President Obama has just announced tougher emissions reductions for EPA’s Clean Power Plant regulation—32% reduction from 2005 levels by 2030. Since actions have consequences, there are two simple questions that need to be answered to understand this proposal. The first is how the reductions are to be achieved. The second is what are the economic consequences of trying to achieve them.
The starting point is the 2005 level of CO2 emissions—6.1 billion tons of CO2 emissions. Last year’s level was 5.4gigatons. At first glance, these two numbers suggest that good progress is being made in reducing emissions. But, most of the reductions were the result of the great recessions. They are now moving up, not down.
A 32% reduction would require that 2030 emissions be no higher than 4.1gigatons or more than a 1gigaton reduction in 15 years. Is that possible? Yes, if you ignore obvious and serious economic impacts. DOE once calculated what would be involved in achieving a 1gigaton reduction in CO2 emissions. The numbers are staggering, especially when a 15 year time frame is taken into account. A 1gigaton reduction is the equivalent of building 136 nuclear power plants, 273 zero emission coal fired plants, replacing 273 million cars with 40 mpg new cars, or installing 270,000 wind turbines. At the time of the calculation, DOE estimated that required wind turbines to equal 1gigaton were 3 times the global installed capacity. For solar power, the required capacity would be 750gigawatts or 125 times installed capacity. Whatever the energy alternative, it is obvious that it is physically and economically impossible to achieve the President’s objective.
Recently, Robert Darwell wrote a Wall Street Journal opinion piece, Obamas’s Renewable-Energy Fantasy. He pointed out that even Bill Gates had concluded that the “current renewables are dead-end technologies” and that (t)he cost of decarbonization using today’s technologies is “beyond astronomical”.
Darwell reviewed Germany’s experience with goals less ambitious than the President’s. Germany for example has already spent $351 billion on its energy transition and its environmental minister estimates that it will cost almost $900 billion by 2030. The US economy is almost five times larger than Germany’s and we generate nearly seven times as much electricity. The German citizens have been saddled with skyhigh electricity rates, several times the US average and German businesses are moving capacity elsewhere. It is hard to conceive anyone wanting to travel the same road as Germany and endure the same or worse consequences.
The economic impacts of the rule, before the reduction target was increased 9%,are also staggering. The economic consulting firm NERA put the costs for the period 2017 to 2030 at about $400 billion while the Chamber of Commerce using an EIA analysis put them around $1 trillion. Whatever the actual costs, the economic impact of a flawed policy on a weak economy will only make it weaker. Even with low economic growth, averaging 1.8%, EIA puts 2030 emissions at almost 5.2gigatons. As John Adams once observed, “Facts are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of our passions, they cannot alter the state of facts and evidence.” The facts and state of evidence on this rule are clear: it is a job and economic growth killer.
The President has proved Groucho Marx prescient when he observed, “politicians look for trouble, find it everywhere, misdiagnosis it, and apply the wrong solutions.” That is clearly the case with CO2, which has been mislabeled a pollutant. It is a nutrient and its benefits are beyond dispute—a greening of the planet and more efficient plant and crop growth.
This article appeared on the FuelFix website at http://fuelfix.com/blog/2015/08/02/aspirations-need-to-reflect-reality/