The EPA Takes Its Thumb Off the Power Switch
Power-plant rules do more than regulate pollution. They can also regulate competitors out of the market. That is the overlooked significance of the Environmental Protection Agency’s (EPA) recent repeal of most Biden administration greenhouse-gas standards for power plants. The move is an environmental-policy reversal and also a competition-policy reform.
The final rule is only a partial repeal. It eliminates standards for existing fossil-fuel-fired steam units, along with several carbon-capture requirements for coal plants and new baseload combustion turbines. A separate supplemental proposal contemplates a broader rollback. Published Sept. 17 in the Federal Register, the final rule takes effect Nov. 16.
The central economic point is that a regulation that forwards a legitimate public-policy goal may nonetheless also skew competition. This happens when the rule imposes costs on some technologies that their rivals do not bear, steers investment toward politically favored alternatives, or raises barriers for firms too small to absorb the compliance burden.
The power-plant rule did all three. Its repeal could therefore improve economic welfare by putting generating technologies on more equal footing, reducing wasted resources, and giving cost and reliability greater weight in deciding how to power the grid.