Good or Bad Climate Policy by David Montgomery


A series of recent letters to the Chestertown Spy have castigated our Representative, Andy Harris, for sponsoring HR637, a bill that would change the way greenhouse gases can be regulated. The bill is a necessary step toward sensible and effective climate policies, and the depth of misunderstanding of the nature of greenhouses gases and the Clean Air Act evident in the letters makes them the subject of this column.

HR637 has 120 co-sponsors, and its purpose is to stop the Environmental Protection Agency from using the Clean Air Act to regulate greenhouse gas emissions. To do so, it changes the language of the Clean Air Act to remove the six greenhouse gases from EPA’s jurisdiction. The six are methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride, carbon dioxide.

There are three reasons why I think the bill co-sponsored by Andy Harris is a good idea: 1. No one is harmed by breathing any of these compounds at concentrations they could reach in the atmosphere whether regulated or not. 2 Reliance on the Clean Air Act is a terrible way to deal with global warming. 3. There are much less costly and more effective ways to address global warming — like the carbon tax that I discussed several weeks ago.

First, we can all breathe freely if these compounds are unregulated. Leaving aside the personal animus expressed in many of the letters, their common error is in believing that the six compounds that would be removed from the list of “air pollutants” are themselves hazardous to human health. The repeated claim that “they will impact our crops, livestock, seafood, soil and waters that are the bounty of our Chesapeake Bay region, not to mention our lungs!” is simply untrue. The only reason that EPA is regulating those compounds is their suspected contribution to global warming.

A little history helps here.

In 2009, EPA issued a finding that these 6 compounds “endanger” public health and welfare due to their contribution to global warming. This is the “endangerment finding,” famous in some quarters and infamous in others. Nowhere in the endangerment finding does EPA mention any direct impacts of these compounds on health. That is because the current and future concentrations of these compounds in the atmosphere are far, far below any threshold at which they could be harmful. And some, like the two fluorocarbons and methane, are harmless propellants that have been used in hairspray. The only property that has led EPA to regulate them is their effect as greenhouse gases.

To make this perfectly clear, EPA is required under the Clean Air Act to regulate emissions of hazardous air pollutants. EPA’s current list includes 187 hazardous air pollutants. None of the greenhouse gases appear on this list. Nor are they in the list of criteria air pollutants (particulate matter, ground-level ozone, carbon monoxide, sulfur oxides, nitrogen oxides, and lead) for which EPA is required to establish ambient air quality standards. If these compounds did pose dangers cited by the letter writers, they would have to be on one of these lists.

Second, the Clean Air Act was never intended to deal with problems like global warming. EPA relied on the endangerment finding to issue a rule requiring existing electric power plants to reduce their emissions of carbon dioxide. EPA also issued a rule in 2016 to regulate methane emissions from oil and gas production as greenhouse gases. These rules will significantly increase costs of natural gas and electricity to consumers and do little to slow the pace of global warming. They are just targets of opportunity, singled out because the Clean Air Act does not give EPA the authority to utilize cost-effective, economy-wide policies that could achieve much greater results at much lower cost.

President Obama declared that “if Congress won’t act on global warming, I will use existing regulatory authorities to take action.” EPA chose the Clean Air Act to support its moves on global warming. But under the Clean Air Act, EPA can only issue performance or technology-based standards for particular categories of sources. So the methane rule applies only to oil and gas wells, and requires reductions in methane emissions that could be — and in fact are being — achieved at far lower cost by addressing leakage from transportation and use of natural gas. The Clean Power Plan is itself before the Supreme Court because of challenges upheld by the lower courts that EPA went beyond what the Clean Air Act allows in designing the rule. In particular, EPA based requirements not on what is technically feasible and economically justified “within the fence” of a power plant, but expected power plants to pay for emission reductions by others.

This kind of emission trading is in itself a very good idea, because it allows the market to find the most cost-effective ways to reduce emissions. But under the Clean Air Act, the extent of that market is tightly circumscribed, so that EPA may have exceeded its authority even with the small amount of offsets it allowed in the Clean Power Plan. Even if the courts uphold the Clean Power Plan, its narrow focus on electric power plants means that there are widespread opportunities to reduce emissions more cost-effectively that it cannot touch.

Third, there is a far better way to do all this. The Obama Administration’s devotion to regulation has done little or nothing for the environment, but it has put a stranglehold on economic growth. The Administration also issued rules for new car fuel economy that auto manufacturers cannot meet unless car owners sacrifice affordability and performance and other rules that require amounts of ethanol in gasoline that can harm older cars as well as boat and farm engines.

