- The Washington Times - Sunday, February 2, 2003

In his State of the Union address, President Bush called forcefully for implementation of his Clear Skies Initiative (CSI). Honoring that request, Sen. James Inhofe, chairman of the Environment and Public Works Committee, recently announced that, contrary to previous expectations, he would introduce the measure. Despite its merits, it's eventual costs might outweigh its benefits.
Proponents of the CSI say that it will clean both the air and the regulatory atmosphere: That, while significantly reducing levels of some air pollutants, the initiative will also reduce some of the heavy-handed, and in many cases contradictory, regulations in the Clean Air Act and replace them with market-based approaches.
The bill mandates 70 percent reductions in power plant emissions of three air pollutants sulfur dioxide (SOx), nitrogen oxides (NOx) and mercury, over the next 20 years via a cap and trade system. It also calls for voluntary cuts in greenhouse gas intensity the ratio of greenhouse emissions to economic output by 18 percent over the next decade.
The White House estimates that flexibility offered by the market framework will save up to $1 billion annually. According to an EPA paper on the subject, "When compared to existing Clean Air Act requirements, Clear Skies may actually result in cost savings because a cap-and-trade approach is much more efficient than existing regulatory programs."
That's probably true, and Mr. Bush is right to push for market-based reforms in environmental policy. However, CSI's cap may have less effect than hoped, since most of the nation is already in compliance with federal standards for SOx and NOx, according to a recently released scorecard by the free-market think-tank PERC. As Joel Schwartz noted in his chapter on air quality, "The administration hasn't adequately assessed whether the value of the health benefits from the [Clear Skies Initiative] would outweigh the costs it will impose on consumers in the form of higher electricity bills." CSI's caps on mercury are also of some concern, since if set too low, they could have an extremely costly impact on the coal industry, according to Charli Coon, the Heritage Foundation's senior policy analyst on energy and the environment.
Moreover, given the minuscule amount (if any) that imposition of even the strictest terms of the Kyoto treaty would have in changing rising global temperatures, the benefits derived by Americans from their voluntary reductions in carbon intensity are, at best, unclear. Notwithstanding Mr. Bush's impressive roundup of business leaders who have committed to follow the CSI's guidelines including 100 percent of the members of the Business Roundtable such measures would appear to be more akin to what Vice President Dick Cheney said about conservation a year ago: perhaps a mark of virtue, but not a sufficient basis for an energy policy.
Besides, it's quite possible that another administration or Congress could make those voluntary caps on carbon dioxide mandatory. That concern already has been raised by Mr. Inhofe, who would know, since his colleague, Sen. Jim Jeffords, introduced legislation last term (S. 556) that would have done precisely that. The Energy Information Administration estimated the bill's cumulative compliance costs at $140 billion.
In addition, as Myron Ebell, a climate policy expert at the Competitive Enterprise Institute, noted in framing the clean air debate, that the CSI will probably become the right wing and the Jeffords bill the left. However, even adding a little bit of carbon-dioxide regulation would tilt the cost-benefit ratio in the wrong direction.
Even worse, passage of the CSI is not likely to change many minds in the environmental community. Several earthy advocacy organizations have already condemned the CSI, including the Clean Air Trust and the Natural Resources Defense Council.
The CSI could still be worth passing, but only if it streamlines the Clean Air Act without having a costly effect on energy prices. In the meantime, consumers are right to be concerned, since a few more drops of ink could turn the CSI into a bill of rather stormier consequence.

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