Good or Bad Climate Policy by David Montgomery

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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.

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Letters to Editor

  1. Joe Wiedemann says:

    Thank you again, David. Please continue offering your unemotional comments and insights. A thankless task, indeed, these days.
    Joe W.

  2. Bob Ingersoll says:

    I almost always disagree with David Montgomery since he has become a regular and welcome contributor to the Spy. However, there is a lot of truth in his latest essay. Yes, the EPA probably should not be trying to solve the problems of global climate change by trying to regulate the release of carbon dioxide and methane. In proportionate amounts they are not harmful to humans. As a function of breathing.
    But as an accumulated gases in the atmosphere, they are dangerous to the very fragile balance of heat in/heat out in our tiny atmospheric bubble. We know this as a fact, not an alternative fact. It would be far better to let a carbon trading paradigm help us control the release of such greenhouse gasses. The market, as Mr. Montgomery states, would be far more effective at getting the desired effect of carbon dioxide level control. President Obama tried to get the Congress to pass such legislation and it never got out of committee. Really didn’t even get a hearing in committee. And it will never get out of committee until certain House and Senate obstructive climate deniers wake up to the situation we face as the human race rather than a race to ignore the obvious. HR 637 might be a worthy bill if it required that a carbon trading paradigm be in place as part of the bargain to delete the EPA power to regulate those gases. But without the threat of regulation, the business world will cruise merrily along and think about it next year, or the year after.
    Sea level rise as a result of global warming is real. My farm is slowly both sinking and losing land to higher and higher high tides. This is not an illusion or alternative fact. It is observable, provable, and constant. Bills like HR637 go against the grain of fixing the problem by saying something not so good is worse than anything. Mr Trumps solution is to get rid of every regulation he can to open up business opportunities that increase the problems of society but create wealth opportunities for the already wealthy. That would let the Chesapeake Bay fall back into a downward spiral because there would be no one to regulate what you could dump in the tributaries. That would let unrestricted amounts of anything to be vented to the atmosphere. That reminds me of the unregulated colonies and early states dumping everything they didn’t want into the rivers until they caught on fire.
    So, Mr. Montgomery, lets link some better solution into the demise of the not so good solution, rather than regress to the No solution.

  3. Frederick Patt says:

    Mr. Montgomery’s latest contribution is consistent with previous ones in its relentlessly partisan tone and criticism of actions by the Obama administration. However, this piece, like his others, ignores several significant facts. He characterizes the effects of greenhouse gases on public heath purely in terms of their direct effect on air quality. In fact, there are very real and substantial effects such as coastal inundation due to sea level rise, the spread of tropical diseases due to increasing temperatures, and reductions in agricultural productivity in areas already affected by poverty and starvation. Faced with a Congress that is completely intransigent on global warming, Mr. Obama used the only tool at his disposal, the EPA. HR 637 is a transparent action to eliminate meaningful actions by the federal government to combat global warming for the foreseeable future, and to perpetuate the thoroughly discredited notion (also stated here) that global warming is a phenomenon that “we do not understand well enough”. Also, while the proposed carbon tax may be a good idea, I believe we (including Mr. Montgomery) know full well that any action that has the word “tax” in it is DOA in Congress. If this tax is worthwhile, it could be enacted before the existing “regulatory jungle is cleared away”. Proposing to do it in the reverse order is just a standard conservative tactic to ensure that, in fact, nothing is done.

