This week, world leaders will meet in Paris to dream up the future of energy policy, from transmission, to extraction, to production. Climate change will be on the menu as well. As the world meets in Paris to identify future cuts to greenhouse gases (GHG), it’s important to remember where the U.S. has been on climate policy and what it will take to reach President Obama’s goals.
First, examining only Environmental Protection Agency (EPA) regulation, the nation has already had to bear an incredible burden to meet just a fraction of the president’s climate ambitions. From efficiency standards for cars and trucks to the “Clean Power Plan,” expect the nation to pay roughly $230 billion in total costs for only the final rules so far. These rulemakings aim to eliminate roughly 860 million tons of GHG annually. That might sound like an incredible figure, but the U.S. emitted 6.1 billion tons in 2005. As the goals add up, the math becomes more daunting for consumers who must ultimately foot the bill.
By 2025, President Obama wants to reduce GHG emissions by 28 percent below 2005 levels. Given the current track of U.S. emissions, including the Clean Power Plan and other final rules, the nation still must find an additional 1.2 billion tons of GHG to cut by 2025. All of this says nothing of any lofty new goals the Paris summit might concoct for the U.S. For comparison, the Clean Power Plan is slated to cut just 265 million tons of GHG by 2025.
What is the cost of finding another 1.2 billion tons to eliminate during the next decade? The cost of saving or eliminating one ton of carbon dioxide from entering the atmosphere varies slightly. Generally, it’s around $31 to $37 per ton. Assuming the cost of cutting GHG remains high, and constant during the next decade, annual costs of meeting the President’s climate pledge could approach $45 billion annually. That’s on top of the $26 billion annually the nation has already spent complying with past rules.
What are the benefits of these extraordinary costs? If you take EPA at its word, past actions should avert roughly 0.0573 degrees Celsius by 2100. That’s more of a rounding error than drastic climate action. Meeting the 2025 climate goals could push this number to approximately 0.2 Celsius. Again, it’s fairly clear that no matter how draconian the regulatory environment, the global benefits from U.S. action alone are miniscule. And that’s why every other nation’s commitment is cumulatively far more impactful than the work of regulators at EPA and the Department of Energy.
So what’s left to regulate for EPA and other federal agencies to achieve the president’s climate change plan? Refineries? According to EPA data, eliminating 100 percent of refinery emissions will reduce the 2025 goal by just 14 percent. Obviously, not feasible. What about the agricultural sector? It contributes roughly nine percent to the nation’s GHG portfolio. Is the president going after farmers and cows to make Paris participants happy? Politically, probably not, even as time slowly ushers the president out of the White House.
Of course, all of this must be taken into an international context. This is a global summit attempting to solve a global problem. Enforcement means everything. From the U.S. perspective, what assurances are there that other nations will actually achieve their climate goals? Who is holding their feet to the fire?
Americans know who holds all of the cards domestically: EPA. They will ensure every machine that emits GHG complies with their strict command-and-control regulatory apparatus. From consumer microwaves, refrigerators, cars, trucks, power plants, and transmission lines, there is little in the nation that federal regulators won’t touch to achieve the President’s climate goals.
Whatever new agreement comes out of Paris, Americans can be certain of one fact: they will pay for the climate deal, through higher energy prices and more expensive household goods. Sadly, there’s more fiction than fact in the idea that the rest of the world will pay as much as Americans to realize the lofty dreams of politicians and regulators.
Mr. Batkins is director of regulatory policy at the American Action Forum.