No free lunch

By Kenneth P. Green

The environmental movement has long downplayed the fact that environmental protection comes with a price tag. Companies, they say, routinely lie about the costs they face in complying with environmental laws. Some environmentalists, such as those at the EPA, actually argue that their regulations are massive job creators, technology stimulators, and so forth. Those claims don’t stand up on either basic principles or economic analysis, but that’s their story, and they’re stickin’ to it.
Alas, reality has a way of slipping into one’s wallet. As USA today points out:

Electric bills have skyrocketed in the last five years, a sharp reversal from a quarter-century when Americans enjoyed stable power bills even as they used more electricity.
Households paid a record $1,419 on average for electricity in 2010, the fifth consecutive yearly increase above the inflation rate, a USA TODAY analysis of government data found. The jump has added about $300 a year to what households pay for electricity. That’s the largest sustained increase since a run-up in electricity prices during the 1970s.
Electricity is consuming a greater share of Americans’ after-tax income than at any time since 1996 — about $1.50 of every $100 in income at a time when income growth has stagnated, a USA TODAY analysis of Bureau of Economic Analysis data found.

What’s the cause? More energy use per household is part of it, but only part:

Prices are climbing, too, hitting a record 11.8 cents per residential kilowatt hour so far this year, reports the Energy Information Administration. The increase reflects higher fuel prices and the expense of replacing old power plants, including heavily polluting — but cheap to operate — coal plants that don’t meet federal clean air requirements.

There’s no doubt that clean air has benefits, but there’s also no doubt that clean air comes with a price tag. EPA and its environmentalist allies have always pushed for the most aggressive air pollution controls possible, at every step of the way, with a complete disdain for the costs of regulation. Greater incrementalism; more market-friendly regulation; and alternative regulatory approaches could have done much to lower the costs of compliance, and stretch those costs out over longer time horizons. But such objections have typically received short shrift from environmentalists, who prefer to simply insist that regulations don’t cost anything.
But lying about costs doesn’t make them go away. If you have doubts, just check your power bill