Obama-Friendly Study: New EPA Regulations Are Cheaper Than The Cost Of Bad Weather
June 5, 2014 by Ben Bullard
Because bad weather will happen only if the President doesnâ€™t get his way, automakers will be financially better off just biting the bullet and accepting the Environmental Protection Agencyâ€™s (EPA) new proposals to curb carbon emissions.
Thatâ€™s the logical conclusion of a new study commissioned by a trade group with close ties to the Administration of President Barack Obama.
Business Forward, founded in 2009 by a gaggle of Democratic consultants, played its part in the Obama Administrationâ€™s climate change drama this week by releasing the new study, which assures American manufacturers that the shared cost of making bad weather go away is nothing compared to the cost of doing nothing.
The study presumes, of course, that industryâ€™s embrace of EPA policy will act as a soothing balm for otherwise-inevitable devastation. Using the automotive sector as a case in point, Business Forward predicts financial mayhem if we donâ€™t curb coal-fired emissions:
The results of the report are striking in two ways.
First, the potential cost of higher electricity rates (adding $7 to the cost of producing a $30,000 car) is quite small, while the cost of weather-related shutdowns is enormous ($1,250,000 per hour). Like most manufacturers, automakers spend less than 1% of their budgets on electricity, which means that if it costs them $100 to manufacture a part today, the EPAâ€™s standards could eventually add 6 cents.
Second, American manufacturers rely on supply chains that are increasingly large, specialized, global and fast. The very characteristics that make them efficient also make them interdependent, and this interdependence is what makes them susceptible to severe weather. Climate change is disrupting our ports, highways, bridges, and rails — and, because producers come from all over the world, severe weather in Asia affects us, too.
An alternate view would suggest that severe weather affects infrastructure in general, and the world has never had as much infrastructure — much of it along waterways and coasts where the vicissitudes of nature toyed with sparse populations long before they burgeoned into sophisticated population and production centers — as it has now. When people put stuff like factories, sewer systems and bridges where there used to be grass and trees, weather tends to amplify mankindâ€™s perception of the power of weather to devastate.
The Obama Administration and apologists like Business Forward take that a step further by adding a massive dose of hubris: If the weather is doing bad things to people, then itâ€™s ultimately up to people to change it. And those who donâ€™t wish to mount such a Quixotic, gargantuan effort, or who question the need or efficacy of doing so, are themselves bad people.
Nowhere does the Business Forward report (full download here) make any attempt to relate the desired outcomes of the newly proposed Obama EPA rules with actual weather. Instead, with progressive hubris at full sail, it simply assumes that EPA policies will fix all the global weather-related problems it attempts to urgently present:
About $60 of the $100 parts suppliers and automakers spend on electricity (per car) is consumed at the final assembly plant. If those costs rise 6.2 percent in 2020, as result of the EPAâ€™s new standards, the assembly lineâ€™s cost (per car) rises $3.72. The cost of electricity for an entire shift (8 hours) rises about $1,860. By comparison, if a plant has the typical downtime cost ($1,250,000 per hour), the cost of losing an entire shift is $10,000,000.
If a plant assembles 300,000 vehicles each year, the increase in the plantâ€™s annual electricity-related costs ($1,116,000) is less than the cost of losing less than an hour of production time.
This past winter, several assembly plants lost days of production to severe weather.
This, of course, will only come to an end if the EPA is allowed to curb domestic carbon emissions from American coal-fired power plants.
Now thatâ€™s hubris.