Discussion: (0 comments)
There are no comments available.
View related content: Environmental and Energy Economics
The U.S. Supreme Court recently rebuffed environmentalists in their bid to get the judiciary to intervene in the global-warming controversy by invoking the old common law of nuisance, as though global warming could be solved through an injunction.
But the irony of the court’s decision in American Electric Power v. Connecticut is that a loss for environmentalists was actually a win for environmentalists, because it all depended on an earlier Supreme Court case, Massachusetts v. Environmental Protection Agency. That case led the EPA to regulate greenhouse gases under the 1990 Clean Air Act, even though Congress never intended the Clean Air Act to extend to greenhouse-gas regulation.
China and India will privately smile at unilateral American and European attempts to regulate GHG emissions, as it will make their economies more competitive.
Because the EPA is on the job, the court said, a common law of nuisance suit is pre-empted, and besides, the court added, judges really don’t have the expertise to manage such a big issue, though this hasn’t stopped federal judges from running school districts and restructuring whole industries.
The curious question is what the court might have done with the AEP v. Connecticut case if it hadn’t had the EPA’s regulatory regime to hide behind. The truth is, neither approach — EPA regulation or common-law nuisance doctrine — makes any sense for the problem of greenhouse-gas emissions, even if you believe in the catastrophic global-warming scenario.
Currently, the EPA is struggling to craft greenhouse-gas (GHG) regulations and recently announced a two-month delay in releasing its first power-plant performance standards. Congress ought to force the matter by stripping the EPA of its authority to regulate greenhouse gases and then let the judiciary decide if it means it when it says judges lack the expertise to do the detailed regulation of the economy that GHG regulation would require.
The basic problem is that unilateral regulation of GHGs will harm the American economy without greatly affecting the total amount of global emissions. In other words, it will do absolutely no good for the planet.
It’s a long story, but can be summarized in one word: China.
China replaced the United States as the largest global emitter of GHG, in 2007, as its demand for energy has been skyrocketing in conjunction with its strong economic expansion. To meet demand, China has been constructing coal-fired power plants at a breakneck pace.
China’s GHG emissions from coal are already greater than U.S. coal emissions, and are expected to grow to more than twice U.S. current coal emissions over the next 25 years. According to the Energy Information Administration, China is expected to emit 31 percent of all worldwide carbon dioxide by 2035. Meanwhile, annual U.S. emissions are projected to grow so slowly that they won’t reach 2005 emission levels until 2027 — even without the EPA’s regulation of GHGs.
Many regulation proponents see the United States in a vacuum, not as one nation among many. As the U.S. plows forward with GHG regulation, the costs of production for U.S. businesses will increase, reducing their ability to compete with international firms. As a result, international firms without a GHG-related cost burden will gain an economic advantage. The United States is projected to have a cost of regulating GHG at over $9.4 trillion in GDP over the next 33 years, according to one estimate.
If the cost of production increases in America, companies will shut down or outsource their production facilities. These facilities will be relocated to nations where the cost of production is lower, and GHG regulations are scarce.
Developing nations, such as China and India, have made their intentions clear when it comes to emitting GHG. They will continue to emit as they grow their economy. In fact, China and India will privately smile at unilateral American and European attempts to regulate GHG emissions, as it will make their economies more competitive. Regulating GHGs in the U.S. will have little impact on global GHG totals as long as other nations continue to freely emit.
Considering these consequences, Congress should strip the EPA of its authority to regulate GHG.
A better long-term strategy would be to emphasize genuine energy innovation that creates new sources of energy that are cheaper than fossil fuels on a large scale. That’s a tall order, and no one knows how to make it happen quickly or easily. But it offers the advantage of addressing the problem without armies of bureaucrats, volumes of regulations, and endless lawsuits.
And that’s exactly why environmentalists and regulators don’t like it.
Steven F. Hayward is the F.K. Weyerhaeuser Fellow at AEI.
Michael Noffsinger is a policy fellow at the Pacific Research Institute.
There are no comments available.
1150 17th Street, N.W. Washington, D.C. 20036
© 2016 American Enterprise Institute for Public Policy Research