Report: EPA’s global warming agenda will cost the economy $2.23 trillion

The Environmental Protection Agency’s climate rules aimed at phasing out coal-fired power in favor of low-carbon fuels will come at a high cost, according to a newly released report.

Over the next two decades, the EPA’s rules to fight global warming will cost the economy $2.23 trillion, raise energy prices and lower families’ incomes.

Using economic models based on the federal government’s National Energy Model System, the conservative Heritage Foundation found that, by the end of 2023, EPA climate regulations will cost the U.S. nearly 600,000 jobs and reduce a family of four’s income by $1,200.

EPA rules would also raise energy prices and cost the economy $2.23 trillion from 2015 to 2038.

“Higher energy prices as a result of the regulations will squeeze both production and consumption. Since energy is a critical input for most goods and services, Americans will be hit repeatedly with higher prices as businesses pass higher costs onto consumers,” writes Nick Loris, a Heritage Foundation economist and co-author of the report.

“However, if a company had to absorb the costs, high energy costs would shrink profit margins and prevent businesses from investing and expanding,” Loris adds. “The cutbacks result in less output, fewer new jobs, and less income.”

Last summer, President Obama unveiled his Climate Action Plan, which heavily relied on capping carbon dioxide emissions from coal-fired power plants. Federal regulators moved quickly to craft rules that would limit power plant emissions, eventually publishing such a rule earlier this year.

Obama doubled down on his climate agenda this year, saying that he would continue his push to move the country away from fossil fuels and towards low-carbon energy.

“The shift to a cleaner energy economy won’t happen overnight, and it will require tough choices along the way,” Obama said in his 2014 State of the Union Address. “But the debate is settled. Climate change is a fact. And when our children’s children look us in the eye and ask if we did all we could to leave them a safer, more stable world with new sources of energy, I want us to be able to say, ‘Yes, we did.’”

But the EPA’s power plant emissions limits faced intense criticism for setting emissions limits for new coal plants impossibly low, effectively banning them unless they used carbon capture and storage technology (CCS). Such technology, however, is not commercially proven and the only known projects in the U.S. are federally funded.

House Republicans have questioned the legality of requiring new coal plants use CCS, when the Energy Policy Act of 2005 specifically prohibits the EPA from using federally-funded projects to prove that a technology is commercially proven.

“No credible basis exists to state that CCS is adequately demonstrated today, since no large-scale power plant in the U.S. has CCS,” reads the Heritage report, adding that one large-scale CCS project under construction in Mississippi has gotten $400 million from the federal government.

The Heritage report urges Congress to block the EPA from imposing such strict standards that would cripple the coal industry. Congress has made several efforts to block the EPA from regulating carbon emissions — the most recent one being a bill proposed by West Virginia Democratic Sen. Joe Manchin and Kentucky Republican Rep. Ed Whitfield.

The Manchin-Whitfield bill limits the EPA’s ability to regulate carbon emissions by requiring that any such regulation must be proven to be economically feasible and have a positive environmental impact.

“To truly ensure that the technology is cost-effective, Congress should strip away all subsidies and Department of Energy spending for CCS in order to prevent the federal government from presenting a handful of fundamentally uneconomic CCS plants as proof that the standards are legitimate,” Heritage notes. “However, the most effective policy solution would be to prohibit the EPA and all agencies from regulating greenhouse gas emissions.”