A Free-Market Energy Blog

EPA’s CO2 Power Grab: Economic Consequences (Part 3)

By James Rust -- July 11, 2014

“The climate change adaption program could make EPA a powerful master that could dictate to all departments in the government. Already the Department of Energy, Department of Interior, Department of Agriculture, and Department of Defense have numerous programs that promote President Obama’s Climate Action Plan.”

At her public announcement June 2, EPA Administrator Gina McCarthy made the following comments about the economic consequences of the Clean Power Plan:

I know people are wondering: can we cut pollution while keeping our energy affordable and reliable? We can, and we will. Critics claim your energy bills will skyrocket.  They’re wrong.  Any small, short-term change in electricity prices would be within normal fluctuations the power sector already deals with.  And any small price increase—think about the price of a gallon of milk a month—is dwarfed by huge benefits. This is an investment in better health and a better future for our kids.

Here is her math:

In 2030, the Clean Power Plan will deliver climate and health benefits of up to $90 billion dollars.  And for soot and smog reductions alone, that means for every dollar we invest in the plan, families will see $7 dollars in health benefits. And if states are smart about taking advantage of efficiency opportunities, and I know they are, when the effects of this plan are in place in 2030, average electricity bills will be 8 percent cheaper.

Bottom line?

For over four decades, EPA has cut air pollution by 70 percent and the economy has more than tripled. All while providing the power we need to keep America strong.

Back to Reality

We think of economic growth in terms of total amount; but the more accurate measure is increase in gross domestic product (GDP) per capita. 

A June 6, 2014, article in The American Thinker by Sierra Rayne, “How Environmental Regulations Hurt The Economy In One Graph,” shows the U. S. economy growth on a per capita basis has slowed since 1970 compared to the time period 1929-1970. 

From 1970 to 2010, the U. S. population increased from 203 million to 309 million, while per capita GNP increased from $24,000 to $49,000. However, based on the growth rate over the period 1929-1970, the per capita GDP would have been $84,000. 

Rayne links the procession of environmental acts (1970 Clean Air Act, 1972 Clean Water Act, 1973 Endangered Species Act, and 1987 Montreal Protocol) to the slowdown in the nation’s rate of economic growth prior to 1970, which might just be part of the truism that there ain’t no such thing as a free lunch for environmental improvement. 

Economic Pain, No Environmental Gain

But EPA’s proposed Clean Power Plan is not about environmental improvement, as yesterday’s post argued. The June 2, 2014, rule will only add to the regulatory burdens and current economic malaise.

Heidi Moore of The Guardian wrote June 6The fault in our starry-eyed ‘recovery’ :  2014 looks like we are going bust again”.  The article disputes economic data put out by the government on unemployment, economic growth, and wealth of most Americans.  This shows EPA’s hit on the economy by unnecessary regulations on fossil fuel use is unwarranted.

Prof. Anthony Kelly’s multi-referenced report for the Global Warming Policy Foundation, Climate Policy and the Poor,” found actions to restrict fossil fuel use has far greater impacts on the poor whether they are from developed or developing nations.

In addition, many adverse consequences are for society by implementation of renewable energy sources–solar, wind, biofuels, and biomass–as substitutes for fossil fuels. He further states the religions of the Western World place assisting the poor as their first priority and yielding to calls for programs to mitigate climate change are counter to this argument.

CO2: The Benefits Side (ignored by EPA)

Carbon dioxide is a necessary chemical to sustain life on this planet.  It is an airborne fertilizer that increases plant yields and bigger plant root systems that make them more drought resistant.

A report on social benefits of carbon dioxide for agriculture alone is estimated at $3.2 trillion from 1961 to 2011. Benefits from 2012 to 2050 are estimated to be $9.8 trillion.

It may be the increase in atmospheric carbon dioxide from 310 parts per million (ppm) in 1950 to 400 ppm today is the reason the planet can feed the population increase of 2.5 billion in 1950 to 7 billion in 2013. These benefits from increased atmospheric carbon dioxide make any suggested economic benefits from carbon dioxide curtailment by the EPA irrelevant.

Electricity: The Master Master Resource

The public should remember that electrification was voted The Outstanding Engineering Achievement of the 20th Century by the National Society of Professional Engineers and other scientific organizations.

This is due to inexpensive, abundant, reliable electricity has contributed more to the health and pleasures of life than any other scientific accomplishment by man.

Thus any activity to reduce its reliability and increase costs is a threat to the health, safety, and economic welfare of the nation.  Here are just a few studies that indicate the EPAs carbon pollution plan will be anti-electricity.

Some Analyses

A June 16, 2014, report, “Ensuring Adequate Power Supplies For Tomorrow’s Electricity Needs,” for the Electric Markets Research Foundation calls attention to a host of issues affecting the reliability of our electric grid system. 

Extreme cold during the 2014 winter caused price spiking and loss of reserves in parts of the country, in particular the Northeast. Coal-fired power plants scheduled for retirement in 2015 were needed to maintain power supply.

Increased reliance on intermittent sources such as solar and wind that may not be available when needed may cause system reliability problems. The trend to using natural gas for new plant construction and conversion of existing power plants to natural gas may cause future problems over pricing and availability of natural gas in future times of urgent demand. 

All of these issues are solutions for reducing carbon dioxide emissions demanded by EPA’s. Thus EPA’s rules jeopardize the national grid reliability.