  4. Chris Koch says:

    First, I want to thank Mr Montgomery for commenting on Andy Harris’ disastrous environmental bill, HR 637, https://www.congress.gov/bill/115th-congress/house-bill/637/text working its way thru congress. Now at least we are discussing it in an open and civil manner and we can all see where Mr Harris stands regarding our environment. Mr. Montgomery, I consider your view as the Old School view which asks “What harm is it?”, when addressing pollution, and emphasizes what industry wants. The New School view asks “What good is it?”, and focuses on that which is healthy and sustainable for all Americans. Our knowledge of the harm that decades of pollution is and has done to our environment is in its infantile stages. Only extreme hubris would assume otherwise considering the relatively short time span since we have even acknowledged any potential negative consequences. And what do we see politicians doing today? Eliminating research funding and denigrating our scientific community, while striping oversight of industrial polluters with bills like HR 637. I would urge you to use your good knowledge of the subject to become part of the solution.
    Second, my big question to Mr Harris is: Who asked you to sponsor this bill? Was it your constituents from the Chesapeake Bay Region telling you that we were not getting enough methane, hydrofluorocarbons, perfluorocarbons, or sulfur hexafluoride, in our air and we needed your help on capital hill? Or was it the lobbyists from the oil and gas industry? I would suggest you follow Governor Hogan’s lead and ignore “consultants” from Washington that put industrial interests ahead of Maryland citizens. Accolades should be sung for Governor Hogan who just called for a ban on Fracking in MD. Against the advice of Washington D.C. based, Mr Montgomery: http://chestertownspy.org/2017/02/27/why-maryland-does-not-need-a-fracking-ban-by-david-montgomery/ Mr Harris, may we one day sing your accolades too.
    Finally, back to HR 637…. the broad carnage within the bill goes on to establish new law by stating in paragraph (2) NO REGULATION OF CLIMATE CHANGE, “nothing in any of the following Acts or any other law authorizes or requires the regulation of climate change or global warming:
    (A) The Clean Air Act,
    (B) The Federal Water Pollution Control Act
    (C) The National Environmental Policy Act
    (D) The Endangered Species Act
    (E) The Solid Waste Disposal Act”
    HR 637 finishes with stating that the “rules (or any similar or successor rules) of the Environmental Protection Agency shall be void and have no force or effect on:
    1) Oil and Natural Gas Sector: Emission Standards
    2) Carbon Pollution Emission Guidelines for Existing Electricity Utility Generating Units.”
    Mr Harris, please remember whose interests you were sent to Washington to protect and protect our environment. I recommend you follow the advice of General James Mattis. Secretary of Defense, James Mattis has recently asserted that climate change is real, and a threat to American interests abroad and the Pentagon’s assets everywhere. https://www.propublica.org/article/trumps-defense-secretary-cites-climate-change-national-security-challenge
    Contact Representative Harris and voice your opposition to HR 637. https://harris.house.gov/contact-me/email-me or call at 202-225-5311.

  5. James Nick says:

    After several months now of reading his commentary, it has become clear that Mr Montgomery sees his role as a Spy contributor as the designated conservative bomb-thrower. And as agents provocateurs are wont to do, he frequently tosses out Molotov cocktails of illogical nonsense just to see what kind of reaction it provokes. He has even responded to himself when he fails to provoke his desired reaction.

    Mr Montgomery’s latest contribution predictably follows this model. The central question he poses seems to be: How much poison can we dump into our atmosphere and not die from its first-order effects? The logic(?) seems to be that if we don’t suffer immediate health effects from breathing in six specific compounds then they can be safely ignored. Furthermore if we can’t detect the effects of these compounds with our five primary senses then their future impact can’t be understood well enough to make predictions with any confidence.

    The first-order effects of global warming gasses are well understood and easily seen in any number of demonstrations readily available on YouTube. The build-up of greenhouse gasses traps heat, period. This is basic science. There is no debate; there is no “misunderstanding” about the nature of these gasses. But Mr Montgomery assures us that that’s Ok. No one is being harmed by breathing in these gasses.

    The second-order effects of these gasses building up in our atmosphere are just as obvious. Polar ice caps are melting, glaciers are retreating and disappearing, coral reefs are bleaching and dying, sea levels are rising, weather events are becoming more extreme, and most compelling, global temperatures are relentlessly climbing. But that’s evidently Ok too. Not only are all these observations just alternative facts and a monumental hoax perpetrated by alarmist liberals but even if some happen to be true, it will be a far, far better world if we ignore all this than live under the yoke of oppressive, job-killing regulations.

    But for those of you who play chess by looking down the chessboard more than two moves it’s just as obvious what the tertiary effects will be. In the not too distant future, perhaps Mr Montgomery, but certainly his children and grandchildren, will be hearing the gallop of the Four Horsemen of the Apocalypse gaining on them as world-wide crop failures, disease, and mass migrations become more and more common. Even the Pentagon recognizes global warming as “threat multiplier” and a significant security risk (https://www.theguardian.com/environment/2016/sep/14/military-experts-climate-change-significant-security-risk).

    Is this the point we need to get to for Mr Montgomery to declare his six compounds a danger to public health and welfare?

