The Trump administration has formed a team charged with making recommendations for changes to the EPA. This action is needed because gone are the days when the EPA followed the legislation written by Congress. Good things were accomplished by the EPA. But now the EPA has over stepped it authority. The EPA task is to administer the law, not make it. For example, it has developed criteria to justify their own efforts, often invites “friendly lawsuits to expand their activities, and uses “secret science” to justify their regulations:
The following are some of the areas that the team need to address, in my opinion:
- Social Cost of Carbon
- Secret Science
- Peer Reviewed Studies
- Friendly Law Suits
- The Endangerment Finding
- Research Grants
- Last Minute Regulations
Social Cost of Carbon
The Federal Departments are charged with providing the benefit that results from their regulations. The EPA’s decided that their benefit would be a calculation that they call the Social Cost of Carbon (SCC). Their SCC calculates the economic damage per ton of CO2 emissions. They form the SCC by considering all the bad things they say are going to happen if atmospheric CO2 continues to increase. Sea level rise, terrible weather, crop failures, mass migrations. These outcomes are predictions made by their computer models. One thing we know about the computer model’s predictions is that they have consistently overstated the temperature rise and the sea level rise. These two drive the cost side of the equation. Thus, all their regulatory schemes are supposed to prevent these costs. But the EPA fails to include the benefits of additional atmospheric CO2. One thing we know for sure is the increased atmospheric CO2 has resulted in a profound greening of the globe. Food crop production has increased dramatically as CO2 is the primary food for plants. The gentle global warming that has taken place has been beneficial as well.
Another problem with the SCC is the discount rate used by the EPA is unrealistic in the view of many economists. The Federal Government’s Office of Management and Budget(OMB) believes a in different discount rate. When using OMB discount rate, the EPA cost estimates are reduced by 80% and is some cases cause the cost to be negative. And where the calculation goes negative, the increased atmospheric CO2 results in a benefit, not a cost.
Using these flawed computer predictions makes this calculation unsuitable for policy making. Further, the benefits that are actually known (not computer predicted) are not included thus making the calculation even more useless. And lastly the discount rate chosen by the EPA would not likely be used by most economist.
Social Cost of Carbon calculation currently used by the EPA should be drained from the swamp.
Unfortunately, many new regulatory rules have been enacted based upon the social cost of carbon. One survey found that between May 2008 and August 2014, some 68 major rules were sanctioned by the SCC. This is an issue the new team should address.