A Cost Effective Way to Cut Smog

Why the Environmental Protection Agencyâ??s ozone plan will do more harm than good

The smog that so often hangs over Los Angeles has long been viewed as a byproduct of Americans’ enjoyment of gas-guzzling cars. But while domestic causes of this hazardous haze have been declining, as much as 20 percent of California’s smog may now be coming from Asia. Rather than imposing enormously expensive new restrictions on American emissions of ozone, as the Environmental Protection Agency (EPA) has proposed, perhaps it is time to look across the Pacific for more cost-effective ways to clear the air.

In the mid-20th century, smogs in Los Angeles and many other urban centers were truly horrific and deadly. But they have declined dramatically. Since 1980, average levels of ozone, the main constituent of smog, have declined by 25 percent nationally according to the EPA. And in Los Angeles the average has fallen by more than 60 percent. A significant part of this decline can be attributed to regulations limiting emissions of ozone-forming chemicals by vehicles and industry. Indeed, concentrations of ozone have now fallen so far that in many places and times they are close to background levels – that is to say the levels that would occur without any industry or vehicles.

Moreover, there is now evidence that a small but significant proportion of ozone on the West Coast of the U.S. comes from Asia. A recent study published in the Journal of Geophysical Research showed that in spring, low pressure systems in Asia can cause ozone to rise two to six miles into the atmosphere, where it is blown across the Pacific by strong winds. It is then pulled back down to ground-level by high-pressure systems in the Northeastern Pacific. The study found that Asian emissions contributed 8 to 15 parts per billion (ppb) of ozone in California during the spring of 2010 – accounting for about half of the days the state was in non-compliance with EPA’s threshold of 75 ppb.

The EPA had planned to ratchet down the limit to between 60 and 70 ppb. Given the proportion of ozone flowing over from Asia, that would mean an effective limit of 45-50 ppb for domestic emissions in some places – that’s below the springtime background level in some locations. In other words, some counties could have found themselves in breach of EPA rules even if they had no industry and no cars.

Advocates for the EPA plan claim that ever lower ozone standards would have additional health benefits. If the impact of ozone were linear that would be true; but it is not: once ozone levels reach a certain level, the additional health benefits of further reductions are likely small to non-existent. Moreover, there are costs to further cutting emissions of ozone forming chemicals. The EPA estimated the costs of its proposed rule at $90 billion a year; industry put the bill at $1 trillion. Economists call these “opportunity costs” because of the opportunities that are foregone by spending money to cut ozone instead of spending it on other things. How many lives could be saved if $90 billion were spent on other health improvement measures?

To put this into context: if the lower ozone threshold had been in operation in 2010, the number of counties in non-attainment would have increased from 242 to around 600. Companies wishing to invest in non-attainment areas would be forced to comply with costly and time consuming permitting processes, the installation of expensive equipment, and could be required to reduce emissions from nearby sources to offset emissions at new facilities. Counties could be denied highway and infrastructure funds if they fail to meet the ozone level. Many businesses would simply avoid these areas due to the potential costs and headaches.

Last fall, under intense pressure from American businesses, President Obama scrapped the EPA’s proposed rule. But the EPA is currently conducting its regular five-year review of ozone, which could impose a lower level as early as 2013. The regulation would have a direct impact on industries as diverse as manufacturing, construction, trucking, farming, electric utilities, and other important sectors. Additionally, EPA and California regulators are engaged in a continuous effort to create auto and fuel regulations that curb ozone-forming pollutants that also have a direct impact on the cost of gasoline – something that impacts nearly every American family and business.

While additional regulations would no doubt cut emissions of ozone-forming chemicals further, they would also drive up the cost of doing business in America. Since abundant, affordable energy helps create the wealth that allows Americans to afford an ever-cleaner environment, the cost of such regulations is far from an ephemeral concern. A sense of proportion is required. Moreover, to the extent that the ozone problem is now being imported from Asia, instead of focusing exclusively on domestic emissions, it might make sense to look at ways of encouraging China, Thailand, Vietnam and other culprit countries to reduce their emissions.

Julian Morris is Vice President of Research and Adam Peshek is a research associate at the Reason Foundation.