CO2-Emission Cuts: The Economic Costs Of The EPA’S ANPR Regulations

The Environmental Protection Agency’s (EPA) Advance Notice of Proposed Rulemaking (ANPR) foreshadows new regulations of unprecedented scope, magnitude, and detail. This notice is not just bureaucratic rumination, but could very well become the law of the land. Jason Grumet, a senior environmental advisor to Barack Obama, has promised that a President Obama would “initiate
those rulings.” These rulings offer the possibility of regulating everything from lawn-mower efficiency to the cruising speed of supertankers. Regardless of the chosen regulatory mechanisms, the overall economic impact of enforced cuts in carbon dioxide (CO2) emissions as outlined in the ANPR will be equivalent to an energy tax.

By expanding the scope of the 1990 amendment to the Clean Air Act (CAA), the EPA will severely restrict CO2 emissions, thereby severely restricting energy use.1 Specifically, the EPA would use the CAA to regulate emissions of greenhouse gases (GHG) from a vast array of sources, including motor vehicles, boats and ships, aircraft, and rebuilt heavy-duty highway engines.2 The regulations will lead to significant increases in energy costs. Furthermore, because the economic effect of the proposed regulations will resemble the economic effect of an energy tax, the increase in costs creates a correspondingly large loss of national income.