EPA’s Clean Air Act is Wrong Tool

Published in National Journal Energy & Environment Experts Blog

The Clean Air Act (CAA) is the wrong tool to reduce U.S. greenhouse gases and unfortunately will result in a great deal of economic sacrifice for minimal environmental gain.

Last year, I testified before a House Energy and Commerce subcommittee on these adverse impacts. One of the most severe is on business expenses, the cost of capital and on new U.S. investment. U.S. gross private domestic investment was down by $256 billion in the fourth quarter of 2011 relative to the fourth quarter of 2007. Any substantial investment could well exceed EPA’s threshold level of GHG emissions and be subject to yet unknown CAA requirements. The recent historical relationship between investment spending and employment shows that each $1 billion dollar decrease in investment is associated with a loss of 15,500 jobs in the U.S. Conversely, each billion-dollar increase in investment is associated with 15,500 additional jobs.

Other analysis shows that if U.S. capital spending declines by $25 to $75 billion, in 2014 there would be an economy wide job loss of 476,000 to 1,400,000 when direct, indirect and induced effects are included. As a result, GDP would be $47 billion to $141 billion less than the baseline forecast.

Unfortunately, absent any global participation in greenhouse gas reduction by major emitters in developing countries, the reduction in global GHGs will be minimal. Given these economic hardships with little environmental return it makes little or no sense for the EPA to continue down this road and it should be stopped through any legislative, administrative or legal means.