Why Trump's Environmental Rollbacks Won't Boost the Economy

by Michelle Zemil

April 07, 2017

It was Ronald Reagan who popularized attacks on regulations when he was on the campaign trail in 1980, and since then, the tactic has been an inescapable feature of our political landscape. The false claims about environmental regulations, job creation, and the economy have been repeated so frequently and for so long that many Americans don't even question them. Yet no matter how many times a fallacy like this is repeated, it remains untrue. 

President Trump and his administration have repeatedly promised to add momentum to the U.S. economy by throwing out environmental safeguards, especially those from the Obama era. At the signing of the March 28 executive order against federal action on climate change, Trump said that it will "start a new era of production and job creation." But is that claim based on facts and evidence? Is it even realistic? 

The Saturday before Trump signed the order, Vice President Mike Pence told a crowd in West Virginia that the non-existent "war on coal" is "over" and that the president's forthcoming policy moves and those of agencies like the U.S. Environmental Protection Agency (EPA) and the Department of the Interior (Interior) were somehow going to bring back jobs to sectors that have been in decline for decades

Pence's first claim may have been referring, in part, to the fact that Trump lifted the temporary moratorium on new coal leases on federal land that was established by the Interior Department in January 2016. But is it fair to classify that moratorium as part of a "war on coal," and will lifting it really bring back jobs? 

First, some context: About 40 percent of American coal is mined on federal land. Interior's Bureau of Land Management (BLM) leases parcels of land to coal companies that then move in and mine on that land. Most of this land is in the Powder River Basin in Montana and Wyoming (not in West Virginia, where Pence spoke). The Mineral Leasing Act of 1920 requires that these coal leases be offered competitively, yet since 1990, 96 of the 107 coal-lease sales by BLM had only one bidder. This means that 90 percent of the leases were noncompetitive. 

But that's just the tip of the iceberg. The leasing program is woefully outdated and robs American taxpayers by allowing coal companies to name their price and pay far less than market value for their leases. A study by Tom Sanzillo at the Institute for Energy Economics and Financial Analysis notes that the BLM has a legal obligation to the American public to secure a fair market value for these leases and that the failure to do so has cost the U.S. Treasury (in other words, all of us) approximately $28.9 billion in lost revenue over the past 30 years. 

Given this reality, it should surprise no one that the Obama administration decided to place a moratorium on new coal leases while Interior was in the process of reviewing and revising the lease program to prevent coal companies from leasing as many parcels of land at below-market prices as possible before rates increased to fair market value. 

What about Pence's second claim that the executive order is going to bring back jobs for energy producers and the coal industry? Like his first claim, it doesn't hold up to scrutiny. For example, before enacting the leasing moratorium, the BLM concluded that coal companies currently have leases on land with enough coal to last 20 years without affecting production (and therefore jobs), prices, or power reliability. The moratorium wasn't restricting production, but coal companies are now being given an opportunity to secure leases for future use at far below market value. That may be a windfall for coal barons, but it's a bad deal for American taxpayers. 

Beyond the coal lease moratorium, Pence's second claim also trumps up the notion that actions to address climate change, the most pressing environmental problem facing our nation and the world, will somehow be "bad" for the energy sector. It's no secret that making the power and energy sector cleaner, better for our health, and better for our climate involves moving away from carbon-intensive energy sources that belch toxic pollutants and greenhouse gases into our atmosphere. But it's market forces that are largely driving utilities and others away from pricey, dirty fuel sources like coal and toward less expensive bridge fuels like natural gas (which, though better, have their own pollution problems) – and eventually toward renewable sources that don't contribute to climate change. These renewable resources will be better for our economy, our health, and our environment in the long run. 

That's not to say that everything Team Trump said in unveiling the executive order was false or lacking in evidence. The president, vice president, and EPA Administrator Scott Pruitt are correct when they say we don't have to choose between jobs, public health, and the environment – just not in the "We don't really mean it," too-clever-by-half way that they say it. 

For example, evidence shows that environmental rules generally have little net impact on job creation and layoffs, and in some cases, they create jobs. Putting stronger environmental standards into place pushes firms to innovate in order to comply with requirements, save costs, and boost competitiveness. A culture of innovation is accepted as a keystone of a healthy business and a robust economy; as the business adage goes, "innovate or die." 

The positive effect of regulation-induced innovations is described by the Porter hypothesis. Harvard economist Michael Porter formulated the hypothesis in 1995. The theory suggests that environmental regulations push firms to create innovations in response and that these innovations will overcompensate for compliance costs. While analyses on the employment effects of these environmental regulation-induced innovations are rare, existing studies have found a small positive effect on overall employment. Environmental regulations can also provide further economic benefits, such as the decreased medical expenses resulting from Clean Air Act regulations. In fact, Clean Air Act regulations are projected to provide $2 trillion in benefits from 1990-2020 compared to $65 billion in costs

Environmental regulations can further lead to job growth in newer "green" industries such as pollution abatement or alternative energy. For example, the Keystone XL pipeline that Trump and the State Department just greenlighted has been touted as a job-producing machine. But most non-rhetorical estimates – those based on facts and observable industry trends – indicate that the pipeline project will create 1,950 jobs each year for just two years; when construction is complete, the pipeline will only provide 35 permanent jobs and 15 temporary contractor positions, hardly an employment boom. In contrast, from 2015 to 2016, the number of jobs in solar energy grew by 25 percent to an impressive 374,000 jobs, while jobs in wind energy grew by a whopping 32 percent, to 101,000 jobs

The numbers related to environmental protection, public health, energy, and job creation don't lie, so why do our politicians continue to mislead the American people about these issues?

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Also from Michelle Zemil

Michelle Zemil is a College Intern at the Center for Progressive Reform and an undergraduate student at the University of Maryland studying Biological Sciences: Ecology and Evolution. She has past experience as an intern in marine ecology at Mote Marine Laboratory in Sarasota, Florida.” She will graduate from the University of Maryland in May 2017.

Why Trump's Environmental Rollbacks Won't Boost the Economy

Zemil | Apr 07, 2017 | Environmental Policy

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