Published January 09, 2024
By Christine Reed
An article penned by energy consultant Paul Bonifas and School of Energy Resources (SER) Professor of Economics Tim Considine analyzing a proposed rule aimed at accelerating the adoption of electric vehicles (EV) in the United States was published in the Winter 2023-2024 issue of Regulations by the Cato Institute.
In 2023, the Environmental Protection Agency (EPA) proposed new standards on vehicle tailpipe emissions in an effort to limit pollution generated in the motor industry. It’s estimated that compliance with the new rule would require approximately two-thirds of cars and nearly half of medium-duty trucks sold in the year 2032 to be EV’s. In its Regulatory Impact Analysis, the EPA claims this EV proposed rule would yield $1.6 trillion in “net benefits” for Americans through 2055 by estimating costs over a series of categories including pre-tax fuel savings, vehicle technology costs, maintenance savings, climate benefits, charging stations and grid upgrades, repair savings, energy security benefits, air pollutant benefits, and increased refueling time.
The study by Bonifas and Considine finds that instead of saving Americans $1.6 trillion, it would cost Americans $1.4 trillion – a difference of $3.0 trillion.
Supported by SER’s Center for Energy Regulation and Policy Analysis (CERPA), the study by Bonifas and Considine provides an analysis grounded in economic fundamentals of each category and compares those results to the EPA’s analysis.
“After reading through the EPA’s proposed rule and the accompanying draft Regulatory Impact Analysis, we conclude that the estimated benefits of the rule are grossly inflated,” says Bonifas. “We felt it was important to conduct our own analysis to provide a more comprehensive picture of the perceived impacts of the proposed rule for policymakers and the public.”
Among other discrepancies in the proposed rule, the study asserts that the EPA miscategorizes the $7,500 federal tax rebate as a benefit rather than a cost, it overestimates gasoline savings, and it underestimates electricity costs.
“We concluded that a more realistic analysis of the EPA’s proposed EV rule results in a net cost of $1.4 trillion to American taxpayers, a $3 trillion underestimation by the EPA,” says Considine. “It is a serious question if this cost is worthwhile, and we want policymakers and the public to be in a position in which they can make the most informed decisions possible when it comes to something that will have such widespread impacts.”
“CERPA’s primary function is to produce meaningful, high quality, and impartial analysis to inform policymakers, stakeholders, and the public about issues critical to the economic development of Wyoming’s energy resources,” says CERPA Director Kara Fornstrom. “This work illustrates how important it is to examine proposed rules, especially the estimated economic impacts, and provide evidence-based insights that can inform policy decisions. We are very pleased to have supported Tim and Paul on this research.”
The article can be downloaded from the Cato Institute website and a research brief can be downloaded from the CERPA website.
