Due to the benign nature of CO2 and water vapor, until quite recently the EPA took the position that it did not have the authority to regulate greenhouse gases under the Clean Air Act. Environmentalists, however, eventually took the EPA to court, and in 2007, the U.S. Supreme Court ruled that the EPA did indeed have that authority. With the authority in hand, and a new Democrat majority in place, the EPA did not wait: It has now declared carbon emissions, including CO2, to be pollutants.
That finding opens the door to federal regulation of almost everything that moves -- from cars, trucks, and ships to lawn mowers and tractors. The EPA also has the authority to develop new regulations for stationary sources, including emission-producing power plants, factories, hospitals, restaurants, and other buildings. Without a doubt, there will be significant pressure applied on the EPA to use its newfound authority.
The Obama administration has already used the new EPA finding to urge legislative action, arguing that if Congress doesn't act, the EPA will. It may seem like a minor difference, but the EPA can only make regulations, not laws. Congress writes laws. The administration has expressed an interest in setting standards through legislative action for autos, coal-fired power plants, and industrial sites.
The EPA is not directly responsible to voters, but Congress is. As such, legislative action might seem like a good thing. The troublesome point, however, is that the members of Congress who are pushing for legislation seem inclined to go further with regulation than would the EPA.
So-called cap-and-trade rules for carbon emissions were already pointing toward a significant legislative battle, but Nancy Pelosi's team upped the ante by including tougher targets and restrictions in the new proposals. Moreover, they have included all kinds of additional programs from the "green wish list," including a renewable electricity standard, a low‑carbon fuel standard, a broader renewable fuels policy, and new efficiency standards.
The Heritage Foundation's Center for Data Analysis evaluated the proposed CO2 rules and concluded that they would lower gross domestic product by about $7 trillion over the next 20 years, while single‑year GDP losses would exceed $600 billion. Job losses would exceed 800,000 annually for several years. The manufacturing sector, which has been struggling for years, would be hit especially hard.
In addition, these new regulations will drive up the cost of energy. Carbon‑based energy is cheap; green energy is expensive. Green electricity will cost at least two to three times as much as present baseline electricity generation. That, in turn, will increase the cost of everything else. Eco-fuels are the same: A recent report pointed out that, in California, a kilowatt hour of coal-generated electricity costs about two cents. Generating that same kilowatt hour with solar power costs about 45 cents.
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