The Clean Air Act is a foundational piece of US environmental legislation and, since 2009, has sat at the core of the government’s approach to regulating harmful emissions, such as carbon monoxide.
In 2009, after years of extensive scientific review, EPA officially determined that greenhouse gas emissions endanger public health and welfare. This “endangerment finding,” as it’s known, was based on overwhelming evidence from EPA’s own experts, the U.S. National Academies of Sciences, Engineering and Medicine, and the scientific community that shows that U.S. greenhouse gas emissions from extracting and burning fossil fuels drive global climate change and harm people.
The finding was legally critical. Under the U.S. Clean Air Act, the EPA is required to regulate substances that “cause, or contribute to, air pollution which may reasonably be anticipated to endanger public health or welfare.” Once the EPA made that determination for greenhouse gases, the agency was legally obligated to act. The finding became the legal foundation for federal climate policy, including regulating vehicle, industrial and power plant emissions and treating climate change as a public health issue under the EPA’s authority.
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The endangerment finding underpinned regulations across multiple sectors, including emissions limits for consumer vehicles, commercial vehicles and heavy-duty trucks, standards for coal-fired and natural gas power plants, and federal sustainability requirements that shape government procurement and broader market behavior.
Donald Trump, as Reuters has reported, reckons the change will be positive for the US economy.
Trump said the country’s “biggest deregulatory action” in history would save companies over $1 trillion in compliance costs. Environmental groups denounced the move, which was cheered by some industry groups but greeted with caution by others.
The President of the National Academy of Sciences subsequently wrote to the organization’s members, noting that ‘the EPA justified its decision on legal, economic, and regulatory opinions, and not on the science’.
But if the decision was justified, at least partially, on economic rather than scientific grounds, do the economics stack up?
Not according to two of the Clark Center’s Expert Panels.
Asked whether “the weight of economic analysis and evidence supports the conclusion that some form of regulation of greenhouse gas emissions is warranted,”, 91% of US respondents, weighted by confidence, either strongly agreed or agreed, as did 97% of European respondents.
Of course, that question does not specifically refer to the EPA’s recent policy change. As Daron Acemoglu, of MIT, put it, “agree but with caveats. First, some of those regulations are worse ways of dealing with emissions than carbon taxes, and the US equilibrium where regulations proliferate instead of carbon taxes is highly inefficient. Second, some regulations may unnecessarily slow down investment”.
Economists mostly agree that greenhouse gas emissions are a form of externality that should be dealt with either through a tax of some sort or a regulation, but there are a variety of potential policy approaches available.
The second question that the panels were posed, more directly addressed the trade-off in play. Asked whether “for US consumers and firms, the health and environmental benefits of greenhouse gas emission standards outweigh the costs, making the EPA rescission substantially net negative for American society,” the results were almost equally decisive. Some 90% of American respondents and 92% of European respondents, again weighted by confidence, either agreed or strongly agreed.
Amongst the minority disagreeing, Robert Shimmer, of the University of Chicago, argued that “for Americans, the benefit of American greenhouse gas emissions standards is likely smaller than the cost of the standards. Much of the benefits of the standards are borne by people in other countries”. Although, as Franklin Allen of Imperial College, London noted, “climate change is already having disruptive effects on the US climate. It is difficult to get insurance as a result of these changes in many places. These effects will get worse over time without action”.
And as David Autor of MIT set out, the issues go wider than just greenhouse gases, “it’s not greenhouse gases but all of the many public health harms that come with burning fossil fuels. Transitioning sooner to wind, solar, and nuclear will save lives, accelerate growth, and enable America to cede _less_ of the future to China”.
Of course, whatever the intention of the administration, it is possible that the impact of the recession will be less dramatic than some hope.
As Reuters noted, a great deal of legal pushback and state-level action is now expected.
The Edison Electric Institute, representing big U.S. investor-owned utilities, said “We are reviewing this new action and will continue to work with the Administration to strengthen grid reliability and lower energy costs for all customers.”
In public comments last year, EEI said repealing the endangerment finding could open the door to a regional patchwork of regulation and legal action.
Ann Carlson, environmental law professor at the University of California law school, agreed with that assessment, saying that federal authority to regulate greenhouse gases would no longer preempt state actions.
“If greenhouse gases aren’t subject to the Clean Air Act, there’s an argument that states could then regulate them independently,” she said.
More broadly, US automakers have reacted cautiously. Given the presence of tougher emissions standards in many other markets, lowering the standards on their models could crimp export sales. And a wholesale switch towards more emitting models for the domestic market could quickly run into problems if the regulatory framework were to change again, firms may prove cautious.
The EPA reversal is potentially a major act of deregulation, and one not supported by the majority of experts, but its impact may be smaller than either proponents or opponents expect.