A paper by Martin E. Rock, P.E., J.D. “Here’s the dirt on the EPA’s new ‘Clean Power’ Plan…,” published June 18, 2014, by energy industry leaderEUCI outlines numerous problems with the EPA plan.

Another dirty little secret is that market forces have reduced GHG emissions more in the US since 2005 than in any other country in the world without any intervention by EPA.  US innovation, free market capitalism, and gas exploration has allowed for dramatic reductions, and these trends indicate even steeper future reductions than does the EPA’s Plan for the next 15 years.  Perhaps someone should tell the EPA the obvious truth about this situation: ‘If it ain’t broke – don’t fix it.

Matt Ridley wrote a June 19th article for the Financial Post,Junk Science Week:  IPCC commissioned models to see if global warming would reach dangerous level this century.  Consensus is ‘no‘, that analyzed worst predictions from the latest IPCC Report. 

The worst set of conditions on greenhouse gas increases led to a temperature rise of 2.1 degrees C.  “The IPCC produced two reports last year. One said that the cost of climate change is likely to be less than 2% of GDP by the end of this century.  The other said that the cost of decarbonizing the world economy with renewable energy is likely to be 4% of GDP. 

Why do something that you know will do more harm than good?”

A House Subcommittee on Energy and Power had a hearing June 19 on the EPA Clean Energy Plan reported as follows:

Rep. Bill Cassidy (R-LA) compared EPA’s promises for its power plant proposal to the administration’s failed promises of Obamacare.  He criticized the administration for misleading the American people about the plan’s impact on jobs and energy prices and overall feasibility and flexibility, saying, “You may say you don’t demand something, but the inherent nature of the rule – the only way it can be reached without the federal government’s squeezing the state – will be to shut down coal (exchange here).

Rep. John Shimkus (R-IL) highlighted the hardships states would face in complying with EPA’s plan, and questioned EPA’s assumptions about electricity generation in states. Shimkus also asked what would happen if EPA did not approve a state’s implementation plan.  She replied, “EPA will move forward with a plan. … We are not focused on that right now” (exchange here).

Upton concluded, ‘As with the health law, another train wreck is coming – unless Congress does something about it.  It’s time to start being honest with the American people about this expensive power plan, and that process started with today’s hearing.’”

Aftermath of Rule

Possibly the greatest dangers to the nation lies in what happens after EPA implements its Carbon Pollution Standards. 

On June 30, the EPA announced their climate change adaptation programs that are summarized as follows:

EPA’s policy is consistent with the President’s Climate Action Plan and Executive Order 13653 on Preparing the United States for the Impacts of Climate Change, which calls on the federal government to strengthen the adaptive capacity of its programs and operations. The new policy updates the EPA policy first issued in June 2011, and includes the following directives:

–        Modernize EPA financial assistance program to encourage climate-resilient investments;

–        Provide information, tools, training and technical support for climate change preparedness and resilience;

–        Implement priority actions identified in EPA’s Climate Change Adaptation Plan and Implementation Plans;

–        Focus on the most vulnerable people and places;

–        Measure and evaluate performance of climate adaptation actions;

–        Continue EPA planning for climate change-related risk; and

–        Coordinate with other federal agencies”

Later that day EPA announced their proposed rule Standards of Performance Solid Waste LandfillsThis rule would increase removal of methane gas from landfill emissions to 66 percent.

The climate change adaption program could make EPA a powerful master that could dictate to all departments in the government. Already the Department of Energy, Department of Interior, Department of Agriculture, and Department of Defense have numerous programs that promote President Obama’s Climate Action Plan.  I am on the distribution list for News Releases from all these agencies. 


My observations are each agency is trying to out-perform the others in their attempts to come up with programs that please the Whitehouse. What comes to mind is the fealty of vassals to his lord back in medieval times. 

The EPA may be the new lord. One example is the U. S. Navy’s Farm to Fleet program that has a long term goal of 50 percent biofuels for its fleet needs. It would be cheaper to buy oil wells.

With a country that has budget deficits of $1.5 billion per day, these programs could help sink the nation into an insurmountable level of debt in a few years.

There is much speculation Emperor Nero fiddled when Rome burned in AD 64.  It appears the “fiddle” has been passed to the EPA by its recent rulings.  It is time to say to the EPA “You have done enough”.

By coincidence, sixty years ago on June 9, 1954; U. S. Army lawyer Joseph Welch told Senator Joseph McCarthy, “You have done enough.  Have you no sense of decency.”  Welch’s remarks stopped McCarthy’s harassing people alleged as Communists. Maybe these remarks will stop this useless harassment of the nation’s abundant, economical, reliable, and geographically distributed fossil fuels.


James H. Rust, Professor of nuclear engineering and policy advisor The Heartland Institute.


  1. Richard A. Fletcher  

    I wouldn’t count on it, as the EPA thinks they are God.


  2. Ronald Walter  

    Greenhouses ‘juice’ the growth of tomatoes by placing an alcohol burner inside the greenhouse and boost the CO2 to 4000 ppm.

    The BNSF and the Union Pacific are going to haul coal out of Wyoming until the cows come home and that is that.

    The business of commerce will continue as such and the job will get done, even if the EPA wants to be a burr under the saddle.

    At the end of the day, coal will prevail.

    The US burned 945 million tons of coal in 2012. China, 3.5 billion tons.

    The EPA is barking up the wrong tree and soon to be ignored completely.

    The Village Idiot will never know.


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