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Obama's hidden agenda

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By Peter Morici
Thursday, June 27, 2013, 8:55 p.m.
 

President Obama's climate action plan won't do much to curb global warming, but it will please liberals who delight in extending government control over large segments of the economy.

The president argues the overwhelming majority of scientists agree the planet is warming and greenhouse gas emissions are the primary culprit. As CO2 composes 80 percent of those gases, Obama targets coal-fired electric utilities and opportunities to reduce fuel use in heavy transportation.

The president proposes reducing U.S. emissions by 17 percent from 2005 levels through strict EPA regulation and oversight. But market forces are already accomplishing that goal without a command-and-control regime.

In 2011, the last year data are available, U.S. greenhouse gas emissions were already down 8.5 percent from 2005. Simply responding to consumer preferences, Detroit started making more fuel-efficient vehicles even before the president started phasing in tougher mileage standards in 2012. Recently, more-abundant and cheaper natural gas inspired electric utilities to start switching out of coal.

If current trends continue, these market-driven adjustments in energy use will take greenhouse gases well below the president's target by 2020 without costly government intervention.

If left alone, the power sector in the Midwest, for example, will continue to phase out coal. Instead, the president will micromanage the process by imposing strict and inflexible requirements on each electric utility. This will limit flexibility, result in the overuse of natural gas, and unnecessarily raise natural gas and electricity prices.

Similarly, competition from rail, complemented by short-haul light trucks, already imposes pressures on long-haul trucking companies and heavy-truck manufacturers to conserve fuel. But the president's program will micromanage their efforts out of the EPA and raise the cost of moving goods around the country without cutting CO2 emissions very much. All this will make U.S. manufacturing and other commercial enterprises less competitive and send more jobs to China, where businesses pollute with reckless abandon.

With an economy about half the size, China emits twice the greenhouse gases as either the United States or Europe. Every three years, its emissions grow enough to replace the savings the United States would accomplish over 15 years. Other developing countries, like India, are similarly adding to the problem.

The president proposes to bring China and other nations along through diplomacy, but he has not been able to obtain Beijing's cooperation on the value of the yuan, cyber piracy or even detaining Eric Snowden. No one can reasonably believe China can be persuaded to rearrange its entire automobile and electrical-generation industries to suit the predilections of American environmentalists.

The president wants the new EPA standards for power plants finalized by June 2015 and implemented in 2016. This hasty timetable is necessary to lock in a new regime before its wisdom is debunked and another round of negotiations with China, India and others fail.

Global warming will go unmitigated and U.S. economic growth and jobs creation will be further harmed. However, the president's desired legacy will be served. As with ObamaCare, the scope of command and control over the private economy will be extended.

Peter Morici is a professor at the Smith School of Business at the University of Maryland and former chief economist at the U.S. International Trade Commission.

 

 
 


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