Statement by ERCC Director Scott Segal at a Hearing on EPA Authority Over Greenhouse Gases

February 9, 2011

Federal agency officials and environmentalists seem to think that expensive environmental regulations create jobs. We think that conclusion just isn't credible in any way. Indeed, in support of federal climate legislation, Administration officials over the last two years have previously warned of the adverse consequences and inflexibility of greenhouse gas (GHG) regulations under existing authority.

No EPA study evaluates the cumulative economic impact of GHG regulation laid on top of fast-moving and costly conventional regulatory proposals. For example, in November 2011, EPA will promulgate the so-called Utility MACT rule that will become effective in early 2012; that date begins a three-year clock for the 400,000 MWs of coal and oil-fired generating units to be in compliance. Based on historic performance and industry experience, it will be impossible to permit, engineer, procure, and construct hundreds of new controls and the necessary replacement generation for the economic retirements of between 60 and 120 GWs of coal and oil-fired generation by 2015. This is the environment in which EPA seeks also to advance GHG guidelines and permitting obligations.

These regulations, taken together, will place the jobs and economic output of coal-fired generation at risk, threatening millions of jobs and household budgets. As a frame of reference, economists at Penn State University set out to estimate the total economic footprint of coal-fueled electric generation by 2015. They found that coal-fueled generation will contribute:

  • $1.05 trillion (2005 $) in gross economic output;
  • $362 billion in annual household incomes, and
  • 6.8 million jobs.

So, a major challenge to traditional sources of power generation is not without the potential for some severe economic consequences.

Some have claimed that power-sector regulations will stimulate new investment in technology of various descriptions, creating so-called 'green jobs.' While this may be true, heavy regulatory burdens have never been truly conducive to business confidence, investment and job creation. Data has shown that salaries paid for jobs classifiable as "green" are far below the national average. European experience demonstrated that for every four green jobs created, nine higher paying industrial jobs are lost. At the very least, flimsy or overly optimistic economic benefit analysis cannot be the basis for risking millions of industrial jobs and billions of dollars in GDP.