The country is about to see its fiercest climate-change battle. After years of congressional inaction, the Environmental Protection Agency is applying new rules to curb greenhouse-gas emissions from cars, trucks and — most controversially — power plants, the biggest national emitters. Senate Minority Leader Mitch McConnell, R-Ky., has said he will try to restrict the EPA if Republicans take over the Senate. President Barack Obama’s executive actions will be an issue in the 2016 presidential campaign.
The EPA has drawn up the best possible policy framework under current law, and it is much better than nothing. Congress should not weaken the rules. But lawmakers could significantly improve on them.
The Obama administration’s plan has three pieces. First, the EPA has persuaded carmakers to nearly double the fuel efficiency of U.S. autos, in the process cutting their carbon emissions in half. Second, the EPA placed limits on the carbon dioxide that new power plants can emit, virtually guaranteeing that no more conventional coal-fired plants will be built in the United States. Third, the EPA proposed in June a rule that would restrict the emissions of existing power plants, cutting their carbon emissions by 30 percent by 2030.
The central criticism is that these rules, particularly the third, will exact extreme costs on the economy without reversing the rise in global temperatures.
But critics have been citing high-cost estimates based on faulty assumptions, and the EPA figures that its power plant rule, which gives utilities many years to comply, will peak at about $9 billion per year in 2011 dollars. That’s a relative pittance in an economy that’s nearly $17 trillion and growing. In return, the EPA projects health and climate benefits outstripping costs many times over. Even if the EPA’s reckoning is significantly off, the regulations will do more good than harm — without even considering their importance in motivating other countries to act.
But will they do a maximum amount of good for the costs? Here, the EPA’s approach falls short. It applies to only parts of the economy when an economywide policy would extract carbon dioxide from wherever it’s cheapest. It commands particular states to meet centrally determined emissions targets and regulates how they can comply. The consulting firm Brattle Group notes in a recent analysis that the required effort could vary widely across the country: Vermont has no fossil-fuel power plants, so it won’t have an emissions goal; Texas will probably have to shut half its coal-fired power plants, replacing them with cleaner-burning natural gas units. The EPA’s rules do not get the Obama administration close to its goal of slashing economywide emissions by 80 percent by 2050.
The EPA recognizes that command-and-control regulation is not ideal. It is offering as much flexibility as it can, including regional emissions-cutting pacts, which would allow the required effort to be averaged across states and reduce the total cost by 17 percent. Yet only Congress can launch a more ambitious but flexible program giving power to U.S. companies and consumers.
The EPA is starting the country down a carbon-reduction path, an important signal to Americans and foreigners seeking confidence that the United States will cut its carbon use. But the regulations’ greatest contribution will come if they prod Congress to enact a plan that’s both more comprehensive and more efficient.