HR 637 is an important step toward dismantling this regulatory approach to climate policy, and it clears the way for building a consensus for a less intrusive and more effective one. Once this regulatory jungle is cleared away, my preference would be for a carbon tax set at a level that gives the best balance between risks to the US economy from global warming and the cost of reducing emissions. Another wise and cost-effective approach could be a technology strategy emphasizing basic and applied research to develop breakthrough clean energy technologies we cannot envision today.

What is most important is to settle on a policy that has sufficient political consensus to last from one Administration to another. One thing that this election should have proven to anyone is that the regulation that one Administration can impose, the next can undo. Global warming is a process that evolves slowly over time, that we do not understand well enough to predict with any confidence, and that will have to be addressed in a consistent manner for many decades to come. In particular, we will not get the kind of research and innovation necessary for a low carbon future unless we put in place long lasting policies that provide adequate rewards for innovation. Getting rid of hastily contrived and excessively costly regulations is a good first step. HR637 does not mean that global warming will not be dealt with, but it does ensure that global warming will no longer be dealt with quite so badly.

David Montgomery was formerly Senior Vice President of NERA Economic Consulting. He also served as assistant director of the US Congressional Budget Office and deputy assistant secretary for policy in the US Department of Energy. He taught economics at the California Institute of Technology and Stanford University and was a senior fellow at Resources for the Future.

Letters to Editor

  1. Neil Armstrong says:

    This sounds a little like the Tom Price sales pitch for the new American Health Care Act – this first step may be ugly but trust us we will eventually give you “something better” than ObamaCare. There is a lack of trust, based on recent history and party loyalties, that the “something better” will ever happen regarding greenhouse gases. Meanwhile in the short term you are making things worse. Think of the many members of Congress who deny the human affects on climate change, or think it is not an urgent problem.

  2. David Jeffery says:

    More than 20 years ago advanced computer models predicted change due to CO2 release by human activities. Prediction: significant global warming of the atmosphere with the greatest rise of temperatures at higher latitudes. The predictions have proved accurate, not only as computer models have given greater detail but in the actual world. Sea levels are rising The Arctic is now more open ocean than ice. Enormous Antarctic ice sheets have developed serious fissures. The Great Barrier Reef is dying, largely due to CO2 induced acidification of ocean waters. And so on. If someone throws a rock at you, you could say: “Well, that needs more study before I duck.” Duck!

  3. Kenneth Mount Miller says:

    Excellent summation on the “Laughing Gass” Et al, that many truly uniformed individuals seemed to be inhailing. If only an informed and intelligent media would report the FACTS, possibly the uninformed would become much more understanding!

  4. Hugh Beebe says:

    David Montgomery offers an apology for Representative Andy Harris’s misguided support of HR 637. Why does he does this?
    Mr. Montgomery’s former employer as a senior officer, NERA Economic Consulting, had founders who were right wing power players from sources such as the Hudson Institute (a far right advocacy group advocating for nuclear power with links to Rupert Murdoch) and Alfred Kahn, a strong resistor to government regulation of almost any type. They have so continued, and currently NERA Economic Consulting officially promotes removing regulation of the coal industry and regulations limiting toxic effects on air and water of the chemical industry.
    NERA receives funding support from dozens of major US corporations in the fossil fuel and chemical industries. A recent study conducted by NERA Economic Consulting, funded in part by fossil fuel industry trade groups, advocates for deregulating the fossil fuel industry and promotes coal as an energy source.
    The reality is that power plants are the nation’s largest source of carbon emissions, and the EPA seeks to reduce these emissions by about 30 percent compared to 2005 levels by 2030.
    In an ideal world, I would agree with Mr. Montgomery that reducing adverse atmospheric effects of carbon pollution should not be accomplished by a regulatory agency. However, the failure of the U.S. Congress to take effective action to that effect, as have many European countries and even China, lead the Obama administration to use other tools available.
    The Shultz, Baker, Paulson plan would be a welcome alternative to the evidence-free, ignorant and dangerously closed-minded positions of David Montgomery and Senator James Inhofe.
    Concerned citizens should take action now to ask politicians, who ought to be representing their constituencies, to get real in confronting the mounting crisis of climate change that is augmented by human activity.
    HR 637 is a severe mistake, and if it were to pass, we would all be worse off — and not by a little bit.

  5. An excellent, knowledgable, thorough, factual analysis by Mr. Montgomery.

  6. David Lloyd says:

    Very disappointing article. The author obviously hasn’t read the science that shows global warming is indeed a very current threat. The fact that we “can all breathe freely if these compounds are unregulated” is so far off the point. You really want to subject people to breathing nitrous oxide, carbon dioxide and more? He may know his economics but he needs to learn a whole lot more about science. And math: when, what, 95+% of all scientists studying global warming have supported making greater efforts to reduce man-made/caused emissions a critical objective, are we to agree that it is “fake news?” Very disappointing.

