Cost of a Climate Policy: The Economic Impact of Obama’s Climate Action Plan

President Obama recently released his Climate Action Plan, which is a continuation of the costly, ineffective policies from his first four years in office: Solyndra-style loan guarantees, nice-sounding but too expensive efficiency mandates, and his war on coal. It is this war on coal that would prove the most costly, with hundreds of thousands of lost jobs and $1.47 trillion of lost national income by 2030.

Bankrupting Coal Hurts American Families
When Senator and presidential candidate Barack Obama pushed his cap-and-trade plan in 2008, he said that if “someone wants to build a coal-powered plant, they can. It’s just that it will bankrupt them because they are going to be charged a huge sum for all that greenhouse gas that’s being emitted.”

Congress rejected his and other cap-and-trade plans, but in his recent speech on climate change, President Obama vowed to go around Congress to reduce greenhouse gas emissions. In case anyone thinks the Administration has since backed off from the anti-coal agenda, Obama climate advisor Daniel Schrag just this week said that “a war on coal is exactly what’s needed.”

In a speech on June 25, President Obama called on the Environmental Protection Agency (EPA) to reduce carbon dioxide emissions from new and existing power plants, which would adversely affect coal-fired plants the most. These regulations are part of a broader effort from the President to significantly reduce coal as an affordable, reliable energy source—the effect of which is to drive up prices for American families and businesses. The Heritage Foundation modeled the effects of significantly reducing coal-fired plants in America and found devastating economic effects.

Regulations Pile On

With 497 billion tons of recoverable coal in the United States—enough to provide electricity for 500 years at current consumption rates[3]—coal has the potential to be an important resource long into the future. The EPA’s constant attacks on coal threaten to close off access to this dependable energy source.
In March 2012, the EPA proposed a rule that would prohibit new power plants from emitting more than 1,000 pounds of carbon dioxide per megawatt of electricity generated. Without the addition of carbon capture and sequestration, a prohibitively costly and technologically challenging requirement, the regulation would effectively ban the construction of new coal-fired plants. Whether the final rule reflects the proposed rule remains to be seen.

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This article first appeared in the Heritage Foundations Policy Blog on June 27, 2013