Sunday, November 26, 2006

Will the Supreme Court rule carbon dioxide a pollutant? Such a ruling could put a huge damper on the U.S. economy by raising energy costs and even restricting its use.

After a split decision by a three-judge panel of the Circuit Court of D.C., the Supreme Court, which will hear oral arguments in the case on Wednesday, announced its readiness to deal with the lawsuit against the Environmental Protection Agency (EPA) brought by the Commonwealth of Massachusetts and others. The EPA administrator had declined to regulate the greenhouse gas carbon dioxide (CO2) as a “pollutant” under the Clean Air Act. Any decision carries far-reaching implications for U.S. economic growth. If the Supreme Court finds against the plaintiffs, it will also lay to rest the multitude of scares that have been hyped by promoters of global warming. It may even dampen down the worldwide fears raised by the Stern Report, just issued by the British government and calling for draconian measures to cut CO2 emissions — something that would be costly and ineffective.

The scientific issues are subtle and were never resolved by the Circuit Court; but they are essential to any sound decision. Scientists on all sides agree that CO2 levels are increasing — and that there has been an upward trend in temperature since 1976. But this hardly proves the existence of man-made global warming. Temperatures were rising before 1940 — most likely because of natural climate factors. And there was cooling until 1975 while CO2 levels rose rapidly. Further, published analyses cannot identify a significant human component in current warming. Next: Is climate warming good or bad? Would a colder climate be better? Not likely. Some economists argue that a modest warming would improve economic growth and raise average incomes. And finally, can emissions be reduced sufficiently to stabilize CO2 levels? Realistically, the answer must be: No. It would require a roughly 70 percent reduction from 1990 emission levels by all nations, including China and India.

The political issues are also subtle. What was congressional legislative intent when writing the Clean Air Act? Carbon dioxide is not one of the legally specified “criteria pollutants.” For CO2 to be considered a pollutant one must demonstrate adverse health effects — a daunting task. After all, we constantly exhale it from our lungs; indoor air typically has higher levels than ambient. Should the EPA abolish indoor assemblies — schools, churches, offices etc? In the earlier suit, the Circuit Court ruled 2-1 that the EPA administrator had properly exercised his discretion. But a future EPA administrator might decide as a matter of “policy judgement” that the agency should regulate CO2 as a pollutant.

In any case, it isvital that theSupreme Court come out with unambiguousrulings. Uncertainty about future EPA actionswouldhave severe impacts on many currenteconomicdecisions — for example, by electric utilities planningto buildcoal-firedpower plants. Evenworse, a future EPA could really damagetheeconomy bylimiting energy from fossil fuels, demanding carbon sequestration, or by mandating impossible efficiency standards. The future of U.S. prosperity hangs on this case.

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