EPA’s Sum Effect = Net Loss

My response to this week’s question on National Journal Energy & Environment Policy Experts Blog:


The clean air rules put forward by the Environmental Protection Agency will have a profound impact on our struggling economy.

EPA’s own data show that the CAA of 1990 have had a negative impact on GDP and growth see figures from EPA modeling here. The new rules are certain to add the uncertainty to the cost of electrical generation as well for other energy using and producing industries. Signs of the impact of uncertainty on the U.S. economy can be seen in the fact that gross private domestic investment is still $327 billion lower in the 3rd quarter of 2011 than in the 4th quarter of 2007 see chart. Each $1 billion loss in investment is associated with 15,000 to 22,000 fewer jobs.

In my testimony from February 2011 to the House Energy and Power Subcommittee on the impact of EPA’s regulation of GHGs under the Clean Air Act, I highlight that if U.S. capital spending declines by $25 to $75 billion, in 2014 there would be an economy wide job loss of 476,000 to 1,400,000 when direct, indirect and induced effects are included. As a result, GDP would be $47 billion to $141 billion less in 2014. See testimony here. 

Given our weak economy we should slow down EPA’s implementation of additional air quality regulations across the U.S. U.S. industry still faces huge uncertainties with additional regulator initiatives including Dodd Frank, health care and deficit reduction. The uncertainty created by EPA’s regulatory policies will exacerbate our weak economic recovery.

Margo Thorning

Dr. Margo Thorning has frequently testified as an expert witness on capital formation, tax, energy and environmental policies before multiple U.S. congressional committees. She has also traveled coast to coast to present findings to state and local lawmakers, business organizations and the media on the economic impact of climate change policies on local job and economic growth.

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