Not satisfied with its efforts to regulate carbon, the U.S. Environmental Protection Agency is beginning a two-month comment period on new proposed rules that would tighten emissions restrictions on power plants that burn coal and oil.
If adopted, these new rules will raise power production costs, perhaps forcing the closure of the oldest plants, and making new ones more expensive.
The proposed rules would affect power plants’ emissions of “heavy metals,” including mercury, arsenic, chromium, and nickel, as well as acid gases like hydrogen chloride and hydrogen fluoride. Power plants would have to be inspected every year to ensure “optimal combustion.”
These rules are projected by EPA to cost $11 billion per year in 2016 to American households, who will eventually pay the higher costs of producing electricity.
The costs of the new regulations would put an implicitly higher price on electricity generation, particularly from coal. In contrast, EPA’s carbon regulations would put an explicit price on carbon, according to James Lucier of Washington’s Capital Alpha Partners, an investment research firm.
But Americans should not worry about negative economic effects of these rules, according to EPA, because, astoundingly for a rule of this magnitude, compliance is characterized as “economically feasible.”
Specifically, the EPA fact sheet states that “a range of widely available, technical and economically feasible practices, technologies and compliance strategies are available to power plants to meet the emissions limits, including wet and dry scrubbers, dry sorbent injection systems, activated-carbon injection systems, and baghouses.”
EPA tries to sweeten the rule by saying “this rule will provide employment for thousands, by supporting 31,000 short-term construction jobs and 9,000 long-term utility jobs.”
However, 40,000 new jobs is less than 20 percent of the 222,000 private sector jobs created just last month. Far more jobs would be lost due to the higher price of energy that results from the rule.
The benefits, calculated at $60 billion to $140 billion in 2016, supposedly take the form of improvements in Americans’ health, lowering cancer, premature deaths, heart attacks and asthma.
But these gains are hard to measure, especially since other factors, such as obesity and lack of exercise, are involved. Asthma has been rising over the past two decades, even as the air has been getting cleaner.
As well as trying to eliminate the use of coal, one of America’s major resources, President Barack Obama also wants to increase taxes on oil and gas. These would discourage domestic production just when global uncertainly requires us to expand it, and shrink the profitability of American companies vis a vis foreign ones.
The proposed new energy taxes in Obama’s 2012 budget would make domestic oil relatively less profitable, and tend to raise America’s already high fraction of imports of crude and product. Such taxes would result in the substitution of foreign oil for domestic, and curtail well-paying jobs in domestic exploration for and production of oil.
Obama’s budget assumes it will raise $3.6 billion in 2012 and $46 billion over the next decade from these tax hikes on oil and gas, more than on any other industry.
Plus, a disproportionate share of tax increases on overseas income and higher Superfund levies would also hit oil hard, raising another $21 billion, for a total of about $67 billion over a decade.
The nuclear power industry will be set back for decades due to Japan’s nuclear disaster and Senate Majority Leader Harry Reid, D-Nev., blocking of the disposal of spent nuclear fuel in Nevada’s Yucca Mountain.
So higher electricity prices, no nuclear expansion, coal becoming more difficult to use economically, oil and gas taxes up — all at a time when unemployment is close to 9 percent.
Let’s hope the wind blows and the sun shines — otherwise, our economy could grind to a halt.
Examiner columnist Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor, is a senior fellow at the Hudson Institute.