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EPA policy reflects true cost of coal

Bad news for a war-weary nation. President Obama has initiated a whole new round of hostilities.
He has declared war — and on coal, no less.

At least that’s what we’re hearing from coal-staters and climate-change skeptics.

The EPA’s new policy targeting emissions from coal plants will push up the price of electricity, foes say, and they are probably right, at least in the short term. It will be a serious blow to the economy, they charge — which is a much more dubious proposition, particularly in the long term.

Actually, the administration’s action is something market-oriented conservatives should applaud, though of course they won’t. Although it’s not as efficient as a carbon tax or a cap-and-trade system, the EPA’s new policy will help the energy industry get important price signals right.


That’s not now the case with power from coal-burning plants. Because they can spew greenhouse gases and other pollutants into the air without accounting for the effects of those emissions, those plants sell the resulting electricity at below its true total cost. Contrariwise, if the charge for that power reflected the true environmental and health effects of coal, the price would rise, rendering clean-energy alternatives more competitive.

That’s one of the ideas behind various market-based schemes for emissions controls. And indeed, cap-and-trade was once considered a sterling Republican idea. But in the years since John McCain pursued the presidency as a cap-and-trade supporter, right-wing insistence on conservative political correctness has taken a toll on Republican rationality.

The GOP’s preferred fallback position used to be that more study of climate change was needed. But even as more research has increased the scientific evidence supporting man-made global warming, the GOP’s dismissal of climate science has grown more strident. These days, to be considered a conservative in good standing, one apparently can’t just be an agnostic on climate change. Rather, one must firmly declare his disbelief in climate science.

For those who take a nonpartisan approach to science, however, the benefits of this policy far outweigh the costs — even if one credits the high-end estimate of those costs. The US Chamber of Commerce claims the policy will decrease annual GDP by some $50 billion. Although that estimate is only a small percentage of national yearly income, it’s still several ballparks removed from the EPA's projection of about $7 billion to $9 billion in yearly costs.


But let’s assume for a moment that the chamber is right. The cost/benefit ratio of the new policy is still positive in the long run; the EPA estimates that reducing emissions will impart $55 billion to $93 billion in annual health and climate benefits by 2030.

Further, even if one disbelieves the strong climate-science consensus (that is, even if you think spewing billions of metric tons of carbon dioxide into the atmosphere has no climate effect), Obama’s new policy still helps correct for the heretofore unconsidered health consequences — or negative externalities, as economists call them — of coal-plant emissions.

The environmental agency estimates that the reduced emissions of sulfur dioxide, soot, and nitrogen oxides will mean at least 140,000 fewer childhood asthma attacks, at least 2,700 fewer premature deaths, and almost half a million fewer work and school days lost to illness. The EPA estimates the total value of those health benefits at $25 billion to $62 billion annually.

To sum up, then, even if one still doubts man-made climate change, this plan is a winner because it makes the price of coal-generated electricity more closely reflect its true costs.


If our political discussion were more rational, that reality would already have dictated better emissions policy. But even in today’s hyper-partisan political atmosphere, it should help clear the industry-created smog about the EPA’s bold move.

Scot Lehigh can be reached at Follow him on Twitter @GlobeScotLehigh.