Written by Nicolas Loris
Wisconsin’s economy has been on the upswing, but Washington’s proposed greenhouse gas regulations could change all that. The Environmental Protection Agency’s prospective crackdown on new and existing power plants will drive up energy prices across the nation, but the proposed regulations will hit Badger State families and businesses particularly hard.
The latest surge in the agency’s “war on coal,” EPA’s proposed limits on carbon dioxide emissions would essentially block construction of new coal-fired power plants and force existing ones into early retirement. New plant emissions, for example, would be capped at 1,000 pounds of CO2 equivalent per megawatt hour. Talk about Mission Impossible! The newest, most efficient coal power plant emits 1,700 pounds per megawatt hour.
In the real world, the war on coal is a war on affordable, reliable energy. It’s especially problematic for Wisconsinites, who rely heavily on coal for their electricity (more than 60% vs. the national average of 40%).
Taking coal offline will drive energy prices higher and squeeze both production and consumption. Most businesses will pass their higher energy costs on to consumers, in the form of higher prices. Those able to absorb the costs will do so by shrinking profit margins — inhibiting their ability to invest, expand or improve employee compensation.
The Heritage Foundation analyzed the effects of a 20-year phase-out of coal and found devastating results for the economy at large. By 2023, the phase-out will have cost the economy nearly 600,000 jobs. Income for a family of four will drop by $1,200 per year. Gross domestic product will register a cumulative decrease of $2.23 trillion over the phase-out period.
Many of the job losses will occur within the manufacturing sector. The blow will fall most heavily on manufacturers in Illinois, Indiana, Michigan, Ohio and — you guessed it — Wisconsin.
Wisconsin stands to lose, on average, more than 1,460 manufacturing jobs per congressional district — nearly twice the national average. Rep. Tom Petri’s (R-Wis.) 6th Congressional District will lose 2,000 manufacturing jobs by 2023 — more than any other district in the country, according to our analysis.
Why will manufacturers take such high casualties in the war on coal? Many manufacturing plants are energy-intensive. Denying them affordable, reliable energy will drive up their production costs.
Currently, the U.S. is experiencing a mini renaissance in manufacturing. Wisconsin is contributing greatly to that progress and reaping the benefits. Wisconsin manufacturers created more than 13,000 net new jobs in 2013, making it a national leader in manufacturing job growth. The EPA’s climate regulations could suck all the affordable energy out of that trend, and wipe away Wisconsin’s economic improvement.
The questions remains: Isn’t that a small price to pay to save the planet for future generations? Hardly. The higher energy bills, fewer jobs and lost economic opportunity will produce negligible climate benefits.
Yes, the climate is changing, and there is little doubt that man-made emissions are having some warming effect. But that does not mean we’re heading to catastrophic warming with more frequent and intense natural disasters. And even if we were, the EPA’s greenhouse gas regulations wouldn’t stop it. At best, these job-killing regulations might — in 85 years’ time — help avert warming by 0.2 degrees Celsius.
The reality is that, by shrinking economic growth, the EPA’s actions will diminish our ability to address real environmental problems effectively. These climate regulations are all pain and no gain. And the pain cuts especially deep in Wisconsin.
Originally published in the Journal Sentinel.
Source: Heritage Foundations
Nicolas Loris is a Policy Analyst at The Heritage Foundation's Roe Institute for Economic Policy Studies. Loris studies energy, environment and regulation issues such as the economic impacts of climate change legislation, a free market approach to nuclear energy and the effects of environmental policy on energy prices and the economy.