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October 17, 2008

The Costs of Regulating CO2 Under the Clean Air Act

October 17, 2008
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In July, the Environmental Protection Agency announced an Advance Notice of Proposed Rulemaking (ANPR) regulating greenhouse gas emissions under the Clean Air Act.[1] This is likely the largest, most far-reaching regulation ever.

The threshold test for EPA to move forward with this far-reaching regulation is whether carbon dioxide and other greenhouse gases “endanger human health and welfare.” The Bush Administration has not reached a conclusion on that question.

What are the likely outcomes if carbon dioxide is regulated under the Clean Air Act?

Regulating carbon dioxide means regulating the activities that emit carbon dioxide. In the United States, 85% of the energy we use comes from sources that emit carbon dioxide—coal, petroleum, and natural gas. Regulating these sources of energy will increase prices to consumers (e.g. electricity and gasoline)and reduce the economic efficiency of the economy, leading to job losses and large reductions in economic growth.

The Heritage Foundation’s Center for Data Analysis has estimated the economic impacts of carbon dioxide regulation, finding that regulating carbon dioxide using the Clean Air Act would:

  • Reduce aggregate gross domestic product by $6.9 trillion by 2029.
  • Reduce employment in the manufacturing sector by 2.9 million jobs by 2029.
  • Reduce employment in:
    • Mining by 7.4%;
    • Transportation and warehousing by 17%;
    • Durable manufacturing by 28%;
    • Textile mills by 28%;
    • Paper and paper products by 36%;
    • Plastics and rubber products by 54%;
    • Machinery manufacturing by 57%.

As the Center notes, “The study measures only the likely impacts through 2029, at which point CO2 will have been cut by 31% below the 2005 level. The ultimate CO2 reduction target will likely exceed 70% by 2050.”

Over a million businesses will need to get carbon dioxide emission permits from EPA.

Regulating carbon dioxide through the Clean Air Act means many businesses will need to pay for new permits just to stay in business. According to the Department of Agriculture,[2] the following farms will need to get permits under Title V of the Clean Air Act:

  • Dairy facilities with over 25 cows
  • Beef operations with over 50 head of cattle
  • Swine operations with more than 200 hogs
  • Farms with more than 500 acres of corn

The process of getting permits under the Clean Air Act from EPA is long and costly. The Department of Agriculture states “these operations simply could not bear the regulatory compliance costs that would be involved.”[3]

Farms aren’t the only businesses that will be forced to obtain permits from EPA—over 1.2 million buildings will needs to get carbon dioxide permits. Here are some of the businesses that will be required to get permits:

  • 1 million mid-sized to large buildings
    • 10% of all churches,
    • 20% of all food service buildings
    • 50% of the buildings used by the lodging industry
    • 92,000 health care facilities (ie. hospitals)
  • 200,000 manufacturing operations
  • 20,000 large farms

These are just a few of the likely outcomes of the EPA’s current plans. But there will be many more—the proposed regulation and supporting documents already span 18,000 pages. And that’s just for the advance notice of proposed rulemaking, not the actual rules.

One last note—even if EPA implemented these plans, they will not result in a change in global warming. The vast majority of future greenhouse gas emission will come from developing countries like China, India, and the Middle East. As a result, reductions in U.S. emissions are likely to have little impact on global emissions. If the U.S. were to eliminate all carbon dioxide emissions by 2030, world-wide carbon dioxide emissions would still increase by about 30 percent.


[1] Environmental Protection Agency, Regulating Carbon dioxide Emissions

Under the Clean Air Act, 73 Fed. Reg. 44,354 (July 30, 2008).

[2] Department of Agriculture, Comments on EPA’s Advance Notice of Proposed Rulemaking on Regulating Greenhouse Gases Under the Clean Air Act, 73 Fed. Reg. 44,354, 44,377 (July 30, 2008).

[3] Id.


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