  7. Carol Voyles says:

    We may be able to tolerate more methane, but your statement that the Clean Air Act was never intended to deal with global warming and carbon dioxide levels undermines your premise. Global warming is clearly impacting our environment, our health, and our well-being – and concerning those unreliable predictions, it’s also coming faster than we thought.

  8. Christopher A. Koch says:

    First, I want to thank Mr Montgomery for commenting on Andy Harris’ disastrous environmental bill, HR 637, working its way thru congress. Now at least we are discussing it in an open and civil manner and we can all see where Mr Harris stands regarding our environment. Mr. Montgomery, I consider your view as the Old School view which asks “What harm is it?”, when addressing pollution, and emphasizes what industry wants. The New School view asks “What good is it?”, and focuses on that which is healthy and sustainable for all Americans. Our knowledge of the harm that decades of pollution is and has done to our environment is in its infantile stages. Only extreme hubris would assume otherwise considering the relatively short time span since we have even acknowledged any potential negative consequences. And what do we see politicians doing today? Eliminating research funding and denigrating our scientific community, while striping oversight of industrial polluters with bills like HR 637. I would urge you to use your good knowledge of the subject to become part of the solution.
    Second, my big question to Mr Harris is: Who asked you to sponsor this bill? Was it your constituents from the Chesapeake Bay Region telling you that we were not getting enough methane, hydrofluorocarbons, perfluorocarbons, or sulfur hexafluoride, in our air and we needed your help on capital hill? Or was it the lobbyists from the oil and gas industry? I would suggest you follow Governor Hogan’s lead and ignore “consultants” from Washington that put industrial interests ahead of Maryland citizens. Accolades should be sung for Governor Hogan who just called for a ban on Fracking in MD. Against the advice of Washington D.C. based, Mr Montgomery: Mr Harris, may we one day sing your accolades too.
    Finally, back to HR 637…. the broad carnage within the bill goes on to establish new law by stating in paragraph (2) NO REGULATION OF CLIMATE CHANGE, “nothing in any of the following Acts or any other law authorizes or requires the regulation of climate change or global warming:
    The Clean Air Act,
    The Federal Water Pollution Control Act
    The National Environmental Policy Act
    The Endangered Species Act
    The Solid Waste Disposal Act”
    HR 637 finishes with stating that the “rules (or any similar or successor rules) of the Environmental Protection Agency shall be void and have no force or effect on:
    Oil and Natural Gas Sector: Emission Standards
    Carbon Pollution Emission Guidelines for Existing Electricity Utility Generating Units.”
    Mr Harris, please remember whose interests you were sent to Washington to protect and protect our environment. I recommend you follow the advice of General James Mattis. Secretary of Defense, James Mattis has recently asserted that climate change is real, and a threat to American interests abroad and the Pentagon’s assets everywhere.
    Contact Representative Harris and voice your opposition to HR 637. or call at 202-225-5311.

  9. David Montgomery says:

    A very interesting set of responses. First, I really don’t think I am responsible for views of the founders of NERA, may they rest in peace. As I have said before, I take attacks on former employers and associates to be evidence of inability to come up with arguments against my reasoning. It is also amusing to read that the Schulz-Baker-Paulson proposal for a carbon tax is an enlightened alternative to my close-minded position, since that group also makes their support for a carbon tax contingent on precisely the rollback of existing regulation that HR637 would accomplish. Those who think I need to study the science again need to remember that they have been breathing carbon dioxide all their lives, and the only perceptible effect of doubling or tripling the amount of carbon dioxide in the atmosphere is that plants will grow faster.

    To deal with more serious comments, I just want to emphasize that my problem is with the regulatory overreach of the Obama Administration not with measured action to address climate risks. The Clean Air Act, and the other laws mentioned in HR637, provide neither the flexibility nor the scope required for cost-effective climate policy. At best, they could lead to a patchwork of controls that contribute little to slowing global warming while imposing unnecessarily high costs. Whether the best legislative strategy is get rid of the regulatory mistakes first, then work on a better approach, or make a deal to do both simultaneously, is a legitimate question to ask. The provisions of HR673 are required in either strategy.

    A final point on the science, I recommend that those who are sure that climate change is a clear and present danger read the Fifth Assessment Report of the Intergovernmental Panel on Climate Change, as I have. That report states definitively that there is little or no evidence that the United States is now experiencing any current harm caused by human-induced climate change. Bad luck with weather but too little increase in temperature attributable to anthropogenic emissions to cause it.

Write a Letter to the Editor on this Article

We encourage readers to offer their point of view on this article by submitting the following form. Editing is sometimes necessary and is done at the discretion of the editorial staff.