Research & Commentary: New Study on EPA CO2 Regulations

Published October 31, 2014

This summer, the U.S. Environmental Protection Agency (EPA) proposed new regulations on carbon-dioxide emissions from existing power plants that require these facilities to reduce their CO2 emissions by 30 percent of the 2005 base year by the year 2030.

The proposed rules received mixed reactions, with environmental groups hailing it as an important, if only symbolic, step in their attempt to stem climate variability. However, a new study by NERA Economic Consulting projects these regulations could cost consumers and businesses $41 billion annually and cause electricity prices in 43 states to increase by double digits.

The NERA analysis also discusses the climate benefits of the proposed rule: There are none. The study states, “EPA’s proposal would have a meaningless effect on global climate change: atmospheric CO2 concentrations would be reduced by less than one-half of a percent, equating to reductions in global average temperature of less than 2/100th of a degree, and sea level rise would be reduced by 1/100th of an inch – equal to the thickness of three sheets of paper.”

In total, the governors of nine states – Alaska, Indiana, Louisiana, Mississippi, North Carolina, North Dakota, Pennsylvania, Texas, and Wyoming – have signed a joint letter to President Obama citing data that suggest “millions of jobs will be lost and billions of dollars will be spent” to comply with the regulations to cut carbon dioxide emissions from power plants and other federal rules.

Nine states have passed legislation directing state regulators to develop a plan with careful consideration paid to economic impacts. However, in many of these states, the final bills passed into law contain language ordering state regulators to adopt measures designed to meet EPA’s guidelines.

If states do not comply with the carbon dioxide goals set by EPA, a federal emissions reduction plan will be implemented. Although no one knows for sure what the federal standards would look like, Bill Pedersen, a lawyer noted for his mastery of the Clean Air Act, stated the “logic just screams cap and trade.” The public comment period for these regulations has been extended to December 1, 2014.

The following documents provide additional information about EPA’s proposed carbon dioxide regulations.


Ten Principles of Energy Policy
Heartland Institute President Joseph Bast outlines the ten most important principles for policymakers confronting energy issues, providing guidance to help deal with ongoing changes in markets, technology, and policies adopted in other states, supported by a thorough bibliography.

Potential Energy Impacts of the EPA Proposed Clean Power Plan
NERA Economic Consulting confirms significant negative economic impacts will result from the U.S. Environmental Protection Agency’s (EPA) proposed Clean Power Plan. NERA projects the costs to comply with the Clean Power Plan could total $366 billion, and possibly more after adjusting for inflation. NERA estimates 43 states will suffer from double-digit electricity price increases. In total, EPA’s Clean Power Plan could cost consumers and businesses a staggering $41 billion or more per year, according to the analysis.

Despite Their Carbon Rebellion, States Prepare for the Worst

Chris Kardish, in the October 2014 issue of Governing, documents the reactions of several states as they respond to proposed EPA carbon-dioxide regulations for existing power plants. Responses vary, with some states passing legislation requiring the state plans account for the economic impact of compliance, while other states have prepared to adopt the proposed rule.

0.02°C Temperature Rise Averted: The Vital Number Missing from the EPA’s “By the Numbers” Fact Sheet
Chip Knappenberger and Patrick Michaels of the Cato Institute’s Center for the Study of Science point out EPA’s “By the Numbers Fact Sheet” makes no mention of how much climate change the Clean Power Plan would avert. Using a climate model emulator developed with EPA support, they found the costly plan would avert only 0.018°C of temperature rise by 2100, a number so small as to be undetectable. 

Assessing the Impact of Proposed New Carbon Regulations in the United States
A well-respected energy and economics firm commissioned by the U.S. Chamber of Commerce quantifies the extent to which EPA’s new regulations on carbon dioxide emissions will raise Americans’ electricity prices, destroy jobs, and reduce economic growth. 

Governors: EPA Carbon Dioxide Rules Job Killer
The Associated Press reports the governors of Alaska, Indiana, Louisiana, Mississippi, North Carolina, North Dakota, Pennsylvania, Texas, and Wyoming sent a letter to President Obama saying EPA’s proposed CO2 restrictions will lead to millions of job losses and cost billions of dollars. Many of the governors say they will use litigation and EPA’s public comment period to express their concerns and try to force needed reforms before the rules become official. 


Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this and other topics, visit the website of Environment & Climate News at, The Heartland Institute’s website at, and PolicyBot, Heartland’s free online research database, at

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