Comment to the Environmental Protection Agency: Proposed Rule on “Multi-Pollutant Emissions Standards for Model Year 2027 and Later Light-Duty and Medium-Duty Vehicles”

Summary

The benefit/cost analysis published by the Environmental Protection Agency in its proposed rule “Multi-Pollutant Emissions Standards for Model Year 2027 and Later Light-Duty and Medium-Duty Vehicles” is fatally flawed; accordingly, the proposed rule should not be finalized.

EPA claims that the fuel savings attendant upon implementation of the proposed rule would yield benefits in present value terms of $380-$770 billion (net of EVSE port costs), depending on the choice of discount rate. But fuel savings are an illegitimate dimension of any such benefit/cost analysis because the value of fuel savings measured as a function of market prices represents no divergence per se between market prices and true resource costs in standard externality analysis.

If “fuel savings” are to be considered relevant for purposes of benefit/cost analysis, then the adverse effects or costs of a (forced) reduction in fuel consumption in terms of the quality of transportation services must be included in the analysis also.

Were a regulatory rule simply to outlaw entirely the use of motor fuels by cars and light trucks, forcing consumers massively to use bicycles, horse-drawn carts, and similar substitutes technologically backward, the “fuel savings” under the EPA methodology would be enormous, but nowhere in the EPA methodology is there any cost in terms of the quality of transportation services. Does EPA believe that consumers of motorized transportation services powered with conventional fuel simply are stupid? This EPA analytic framework is not to be taken seriously.

The same is true for the asserted “climate benefits” of the proposed rule, which under the explicit EPA assumptions and estimates as published, would be about 0.023°C by 2100, using the EPA climate model under assumptions that exaggerate the effects of reduced emissions of greenhouse gases. That effect would not be detectable. Accordingly, the monetized climate benefits of the proposed rule asserted by EPA are an illusion.

EPA attempts to circumvent this obvious problem by substituting in place of any such analysis an application of the “social cost of carbon” to the asserted reductions in GHG emissions attendant upon implementation of the proposed rule, as estimated on an interim basis by the Biden

Administration Interagency Working Group. The interim IWG estimates are deeply flawed, in that they (1) distort the actual economic growth predictions produced by the integrated assessment models, (2) base predictions of future climate phenomena on climate models that cannot predict the past or the present, (3) incorporate “co-benefits” in the form of a reduction in the emissions of other criteria and hazardous air pollutants already regulated under different provisions of the Clean Air Act, (4) incorporate the asserted benefits of GHG reductions on a global basis, and (5) employ discount rates that are inconsistent and inappropriate.

The asserted “energy security” benefits of the proposed rule are illusory. Because there can be only one world market price for such fungible commodities as crude oil, abstracting from such second-order differences as transportation costs, exchange rate impacts, and the like, nations that import all of their oil face the same prices and price changes as those importing none of their oil.

Accordingly, the common view of “energy security” as a direct result of the level or proportion of imports is incorrect; but the EPA in effect endorses this view nonetheless. A U.S. that imports more oil is not less “energy secure” than a U.S. that imports less.

Similarly, a defense cost argument is not correct. The portion of the costs of the U.S. defense effort that can be attributed to defense of the sea lanes and the like is a hugely complex analytic calculation, dependent upon a large array of alternative assumptions about the allocation of the fixed costs of the physical and human force structures across military functions and missions.

Because national security needs and force structures evolve only over decades, it is reasonable as a first approximation to assume that defense capital provides those multiple functions in more-orless fixed proportions, which means that any allocation of those fixed costs across multiple functions is arbitrary.

EPA asserts that “there is consensus that the effects of climate change represent a rapidly growing threat to human health and the environment, and are caused by GHG emissions from human activity, including motor vehicle transportation.” This is not correct, even apart from the dubious premise that some sort of undefined “consensus” is a proper basis for policy formulation, and even apart from the failure of EPA even to attempt to separate anthropogenic and natural influences on climate phenomena.

There is no evidence of a climate “threat” or “crisis” as commonly asserted, in terms of temperature trends, polar sea ice, tornadoes, tropical cyclones, wildfires, drought, flooding, or ocean alkalinity. The Intergovernmental Panel on Climate Change is deeply dubious about the various severe effects often asserted as prospective impacts of increasing atmospheric concentrations of GHG. Moreover, NASA reports significant planetary greening as a result of increasing atmospheric concentrations of carbon dioxide, and data from the United Nations Food and Agriculture Organization show that global per capita food production increased 46 percent between 1961 and 2020, and 20 percent for 2000-2020.

The “crisis” narrative is derived wholly from climate models that cannot predict the actual temperature record. In particular, the suite of climate models underlying the IPCC 5th and 6th Assessment Reports overstate the mid-troposphere temperature record by factors of about 2.5. Moreover, the models are fine-tuned in such a way as to deny the importance of natural influences on climate phenomena, but that is inconsistent with a large body of evidence, in particular the substantial warming observed from 1910 to 1945, and the close correlation between the satellite temperature record and the El Niño/Southern Oscillation.

The analysis underlying the proposed rule is fatally flawed; it should not be finalized.

This piece originally appeared at AEI.org and has been republished here with permission.