Wolfram: The war on coal heats up
The EPA has developed final rules that set stringent standards for emissions of pollutants from coal-fired power plants. Carbon-dioxide is included as a pollutant under the assumption that man-made carbon dioxide is contributing to global warming, that global warming is a bad thing, and that these regulations can have a noticeable effect.
A problem is that these regulations are costly (compliance costs are estimated at $140 billion), will increase energy costs in Michigan and throughout the country, and will have little effect on global temperatures.
The regulations will certainly reduce the number of power plants operating in the U.S. The Associated Press reports more than 32 mostly coal-fired power plants will close and another 36 plants could also be forced to shut down as a result of the new EPA rules.
Michigan relies more heavily on coal than other states for its electricity generation. Nationally coal accounts for 37 percent of electricity generation, whereas in Michigan it is 54 percent, so regulations that affect coal-fired power plants are of particular importance to Michiganians.
Michigan already has the 15th highest retail price for electricity in the country, so it can little afford to be burdened by regulations that burden its primary power source.
While the U.S. is increasing the cost of electricity and all products that use electricity in the production process, China and India are increasing their use of coal. Chinese production and consumption of coal increased for the 13th consecutive year in 2012. China is by far the world's largest producer and consumer of coal, accounting for 46 percent of global coal production and 49 percent of global coal consumption — almost as much as the rest of the world combined.
Coal is India's primary source of energy (equaling 44 percent of total energy consumption).
Even if man-made carbon dioxide is causing global warming, it should be clear that attempts by the U.S. to regulate the production of carbon dioxide will have little effect on global temperatures and will put it at a competitive disadvantage with respect to two large industrial nations.
It should also be noted that market forces are already reducing carbon emissions in the United States. The fracking revolution has substantially reduced the price of natural gas, making smaller and older coal-fired plants economically obsolete.
Rather than relying on central planners to decide how electricity is to be produced, market forces should be allowed to continue to operate along with regulations that clearly show economic benefits that exceed the economic costs.
Gary Wolfram is a professor of economics
at Hillsdale College.