Policy Documents

How EPA Could Destroy 7.3 Million Jobs

William Shughart II –
November 22, 2010

Environmental Protection Agency officials Wednesday provided power companies and states with new guidance on EPA’s plans to regulate greenhouse gases.

A D.C. lobbyist for two major power companies told Bloomberg News that “the energy and manufacturing sectors will essentially be in a construction moratorium” as a consequence.

Here we are, with 15 million Americans unemployed and millions more underemployed, and the EPA is moving blindly ahead with new regulations that will increase dramatically the energy costs of U.S. industries, reducing their competitiveness and profitability, and making it less likely they will hire.

EPA’s action amounts to rewriting the Clean Air Act to suit its own bureaucratic and ideological objectives. At a time when the Obama administration should be focused on job creation and the nation’s economic recovery, promulgating stringent new environmental rules should be its last priority.

The new EPA rules call for a reduction in the national ambient air-quality standard for ground-level ozone, a precursor of smog, from 75 parts per billion to between 60 and 70 parts per billion, a cut of up to 20 percent.

While this might seem innocuous enough, setting a more-stringent ozone standard will in fact cause economic havoc.

Hundreds of U.S. cities and counties already don’t meet the current standard. If the EPA tightens the rules, these counties will fall permanently into noncompliance, even with costly investments in new pollution controls.

Under the Clean Air Act’s nondegradation provision, state and local governments are not permitted to take actions that would worsen air quality, even if the area is in compliance with EPA standards.

If a county or city is not in compliance, its economy won’t be able to grow—so the EPA’s proposal would spell economic stagnation for many communities.

A study by the Manufacturers Alliance/MAPI, a 75-year old organization that provides economic research and training for business executives, warns that the new standard would destroy an estimated 7.3 million jobs nationwide and add $1 trillion annually in new regulatory costs beginning in 2020.

In Mississippi, the EPA proposal would kill an estimated 130,000 jobs and add $32.2 billion annually in new regulatory costs from 2020 to 2030.

Direct compliance costs are only part of the burden, however. If the new standards go into effect, the costs of nearly everything we buy also will go up, as higher energy prices raise production costs.

This huge price tag, however, wouldn’t appreciably improve public health. So it’s fair to ask why a more stringent ozone standard is even needed. Efforts to achieve cleaner air over the past 20 years have been extraordinarily successful, with pollution in some places cut in half.

If we’ve learned anything from clean-air regulation to date, it is that there is no low-cost way of substantially curtailing ground-level ozone or greenhouse-gas emissions within a relatively short time frame, which the EPA insists is necessary.

Fossil fuels account for 85 percent of America’s energy resources. We use oil, natural gas and coal—and will continue to do so in the foreseeable future—because they are plentiful and affordable.

All EPA regulation of greenhouse gas emissions will accomplish is to impoverish America, while doing little to cut emissions globally.

Increased energy consumption in China and other developing economies will offset any reductions in the United States. It is an unwise and dangerous move that would compel us unilaterally to curtail our use of fossil fuels significantly, one consequence of which would be a decline in our country’s economic well-being.

The EPA’s proposed ozone standard exemplifies arbitrary over-regulation that will destroy jobs and harm our economy without any offsetting benefit.

Congress should block the EPA move.