President Barack Obama promised in 2008 that his environmental policies would make electricity prices “necessarily skyrocket,” and earlier this month he unveiled his plan to deliver on his word. Starting next year, the Environmental Protection Agency will force Michigan’s power plants to cut their carbon emissions by 32 percent. The administration claims that this will save the planet and even create jobs.
This is merely a slick sales pitch with no connection to reality. The regulation’s real effects will be job losses, higher prices for electricity and everyday goods, and less economic growth. Meanwhile, the EPA itself admits that your economic pain will do almost nothing for the climate.
The misinformation begins with the president’s promise that this mandate will “leave our children a safer and more stable world.” This is nothing but a poll-tested marketing ploy. The EPA’s own climate model shows that this new regulation would reduce global temperatures by a meager 0.02 degrees Celsius by 2100 — a statistically meaningless amount.
The environment won’t be better off, but the economy will be ravaged. In May, the Chamber of Commerce released a study demonstrating the effects of a slightly more aggressive plan. It assumes a 42 percent emissions reduction, compared to the EPA’s 30 percent rate, but the EPA’s estimate is deceptively low. The EPA rules don’t mandate cuts from actual carbon dioxide emission levels from 2005. Instead, they’re based on hypothesized numbers that might have occurred if Michigan had agreed to the EPA’s every demand. The Chamber study is thus the best guide to these regulations’ real-life effects.
Michigan—which generates 57 percent of its electricity from coal — will be hard hit. The EPA rules mandate that it reduce its carbon dioxide emissions by 32 percent (every state’s number is different). In order to meet this goal, the state will have to close down low-cost existing power plants and force utilities to purchase electricity from new sources, which are almost always more expensive.
Both moves will be reflected in your electricity bill. In the Chamber report, your disposable income would decrease by $200 next year, and up to nearly $400 a year within a decade.
These higher costs don’t just affect families — they affect our workplaces as well. When employers pay more for energy, they have less money to spend on their employees. Small businesses grappling with higher energy costs are often forced to lay off employees in order to stay afloat. The Chamber estimates that Michigan and its neighbors could lose up to 31,700 jobs a year.
Higher costs and fewer jobs ultimately mean lower economic output, and thus less wealth for middle class Americans. Over the next decade the Chamber estimates that as much as $7.4 billion in new wealth will be lost every year in the East North Central region, which includes Michigan. Nationally, the country could be $50 billion poorer every year.
The EPA’s and the president’s unwillingness to address this issue honestly — remember the real effect it will have on the environment? — mean that the Chamber of Commerce report is the best analysis of the new rule’s effects. Even with its slightly different statistical assumptions, it is undeniable that the EPA rule will mean less income, fewer jobs, and less wealth for Michiganians. And it is equally undeniable that your pain will not be the climate’s gain — the EPA knows it but just won’t say it.
Remember that the next time Obama or any other politician claims that they’re saving the world and protecting our children. The EPA regulations are a war on middle class jobs, the economy, and affordable energy.
Tom Pyle is president of the American Energy Alliance.