With the Environmental Protection Agency’s recent announcement that it will mandate a 30 percent reduction in carbon emissions in just 16 years, many Americans are wondering how the new regulations will affect them. With energy prices expected to rise as utility companies adjust to the forced reductions, it is clear that America’s poorest citizens will be hurt most by the new EPA regulations.
According to recently-released data from the Labor Department's Consumer Expenditure Survey, those in the lowest fifth of income earners spend the greatest share of their incomes on energy (defined as natural gas, electricity, and gasoline and motor oil). Earners in the lowest income quintile spend 24 percent of their pre-tax income on energy, while those in the highest income quintile spend 4 percent—the same as in 2012. Even though high-earners spend more on net, it is the poor who will have their budgets squeezed as they struggle to pay for gas and electricity.
As E21 director Diana Furchtgott-Roth stated last week, this increases income inequality.
The pain inflicted on the poorest Americas will not reduce global emissions. According to Manhattan Institute senior fellow Robert Bryce, “the EPA’s new rules will have a negligible [effect] when it comes to soaring global carbon dioxide emissions and surging global demand for coal.” Global CO2 emissions rose by 723 million tons in 2011, the latest data available. The Obama Administration’s goal would cut U.S. emissions by approximately that much over the course of 16 years.
The movement towards solar power, one of the Obama Administration's preferred alternatives, is not as green as it seems. New research from Northwestern University finds solar panels manufactured in non-OECD countries (the vast majority of solar panels) require high levels of coal use. The carbon footprint of these solar panels is double that of those manufactured in Europe. Moving solar panel production to OECD countries would only further increase the price of energy, again leading to disproportionately negative effects on the poor.
China is the only country that could unilaterally have a significant impact on global CO2 emissions. China emits the most CO2 in the world, nearly twice as much as the United States. According to Bryce, “in a six-year period, China’s coal-related emissions increased by four times the size of the reduction that the EPA is seeking over 16 years” [emphasis in original].
Although it has a long way to go, China’s emissions have risen as its poor, rural population has increased its standard of living. Now, China has a growing middle class and thriving cities. Increased respect for human rights and open markets has accompanied this rise.
People in poor countries want the immense benefits that come with abundant, affordable electricity. Hydrocarbons, which produce 87 percent of the world's total energy needs, are the answer. The United States cannot unilaterally stop the rise of CO2 emissions and, even if it could, should it? Doing so would sentence those in developing countries to continued poverty.
The EPA and the Obama Administration should rethink this meaningless, job-killing regulation. The inevitable rise in utility prices will disproportionately affect those with low incomes, a group that has been continually hurt by the slow economic recovery. If, as Mr. Obama has stated before, “inequality is the defining challenge of our time,” it makes no sense to push regulations that hurt the poor most, and the wealthiest least.
The regulation is at the “Proposed Rule” stage of the regulatory process. Once it is formally published in the Federal Register, there will be at least 120 days for public comment, as well as public hearings in Atlanta, Pittsburgh, Denver, and Washington, D.C. Only after the EPA has considered the public comments will a final regulation be issued.
Those who are concerned about inequality and the poor should take this opportunity to send their comments to the EPA in an attempt to avert a needless waste of funds.
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