everywhere will try to cover their higher production costs by raising product prices. As a result, consumer demand will fall, and income and employment will drop.”
As the Associated Press reported:
While the EPA says the suite of regulations will not cause the power to go out, almost everyone agrees that it will help close down some of the oldest, and dirtiest, coal-fired facilities. At the remaining plants, operators would have to use existing pollution controls more frequently, use lower-sulfur coal, or install additional equipment.
“The EPA is ignoring the cumulative economic damage new regulations will cause,” said Steve Miller, president and CEO of the American Coalition for Clean Coal Electricity, a pro-coal industry association. Along with other pending regulations, Miller said they “are among the most expensive ever imposed by the agency.”
Most regulations have adverse effects on the economy. These are likely to be especially destructive, given the wide range of industries affected by energy prices. Yet Obama’s EPA is going ahead with their implementation, even in the midst of a sputtering economic recovery.