The White House issued a report Tuesday warning that the United States could face billions of dollars in added economic costs if it delays action to curb the greenhouse-gas emissions linked to climate change. According to the report, each decade of delay will make it 40 percent more expensive to eventually reach the identical global climate target.
The analysis, issued by the president’s Council of Economic Advisers, comes at a time when the Obama administration is struggling to incorporate the costs associated with global warming into its energy decisions. Environmental groups have been pressing the administration, in court as well as through public advocacy efforts, to factor in the environmental impact of increased emissions of carbon dioxide when it issues coal, oil or natural gas leases on federal lands.
The administration, which began two days of public hearings in four cities this week on its proposal to curb greenhouse-gas emissions from existing power plants, has been emphasizing the costs of inaction. Environmental Protection Agency Administrator Gina McCarthy told reporters Monday in a conference call that the agency has received more than 300,000 comments on the draft rule.
Even corporate groups such as the Business Roundtable, she said, welcomed the move to cut carbon emissions from utilities. “They know that the biggest danger we have is to not take action now,” said McCarthy, whose agency will hold sessions in Atlanta, Denver, Pittsburgh and the District.
The two parties on Capitol Hill offered differing views on the issue through dueling hearings Tuesday. The Senate Budget Committee held a hearing on how climate change — and delays in addressing it — will affect the federal budget, while the House Energy and Commerce subcommittee on energy and power heard from members of the Federal Energy Regulatory Commission on how the EPA’s power-plant proposal would affect the reliability of the nation’s electricity supply.
The Council of Economic Advisers based its findings on 16 studies that incorporated a range of economic models. It concluded that a global temperature rise of three degrees Celsius (5.4 degrees Fahrenheit) as opposed to a rise of two degrees (3.6 Fahrenheit) “could increase economic damages by approximately 0.9 percent of global output. To put this percentage in perspective, 0.9 percent of estimated 2014 U.S. Gross Domestic Product (GDP) is approximately $150 billion.”
Council Chairman Jason Furman told reporters in a conference call that the White House conducted the analysis to show “why the administration is doing so many things, on so many levels, simultaneously, to deal with climate change. . . . We know way more than enough to justify acting today.”
But congressional Republicans and some industry officials, who oppose mandatory federal limits on power plants, questioned the administration’s findings.
“Today’s report reads more like a blueprint to create jobs in China. Our emissions levels are at their lowest in nearly two decades, and yet President Obama, despite tens of billions of dollars already spent, is intent on eradicating the coal industry and its affordable energy and jobs,” Ed Whitfield (R-Ky.), chairman of the House energy and power subcommittee, said in a statement.
Even some environmental economists who support the general thesis of the report — that postponing carbon cuts will ultimately lead to costly climate-
related impacts and more expensive emissions reductions — took issue with some White House calculations.
Robert N. Stavins, director of the Harvard Environmental Economics Program, noted that the damage associated with climate change would be disproportionately borne by developing countries vulnerable to rising sea levels, drought and other impacts, so that the damage to the U.S. economy would be less than $150 billion.
Even if those numbers were correct, he noted, it would not be accurate to attribute the entire impact to a slowdown in U.S. policy, “because a delay in U.S. action is not going to have an impact that is anywhere close to what would make the difference” between the two- and three-degree increases in global Celsius temperatures.
Many environmental groups have also criticized the Obama administration for inconsistency between its aspirations for international leadership on climate change and its policies for leasing the rights to mine coal on federal lands.
On Wednesday, the Interior Department’s Bureau of Land Management is expected to auction tracts with an estimated 8 million tons of recoverable coal reserves in Colorado. That would be enough to fuel a 500-megawatt coal-fired power plant for more than five years, Sierra Club attorney Bruce Nilles said.
Six environmental advocacy groups, led by WildEarth Guardians, sent a letter Monday asking Interior Secretary Sally Jewell to cancel the sale.
The auction, which would be a small addition to roughly 400 million tons of coal produced on federal land, comes shortly after a ruling by a U.S. District Court in Colorado that the BLM must disclose its calculations of the “social cost” of carbon before selling mining rights on federal lands. Judge R. Brooke Jackson said that it was “arbitrary and capricious” for the agency to calculate benefits from selling the mining rights without calculating the costs in its environmental impact statement.
“In effect, the agency prepared half of a cost-benefit analysis, incorrectly claimed that it was impossible to quantify the costs, and then relied on the anticipated benefits to approve the project,” Jackson said.
Last year, the Office of Management and Budget set the price of carbon at $37 a ton for purposes of evaluating rules and regulations regarding carbon dioxide emissions, but Interior has not applied that to lease sales, critics say.
A new report by the Center for American Progress says that applying the OMB estimate to the carbon-intensive federal coal produced in the Powder River Basin results in social cost of $62 a short ton. Because the Powder River Basin of Wyoming and Montana produces about 42 percent of all U.S. coal, the net loss including social costs amounted to $19 billion in 2012.
“The bottom line is that the government is selling federal coal at a huge loss, subsidizing an industry to produce carbon pollution, and seemingly has no meaningful plan to change course,” wrote Nidhi Thakar, deputy director of the center’s public lands project, and Michael Madowitz, an economist at the center.
Interior spokeswoman Jessica Kershaw said in an e-mail that the BLM sales were “part of the Obama administration’s all-of-the-above energy strategy.” She said that “coal is a key component of America’s comprehensive energy portfolio and the nation’s economy.”
Kershaw added that the BLM “remains fully committed to ensuring that taxpayers receive a fair return from the development of coal resources on public lands.”
But the Government Accountability Office has called for the BLM to standardize methods of calculating fair market value of the coal leases used by state BLM offices. In February, the GAO said that the BLM had failed to comply with eight of GAO’s recommendations.