Texas public policy foundation
EPA Threatens Automakers with 'Green' Bankruptcy
 
COMMENTARY
 

Note: This article originally appeared at The Detroit News on November 19, 2012.

During the waning days of the presidential election, a lot of attention was focused on which candidate would be better for the health of the American auto industry. Absent from this discussion was any acknowledgement of the single biggest threat U.S. automakers currently face: The Environmental Protection Agency's decision to regulate carbon dioxide as a pollutant.

Environmentalist groups have been trying for years to force EPA to regulate CO2 as a pollutant under existing law. CO2 is a ubiquitous by-product of any economic activity and has no ambient health effects, unlike all other regulated pollutants. Regulating CO2 under the command and control architecture of the Clean Air Act (CAA) would be a "glorious mess" in the words of Rep. John Dingell, D- Dearborn, former longtime chair of the House Energy and Commerce Committee. Congress has repeatedly declined to regulate greenhouse gas emissions. Under the prior administration, EPA resisted these efforts in court. But in December 2009 EPA capitulated, issuing a legal finding that emissions of six greenhouse gases, including CO2, were pollutants under the legal authority of the Clean Air Act. EPA then began implementing a series of new carbon emission restrictions.

EPA's first CO2 regulation was to increase "corporate average fuel economy" (CAFE) standards for passenger cars and light trucks. Set at an average of 54.5 miles per gallon (mpg) by 2025, EPA's new tailpipe standard is twice as strict as the 27 mpg standard currently in effect. These emission limits are tantamount to limits on fuel use, because reducing the amount of fuel consumed is the only way to reduce CO2.

Previous CAFE standard increases have had a devastating impact on American automakers. This latest increase will be no exception. EPA calculates that the CO2 fuel standards will cost automakers $157 billion just to cover investment in developing new technology.

Already struggling to meet the 35 mpg standard, industry insiders predict that EPA's new standard will increase the cost of a vehicle $3,100 by 2025. Today's lower-priced vehicles may be priced out of existence. Safety will be compromised by the necessity of reducing car mass by 15 to 25 percent.

Automakers will also indirectly bear the brunt of other CO2 regulations. Proposed standards for new power plants have been set to allow new natural gas plants while effectively banning any new coal-power plants and potentially including existing plants. This represents the first time EPA has asserted direct control of the means of energy production for the nation. It won't be the last. EPA will be legally obligated to extend regulation to refineries and manufacturing, raising the price of auto components and metals.

The justification for treating CO2 as a regulated pollutant has always been incoherent. Regulating CO2 under the CAA would not abate supposed global warming. Even an 85 percent reduction in U.S. carbon emissions would only lead to a 0.1 Celsius reduction in global temperatures, according to the Intergovernmental Panel on Climate Change.

Declaring CO2 a Clean Air Act pollutant is also administratively infeasible. The plain text of the Act, for example, requires permitting of any facility that emits more than 100-250 tons per year of a covered pollutant. At this level, every restaurant or hotel would likely be required to seek an emissions permit.

Recognizing the absurdity of this level of regulation, EPA rewrote the statute, something unelected bureaucrats supposedly aren't allowed to do under our system of representative government, adopting an emissions threshold of 100,000 tons of carbon dioxide equivalent.

Congress needs to make clear that carbon dioxide and other greenhouse gases are not pollutants under the Clean Air Act. The U.S. House already has passed a bill to do this.

Returning control of these issues to the elected branches would provide much-needed accountability for policy decisions of major national consequence.

Kathleen Hartnett White is director of the Armstrong Center for Energy and Environment at the Texas Public Policy Foundation.

"