07.14.10

Expert Testimony Calls for Climate Legislation over EPA Regulation of Carbon

Questioned by Cantwell, former CBO director says predictable approach to reducing greenhouse gas emissions far preferable to "economically irrational and destructive" command and control regime by EPA

WASHINGTON, D.C. – Today, U.S. Senator Maria Cantwell (D-WA) elicited testimony from the former head of the Congressional Budget Office (CBO) supporting the idea of climate legislation that sets a predictable path and harnesses market forces to reducing greenhouse gas pollution, such as the Cantwell-Collins CLEAR Act (S.2877). At a Senate Finance Committee hearing, Cantwell questioned Douglas Holtz-Eakin, president of the American Action Forum and former CBO chief, about the economic uncertainty caused by carbon regulations that the Environmental Protection Agency (EPA) will impose on major stationary sources such as power plants beginning next January. EPA action became certain last December when the EPA determined, in response to an April 2007 Supreme Court ruling, that the Clean Air Act should cover greenhouse gas emissions. This well-intended enforcement power could introduce great uncertainty in industry about the costs of compliance. Cantwell is co-author, with Senator Susan Collins (R-ME), of the CLEAR Act, legislation designed to establish a predictable, free market path to meeting the nation’s goals for reducing greenhouse gas emissions.
 
In today’s exchange, Holtz-Eakin warned that EPA regulation of carbon emissions could prove “economically irrational and destructive.” He also warned that the negative impact on growth, wages, incomes, and employment of unpredictable EPA carbon regulations “could potentially be a very large number.” As the Senate prepares to take up climate legislation, Cantwell said it is not well understood that failure to act on a comprehensive bill could result in a costly outcome for employers and workers alike, in which unpredictable regulatory enforcement of individual polluters could cause economic turmoil without meeting the nation’s goals for greenhouse gas reduction or conversion to a clean-energy economy.
 
An excerpt from today’s exchange follows:
 
Senator Cantwell: One of the things that seems to me that’s looming out there that’s going to affect incomes across America is this issue of EPA’s action on climate and the regulation of pollutants under the Clean Air Act. And that is going to take effect in January. Companies are going to have to start looking at the best available control technology and that’s going to be an expense. Later in July, they’re going to have the full scope of covering facilities that are going to have to make upgrades on emissions. That cost is going to get passed on to the individual consumers and that’s an expense. That’s an expense that is going to affect people moving forward. And I wonder, Dr. Holtz, I know you’ve talked about proposals that we’ve proposed that try to lessen the impact on consumers. Do you think legislation is a better path to reducing the cost on the consumer as opposed to just letting EPA Act?
 
Dr. Holtz-Eakin: Regardless of one’s views on the merits of climate legislation, it is widely recognized that to have the EPA go back to a command and control regime, with as many point sources there are for carbon, is economically irrational and destructive. There is not one good reason to do this. If you want to take care of carbon emissions, you should use market forces, as your bill with Senator Collins does. So that there’s a price on carbon and people respond appropriately to innovate new technologies that don’t emit carbon and substitute away from those that do. That’s a much more rational course.
 
Watch a video of Cantwell’s remarks at today’s hearing.
 
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