Pro-environment policies disrupt business confidence—EPA carbon reduction and CEO response prove

The White House has launched a coordinated PR campaign to argue that it is not . That is a difficult argument to make when we look at the Administration’s record on energy. Time after time the Administration has acted to make it more difficult to produce energy domestically and they are actively seeking to make energy more expensive. This only makes an economic recovery more difficult.

The Administration’s Assault on Domestic Energy Production and the Use of Energy [Partial List]

The Administration has been working around the clock to achieve President Obama’s goal of bankrupting coal companies and making .

Within days of taking office, the Administration  in Utah,  for offshore resources, and . But that was just the beginning.

In the wake of the Gulf oil spill, the Administration is trying to put cap-and-trade legislation back on the agenda,  to try to find consensus on increasing the cost of energy. And the Administration has announced a variety of other regulations that will increase the price of energy.

The most impactful new regulation is the Environmental Protection Agency’s (EPA) regulation on greenhouse gas emissions. EPA has already announced regulations on carbon dioxide emissions from automobiles. According to EPA itself, this will increase the price of automobiles by $1000 a car and reduce global temperature (the whole point of the rule) by only a .

But that’s only one part of the Administration’s efforts to drive up the cost of producing and using energy. EPA wants to revise the Bush-era . If EPA ratchets down the ozone level too far, many counties – even those with no industry – will fail the standard. EPA also wants to tighten  and  nationwide and it has announced a new “transport” rule to . Finally, the Administration is preparing a  to regulate hazardous air pollution from boilers and process heaters.

Administration Cancels 122 Previously-Issued Permits in Texas

Besides imposing new burdensome regulations, EPA is cancelling previously-made decisions to further ratchet up the cost of doing business for domestic energy manufacturers.  In Texas, the Administration  under a program started under the Clinton Administration. :

According to figures touted by [Gov.] Perry and state regulators, Texas beat national averages over the past 10 years by achieving a 22 percent reduction in ozone emissions and a 27 percent drop in nitrogen oxide emissions.

“We are defending our flexible air permitting program because it works,” TCEQ [Texas Commission on Environmental Quality] Chairman Bryan Shaw said earlier this month. “EPA is not able to demonstrate how our program is less protective of the environment than the bureaucratic federal approach. EPA’s philosophy of more bureaucracy by federalizing state permits will not lead to cleaner air, but will drive up energy costs and kill job creation at a time when people can least afford it.”

According to , it will cost millions of dollars for each company to change their pollution control technologies. This could cost a lot of jobs. According to a story in the :

Corporations said the decision creates uncertainty for their companies.

“Valero has six refineries operating under flex permits, employing more than 2,700 people,” the company said in a statement, noting the EPA did not object to the program when it was created. “Now, 16 years later, EPA is reversing course, and our facilities are caught in the middle, creating significant uncertainty at a time when our economy can least afford it.”

Also,  the Administration cancelled these permits now is to force these plants to get carbon dioxide permits under EPA’s new carbon dioxide regulations.

Conclusion

We need to be vigilant about air pollution, but the Obama Administration’s carbon dioxide rules, for example, have nothing to do with air pollution. The carbon dioxide regulations are supposed to address global warming, but even EPA admits (as seen above), they will have miniscule impacts on global temperature.

The President says he wants to be pro-jobs, pro-consumer, and pro-market.  If that is indeed the case, then he needs to consider holding off on his regulatory assault on the American economy. One of the reasons that unemployment rates are high and  is because of uncertainty about future regulations and the cost of those regulations.

The American economy is hurting and this regulatory assault needs to be reconsidered for the economy to have any hope of recovering and – more importantly – for enabling the private sector to create real jobs.

Investment in improved efficiency is another major growth area, driven by higher fuel prices and government incentives. A 16% increase in buildings efficiency investment in 2021 led the way, by far the largest annual increase since we started tracking these investment flows. Policy makers are attempting to move the global annual rate of building retrofits above the 1% mark, where it has been stuck for many years, and many countries, notably Japan, China and some in Europe, are putting increasing emphasis on high energy performance standards for new construction.

The upward trend in efficiency spending is expected to be maintained in 2022. The spike in fuel prices is prompting increasing interest in technologies like electric heat pumps (sales of which grew by 15% in 2021). However, efficiency investment faces headwinds, with higher borrowing costs, flat household incomes, and lower consumer and business confidence. As ever, much hinges on continued government support to shape consumer and corporate demand.

Electrification of mobility is a key contributor to rising clean end-use spending by consumers. Sales of EVs more than doubled in 2021 on the previous year and are continuing to rise strongly in 2022. Back in 2012 just 120 000 EVs were sold worldwide. In 2021 more than that number were sold each week. One uncertainty is whether automakers can keep up with orders, given supply chain issues (see section on critical minerals) and the global semiconductor shortage.

Electrification is not only about cars; sales of electric two- and three-wheelers have been bouyant, and investment in the electrification of buses and commercial vehicles is also strong. Most electric buses are still deployed in China, but investment elsewhere is growing: in early 2022 India ordered more than 5 000 electric buses for five major cities, awarded at half the price reached in previous tenders.

There are signs of life among important new and emerging technologies, where absolute investment remains relatively small but growth rates are high.

Investment in battery energy storage is hitting new highs and is expected to more than double to reach almost USD 20 billion in 2022. This is led by grid-scale deployment, which represented more than 70% of total spending in 2021. The pipeline of projects is immense, with China targeting around 30 GW of non-hydro energy storage capacity by 2025 and the United States having more than 20 GW of grid-scale projects either planned or under construction.

The momentum behind low-emissions hydrogen has been reinforced by Russia’s invasion of Ukraine, which has bolstered policy support, especially in Europe. Clean hydrogen-focused companies are raising more money than ever before, and the value of a portfolio of leading firms in this space has quadrupled since the end of 2019. Annual investment in low-carbon hydrogen stands at around USD 0.5 billion; to supply the extra 15 Mt of hydrogen targeted in the REPowerEU plan, we estimate that cumulative capital investment totalling around USD 600 billion globally would be needed up to 2030, with 60% of this for infrastructure outside the European Union.