EPA in Obama’s Plan Laser Talk

CCL is glad that the Obama administration is doing something serious about climate change. However, regulation is a blunt instrument for accomplishing it. Instead of the club of regulation, we much prefer the scalpel of congressional action for Carbon Fee and Dividend: a steadily and aggressively increasing price on fossil carbon with border adjustments and all revenue returned to households.

Why Carbon Fee and Dividend vs. regulation

Obama’s plan relies on EPA regulation to reduce greenhouse gas emissions, but it is no one’s ideal situation. Even former EPA head Lisa Jackson concedes that regulation is not the best way to reduce emissions [1]. Using positively rosy predictions [2], one study found EPA regulation would result in a maximum 12.7% reduction in greenhouse gas emissions below 2005 levels by 2020 [3, 4].  By contrast, the CCL proposal would reduce emissions by an estimated 31% below 1990 levels by 2025, and to 50% below 1990 levels by 2035 [5, 6, 7].

In addition to being inferior to a carbon tax for actually solving the problem, regulation also cannot protect American businesses or the poor since there is no possibility of a border adjustment or a dividend.

  1. Statement of Lisa P. Jackson/ Administrator, U.S. Environmental Protection Agency/ Hearing on American Clean Energy and Security Act of 2009/ Committee on Energy and Commerce / U.S. House of Representatives ”. April 22, 2009.
  2. Jame Handley. “Are EPA Hammers The Best Tools to Ratchet Down Global Warming Pollution?”. The Carbon Tax Center. 02/14/2012.
  3. Butraw, D., Fraas, A.G., and N. Richardson. “Greenhouse Gas Regulation Under the Clean Air Act”. Brookings Institution. February, 2011. Washington, DC.
  4. Dallas Butraw. “GHG Regulation for Power Plants under the Clean Air Act”. Powerpoint presentation. Resources for the Future. December 7, 2011.
  5. REMI study: Nystrom, Scott and Luckow, Patrick. “The Economic, Climate, Fiscal, Power, and Demographic Impact of a National Fee-and-Dividend Carbon Tax“. June, 2014. Regional Economic Models, Inc., prepared for Citizens’ Climate Lobby.
  6. Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990 – 2012. April 15, 2014. US. Environmental Protection Agency. p. ES-5.
  7. Calculation, using references 5 and 6. From REMI study, US Emissions in 2025 are 3,523.80 Million Metric Tons (MMT) and 2035 is 2,571.05 MMT. From EPA Document, 1990 emissions of CO2 alone = 5108.7 MMT. Calculations of reductions from 1990 are: 2025 = 100% – [(3,523.8/5108.7) *100] = 31%; 2035 = 100% – [(2,571.05/5108.7)*100] = 50%.