Comment to the Environmental Protection Agency: Proposed Rule on “Multi-Pollutant Emissions Standards for Model Year 2027 and Later Light-Duty and Medium-Duty Vehicles”

Summary

The benefit/cost analysis published by the Environmental Protection Agency in its
proposed rule “Multi-Pollutant Emissions Standards for Model Year 2027 and Later Light-Duty
and Medium-Duty Vehicles” is fatally flawed; accordingly, the proposed rule should not be
finalized.

EPA claims that the fuel savings attendant upon implementation of the proposed rule would
yield benefits in present value terms of $380-$770 billion (net of EVSE port costs), depending on
the choice of discount rate. But fuel savings are an illegitimate dimension of any such benefit/cost
analysis because the value of fuel savings measured as a function of market prices represents no
divergence per se between market prices and true resource costs in standard externality analysis.
If “fuel savings” are to be considered relevant for purposes of benefit/cost analysis, then the
adverse effects or costs of a (forced) reduction in fuel consumption in terms of the quality of
transportation services must be included in the analysis also.

Were a regulatory rule simply to outlaw entirely the use of motor fuels by cars and light
trucks, forcing consumers massively to use bicycles, horse-drawn carts, and similar substitutes
technologically backward, the “fuel savings” under the EPA methodology would be enormous,
but nowhere in the EPA methodology is there any cost in terms of the quality of transportation
services. Does EPA believe that consumers of motorized transportation services powered with
conventional fuel simply are stupid? This EPA analytic framework is not to be taken seriously.

The same is true for the asserted “climate benefits” of the proposed rule, which under the
explicit EPA assumptions and estimates as published, would be about 0.023°C by 2100, using the
EPA climate model under assumptions that exaggerate the effects of reduced emissions of
greenhouse gases. That effect would not be detectable. Accordingly, the monetized climate
benefits of the proposed rule asserted by EPA are an illusion.

EPA attempts to circumvent this obvious problem by substituting in place of any such
analysis an application of the “social cost of carbon” to the asserted reductions in GHG emissions
attendant upon implementation of the proposed rule, as estimated on an interim basis by the Biden
Administration Interagency Working Group. The interim IWG estimates are deeply flawed, in that
they (1) distort the actual economic growth predictions produced by the integrated assessment
models, (2) base predictions of future climate phenomena on climate models that cannot predict
the past or the present, (3) incorporate “co-benefits” in the form of a reduction in the emissions of
other criteria and hazardous air pollutants already regulated under different provisions of the Clean
Air Act, (4) incorporate the asserted benefits of GHG reductions on a global basis, and (5) employ
discount rates that are inconsistent and inappropriate.

The asserted “energy security” benefits of the proposed rule are illusory. Because there can
be only one world market price for such fungible commodities as crude oil, abstracting from such
second-order differences as transportation costs, exchange rate impacts, and the like, nations that
import all of their oil face the same prices and price changes as those importing none of their oil.
Accordingly, the common view of “energy security” as a direct result of the level or proportion of
imports is incorrect; but the EPA in effect endorses this view nonetheless. A U.S. that imports
more oil is not less “energy secure” than a U.S. that imports less.

Similarly, a defense cost argument is not correct. The portion of the costs of the U.S.
defense effort that can be attributed to defense of the sea lanes and the like is a hugely complex
analytic calculation, dependent upon a large array of alternative assumptions about the allocation
of the fixed costs of the physical and human force structures across military functions and missions.
Because national security needs and force structures evolve only over decades, it is reasonable as
a first approximation to assume that defense capital provides those multiple functions in more-orless fixed proportions, which means that any allocation of those fixed costs across multiple
functions is arbitrary.

EPA asserts that “there is consensus that the effects of climate change represent a rapidly
growing threat to human health and the environment, and are caused by GHG emissions from
human activity, including motor vehicle transportation.” This is not correct, even apart from the
dubious premise that some sort of undefined “consensus” is a proper basis for policy formulation,
and even apart from the failure of EPA even to attempt to separate anthropogenic and natural
influences on climate phenomena.

There is no evidence of a climate “threat” or “crisis” as commonly asserted, in terms of
temperature trends, polar sea ice, tornadoes, tropical cyclones, wildfires, drought, flooding, or
ocean alkalinity. The Intergovernmental Panel on Climate Change is deeply dubious about the
various severe effects often asserted as prospective impacts of increasing atmospheric
concentrations of GHG. Moreover, NASA reports significant planetary greening as a result of
increasing atmospheric concentrations of carbon dioxide, and data from the United Nations Food
and Agriculture Organization show that global per capita food production increased 46 percent
between 1961 and 2020, and 20 percent for 2000-2020.

The “crisis” narrative is derived wholly from climate models that cannot predict the actual
temperature record. In particular, the suite of climate models underlying the IPCC 5th and 6th
Assessment Reports overstate the mid-troposphere temperature record by factors of about 2.5.
Moreover, the models are fine-tuned in such a way as to deny the importance of natural influences
on climate phenomena, but that is inconsistent with a large body of evidence, in particular the
substantial warming observed from 1910 to 1945, and the close correlation between the satellite
temperature record and the El Niño/Southern Oscillation.

The analysis underlying the proposed rule is fatally flawed; it should not be finalized.