Manufacturers: Even with costs halved, ozone reg could still be most expensive

Though a new study commissioned by the National Association of Manufacturers cuts the compliance cost of the Environmental Protection Agency’s new ozone standards by half, the trade group said the proposed rule could still be the nation’s most costly.

According the report, released Thursday, a more stringent ozone standard of 65 parts per billion could lead to $1.1 trillion in compliance, down from the $2.2 trillion the NAM estimated for a standard of 60 parts per billion in July, and a $140 billion annual blow to the gross domestic product, down from the former $270 billion estimate.

The EPA’s latest proposal is to drop its 75 parts per billion standard for smog pollution down to a rage of 65 to 70 parts per billion.

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The study, conducted by National Economic Research Associates (NERA) Economic Consulting, however, found that a new standard of 65 parts per billion would reduce GDP by 1.7 trillion from 2017 to 2040, resulting in 1.4 million fewer jobs per year and costing the average household $830 annually in the form of lost consumption. 

“Manufacturers in the United States are in the midst of a resurgence that’s fueling job growth and economic recovery nationwide, but the proposed tightening of the ozone standard puts our momentum at great risk,” NAM President and CEO Jay Timmons said in a release.

“This data confirms our long-held concern that revisions to the ozone standard represent one of the most significant threats, not just to our manufacturing sector, but to our economy at large.”

The EPA has estimated the costs for states to be $16.6 billion in 2025 nationwide, according to a December report.

The study is an economic impact analysis only, according to Aric Newhouse, the NAM’s senior vice president of policy and government relations. During a conference call Thursday, he said the report does not factor in any benefits of stricter ozone rule, though the EPA has estimated that yearly health benefits nationwide, excluding California, could reach anywhere from $19 billion to $38 billion annually by 2025.

“65 parts per billion would still be the most expensive regulation of all time,” Newhouse said. “Manufacturers would be forced to shut their facilities down and cars, trucks and trains would have to be scrapped.”

Anne Smith, senior vice president and co-chairwoman of Environment Practice at NERA, said the cost estimates are much higher that the EPA’s because the agency said 60 percent of reduction would need to come from unknown controls and used a blanket price tag of  $15,000 per ton. 

NERA, however, found that to meet the new standard, manufacturers would have to close power plants, turn over vintage equipment and replace older model vehicles — all of which, she said, would cost more than the EPA is willing to admit. 

In a statement Thursday, EPA Spokeswoman Enesta Jones said the agency had not yet reviewed NAM's study, but welcomed the review of its proposed rule. 

“EPA’s proposal is about setting a health standard and determining that level," she said. "By law, we cannot consider costs in doing so."

To inform the public, EPA does analyze the benefits and costs of implementing the standards, which is required by executive orders and guidance from the White House Office of Management and Budget. In this case, Jones said the health benefits outweight the estimated costs.

Health benefits, according to the agency include preventing 750 to 4,300 premature deaths; 790 to 2,300 cases of acute bronchitis in children; 1,400 to 4,300 asthma-related emergency room visits; 320,000 to 960,000 asthma attacks in children; 65,000 to 180,000 days when people miss work; and 330,000 to 1 million days when children miss school.

 

 

Ultimately, Jones said future state action determines the cost of meeting new standards.