A series of recent letters to the Chestertown Spy have castigated our Representative, Andy Harris, for sponsoring HR637, a bill that would change the way greenhouse gases can be regulated. The bill is a necessary step toward sensible and effective climate policies, and the depth of misunderstanding of the nature of greenhouses gases and the Clean Air Act evident in the letters makes them the subject of this column.
HR637 has 120 co-sponsors, and its purpose is to stop the Environmental Protection Agency from using the Clean Air Act to regulate greenhouse gas emissions. To do so, it changes the language of the Clean Air Act to remove the six greenhouse gases from EPA’s jurisdiction. The six are methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride, carbon dioxide.
There are three reasons why I think the bill co-sponsored by Andy Harris is a good idea: 1. No one is harmed by breathing any of these compounds at concentrations they could reach in the atmosphere whether regulated or not. 2 Reliance on the Clean Air Act is a terrible way to deal with global warming. 3. There are much less costly and more effective ways to address global warming — like the carbon tax that I discussed several weeks ago.
First, we can all breathe freely if these compounds are unregulated. Leaving aside the personal animus expressed in many of the letters, their common error is in believing that the six compounds that would be removed from the list of “air pollutants” are themselves hazardous to human health. The repeated claim that “they will impact our crops, livestock, seafood, soil and waters that are the bounty of our Chesapeake Bay region, not to mention our lungs!” is simply untrue. The only reason that EPA is regulating those compounds is their suspected contribution to global warming.
A little history helps here.
In 2009, EPA issued a finding that these 6 compounds “endanger” public health and welfare due to their contribution to global warming. This is the “endangerment finding,” famous in some quarters and infamous in others. Nowhere in the endangerment finding does EPA mention any direct impacts of these compounds on health. That is because the current and future concentrations of these compounds in the atmosphere are far, far below any threshold at which they could be harmful. And some, like the two fluorocarbons and methane, are harmless propellants that have been used in hairspray. The only property that has led EPA to regulate them is their effect as greenhouse gases.
To make this perfectly clear, EPA is required under the Clean Air Act to regulate emissions of hazardous air pollutants. EPA’s current list includes 187 hazardous air pollutants. None of the greenhouse gases appear on this list. Nor are they in the list of criteria air pollutants (particulate matter, ground-level ozone, carbon monoxide, sulfur oxides, nitrogen oxides, and lead) for which EPA is required to establish ambient air quality standards. If these compounds did pose dangers cited by the letter writers, they would have to be on one of these lists.
Second, the Clean Air Act was never intended to deal with problems like global warming. EPA relied on the endangerment finding to issue a rule requiring existing electric power plants to reduce their emissions of carbon dioxide. EPA also issued a rule in 2016 to regulate methane emissions from oil and gas production as greenhouse gases. These rules will significantly increase costs of natural gas and electricity to consumers and do little to slow the pace of global warming. They are just targets of opportunity, singled out because the Clean Air Act does not give EPA the authority to utilize cost-effective, economy-wide policies that could achieve much greater results at much lower cost.
President Obama declared that “if Congress won’t act on global warming, I will use existing regulatory authorities to take action.” EPA chose the Clean Air Act to support its moves on global warming. But under the Clean Air Act, EPA can only issue performance or technology-based standards for particular categories of sources. So the methane rule applies only to oil and gas wells, and requires reductions in methane emissions that could be — and in fact are being — achieved at far lower cost by addressing leakage from transportation and use of natural gas. The Clean Power Plan is itself before the Supreme Court because of challenges upheld by the lower courts that EPA went beyond what the Clean Air Act allows in designing the rule. In particular, EPA based requirements not on what is technically feasible and economically justified “within the fence” of a power plant, but expected power plants to pay for emission reductions by others.
This kind of emission trading is in itself a very good idea, because it allows the market to find the most cost-effective ways to reduce emissions. But under the Clean Air Act, the extent of that market is tightly circumscribed, so that EPA may have exceeded its authority even with the small amount of offsets it allowed in the Clean Power Plan. Even if the courts uphold the Clean Power Plan, its narrow focus on electric power plants means that there are widespread opportunities to reduce emissions more cost-effectively that it cannot touch.
Third, there is a far better way to do all this. The Obama Administration’s devotion to regulation has done little or nothing for the environment, but it has put a stranglehold on economic growth. The Administration also issued rules for new car fuel economy that auto manufacturers cannot meet unless car owners sacrifice affordability and performance and other rules that require amounts of ethanol in gasoline that can harm older cars as well as boat and farm engines.
HR 637 is an important step toward dismantling this regulatory approach to climate policy, and it clears the way for building a consensus for a less intrusive and more effective one. Once this regulatory jungle is cleared away, my preference would be for a carbon tax set at a level that gives the best balance between risks to the US economy from global warming and the cost of reducing emissions. Another wise and cost-effective approach could be a technology strategy emphasizing basic and applied research to develop breakthrough clean energy technologies we cannot envision today.
What is most important is to settle on a policy that has sufficient political consensus to last from one Administration to another. One thing that this election should have proven to anyone is that the regulation that one Administration can impose, the next can undo. Global warming is a process that evolves slowly over time, that we do not understand well enough to predict with any confidence, and that will have to be addressed in a consistent manner for many decades to come. In particular, we will not get the kind of research and innovation necessary for a low carbon future unless we put in place long lasting policies that provide adequate rewards for innovation. Getting rid of hastily contrived and excessively costly regulations is a good first step. HR637 does not mean that global warming will not be dealt with, but it does ensure that global warming will no longer be dealt with quite so badly.
David Montgomery was formerly Senior Vice President of NERA Economic Consulting. He also served as assistant director of the US Congressional Budget Office and deputy assistant secretary for policy in the US Department of Energy. He taught economics at the California Institute of Technology and Stanford University and was a senior fellow at Resources for the Future.