  6. David Montgomery says:

    A very interesting set of responses. I have to reiterate that my problem is with the regulatory overreach of the Obama Administration not with measured action to address climate risks. The Clean Air Act, and the other laws mentioned in HR637, provide neither the flexibility nor the scope required for cost-effective climate policy. At best, they could lead to a patchwork of controls that contribute little to slowing global warming while imposing unnecessarily high costs. Whether the best legislative strategy is get rid of the regulatory mistakes first, then work on a better approach, or make a deal to do both simultaneously, is a legitimate question to ask. The provisions of HR673 are required in either strategy.

    I am intrigued by the notion that I am “old school” on the environment. The point, I believe, is more serious than the writer makes it. There is a fundamental divide between asking “what harm is it?” and asking “what good is it?” and it is far from clear that history is on the side of those who advocate banning all substances until they are proven beneficial (or at least harmless). This approach has become known as the precautionary principle, and I wrote about the logical impossibility of using that principle for climate change in the journal Human and Ecological Risk Assessment. Emissions of the principal greenhouse gas, carbon dioxide, cannot be reduced sufficiently to make a difference to global warming without incurring substantial costs and without imposing other kinds of health and environmental risks from the alternatives. The question that matters for climate policy is indeed how to do the least harm, considering the costs of control and the risks of continued emissions.

    And on the point of balancing harms, I will disappoint readers who see me as relentlessly partisan by saying a nice word about the adoption by the Obama administration of the “social cost of carbon” to determine how far we should go in reducing greenhouse gas emissions. That social cost of carbon was an estimate of how much damage would be avoided WORLDWIDE if the US reduced emissions of carbon dioxide by one ton. The guidance was to use that number in cost-benefit analysis to see whether a particular action that would increase or decrease carbon dioxide should be undertaken. I think that use of worldwide damages was inappropriate, but that the implied estimate of the likely damage done to residents of the United States was reasonable. My intention here is not to debate the actual number or its implications for particular regulations, just to point out that by issuing adopting a social cost of carbon the Obama Administration committed itself to judging greenhouse gas emissions by “what harm do they do?” That, I submit, is the right way to do it.

    • James Nick says:

      A carbon tax is a useful first step in limiting the emissions of greenhouse gases but only as a bridge while strict worldwide regulations are put in place and technology advances enough to permit a move to carbon-neutral energy sources. At its most fundamental, a carbon tax system is the equivalent of letting two companies upstream of a city’s drinking water intake bargain on how much toxic waste and raw sewage they will dump into the river where that amount is not zero.

      As for Mr Montgomery invoking the “Precautionary Principle” he conveniently fails to speak to the concept of the “Irreversible and Catastrophic Harm Precautionary Principle” that covers the situations where catastrophic losses can result in the worst-case scenario. Failure to take urgent and aggressive action in these cases is not optional even in cases where all the details of the threat are not yet known. This formulation appears in many disciplines under different names. In statistics, it comes up in the concept of Type II error where, in this case, it would be the failure to reject the null hypothesis that Mr Montgomery’s six compounds do no harm.

      Mr Montgomery states that “… it is far from clear that history is on the side of those who advocate banning all substances until they are proven beneficial (or at least harmless).” He is essentially arguing that there be no regulations until or unless something is proven to be harmful. Nonsense. There are many regulatory agencies in this country that must operate on the Irreversible and Catastrophic Harm Precautionary Principle. Consider the FAA and FDA where past (and even present) industry pressure resulted in the failure to take proactive precautions and regulations. This resulted in many regulations being written in the blood of countless victims and enacted AFTER an aircraft design or component or drug was proved to be lethal. What about the Nuclear Regulatory Commission. It doesn’t take the proverbial rocket scientist to intuit the potential catastrophic consequences of a nuclear power industry operating on the profit motive and left to its own devices. The need for strict, proactive regulations is self-evident before the worst-case happens. Global warming is no different. Think Fukushima and Chernobyl happening in slow motion and on worldwide scale but the same catastrophic consequences. That, Mr Montgomery, is a risk I can do without. I am not willing to accept your misguided, laissez-faire, pro-business, anti-regulation ideology and wait to see what happens.

      • James Nick says:

        Make that… A Type II error would be the failure to reject a FALSE null hypothesis that the six compounds do no harm.

  7. Steve Payne says:

    The Supreme Court has ruled that EPA can regulate greenhouse gases under the Clean Air Act.

    https://www.justice.gov/enrd/massachusetts-v-epa

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