National Center for Policy Analysis

MONTH IN REVIEW

Environmental Policy

January, 1996

CFC BAN PROMPTS SMUGGLING

The second most profitable illegal import in Miami (after drugs) is now chlorofluorocarbons (CFCs) -- the chemicals allegedly causing a hole in the ozone layer over Antarctica.

CFCs were widely used in the United States as aerosol propellants, foam-blowing agents, cleaning solvents and so forth until the developed countries agreed to phase out their production and use in the 1987 Montreal Protocol.

However, CFCs are still in demand as a coolant for refrigerators and air conditioners on autos produced before 1992. Smuggling has become widespread to meet that demand:

• In the United States, there are hefty federal taxes on legal CFCs, and production has ceased here and in Europe.
• However, developing countries are rapidly increasing production and resisting switching to more expensive and difficult-to-produce alternatives.
• Only recycled CFCs are supposed to be imported, but in Europe, smugglers are buying newly produced CFCs from developing countries and disguising it as recycled gas.
• According to the estimates of chemical companies, 20 percent of all CFCs in current use have been bought on the black market -- and the percentage is higher for those used in refrigerators.

Owners of cars built prior to the 1992 model year face higher repair and maintenance costs as the supply of CFCs, commonly known as Freon, evaporates. Conversion kits are available to switch to HFC-134a (a hydrofluorocarbon), the less efficient refrigerant in newer car air conditioners, but retrofit can cost more than $1,000.

Finally, new car owners may face a similar phase out of HFCs, since it allegedly contributes to global warming.

Sources: "Chemical Production: Holed Up," Economist, December 9, 1995, and Eric Peters, "Resuscitation of the Retrofit Ogre?" Washington Times, December 19, 1995.

THE POLITICS OF ENVIRONMENTAL REGULATORY REFORM

Republican intent on reforming regulations affecting the environment have been taking a public relations beating, according to some observers. Environmentalists are framing the issues in an attempt to convince the GOP to back off from promises made in their Contract.

But the same polls that document broad public support for environmental protection also show strong support for the sorts of regulatory reforms advanced by Republican lawmakers.

• A poll conducted last year showed that two-thirds of Americans believe landowners should be compensated when wetlands regulations or laws protecting endangered species devalue their land.
• Another poll revealed that 68 percent believe environmental regulations should be "subject to an analysis to determine whether eliminating that risk justifies the economic cost."
• One Democratic Party pollster has observed that most Americans believe that transferring power to the states in environmental matters "is a way of making the environmental regime more responsive, more flexible and sensible."

What environmental lobbyists characterize as anti-environmental regulatory rollbacks, most Americans see as common sense.

Sources: Jonathan H. Adler, "The Greening of the Republican Platform," Washington Times, January 4, 1995.

NO GOOD DEED GOES UNPUNISHED

Companies that perform environmental audits of themselves to uncover problems and report them to state authorities or the Environmental Protection Agency (EPA) may face fines, prosecutions and lawsuits by environmental groups for their good deed.

According to a Price-Waterhouse survey of companies that perform environmental audits, more than 45 percent said they don't want to expand their audits because the information they collect can be used against them.

That's what happened to Coors Brewing Company:

• Coors conducted an 18-month, $1.5 million environmental audit of its brewery and found the beer-making process releases about 17 times more volatile organic compounds (VOCs) into the air than regulators thought.
• It reported this information to the Colorado Department of Health, which promptly fined the company more than $1 million (later reduced to $237,000) for polluting the air.
• This led to one of the first "environmental audit privilege" laws, now enacted in 14 states, which say audit reports can't be used as evidence in judicial or administrative proceedings if violations are reported and promptly corrected.

The EPA opposes similar federal legislation, claiming it would make enforcement more difficult. In fact, EPA Administrator Carol Browner says the agency may increase enforcement in states with audit privilege laws and take back some of the programs delegated to those state governments.

Environmental audits can be useful in uncovering pollutants that aren't well-understood, such as VOCs, or otherwise evident.

Source: Alexander Volokh, "Tastes Great! More Polluting!" Reason, January 1996.

FORCING SALES OF ELECTRIC CARS

Environmentalists and legislators in California would like for 2 percent of cars the cars sold there to be electrically powered. That figure would rise to 10 percent by 2003.

But will consumers buy them? General Motors is preparing to introduce its zero-emission model shortly and some are wondering if the company simply wants to demonstrate how unpopular they will be so as to head-off efforts in other states to mandate them.

• GM's Impact -- a small sedan -- will have a range of about 90 miles between charge-ups and price of between $28,000 and $45,000.
• Internal combustion engine autos have an average range of 275 miles between fill-ups and an average cost of about $21,000.
• While the typical Los Angeles driver goes less than 30 miles each day, consumers say they want cars with a range that covers expected maximum use, not average use.
• Heavier vehicles -- sport-utility vehicles, minivans and pickups -- now make up 40 percent of the Big Three automakers' sales, but the more powerful batteries needed for them would either limit their range or drive their prices sky-high.
• Added to these discouraging factors is the fact that electricity costs in California are already 50 percent higher than the national average.

Electric companies, however, are pushing hard to mandate electric cars, because they figure people will recharge at night when there is a lot of unsold power capacity. Night-time use would let utilities sell from that unused capacity -- boosting revenues at virtually no extra cost.

Source: Perspective, "Batteries Required," Investor's Business Daily, January 9, 1996.

BENEFITS OF A GREENHOUSE GAS

According to the results of hundreds of laboratory and field experiments, an increasing concentration of carbon dioxide (CO2) in the air is helping plants grow faster, bigger and more profusely.

The amount of carbon dioxide in the air has increased steadily over the past 200 years due to the burning of fossil fuels. The concentration was constant for several centuries prior to the Industrial Revolution at 280 parts per million (ppm), but since then has risen to more than 400 ppm.

There is evidence that the global warming effects of greenhouse gases such as CO2 have been drastically overstated. The beneficial effects of CO2 seem to be confirmed by observations that show:

• There have been increases in the growth rates of nearly all of earth's plants.
• There has been a worldwide invasion of grasslands by trees and shrubs beginning 200 years ago and increasing in recent decades, due to the competitive advantage woody plants have in utilizing CO2.
• The growth rates of many forests around the globe have increased in recent decades.
• And over the past 35 years, the seasonal variation in CO2 concentrations resulting from the growth cycle of plants is increasing, indicating an increasing abundance of life on earth.

According to some controlled experiments, even at much higher concentrations of CO2 than we experience today, these beneficial effects would increase.

Source: Sherwood B. Idso, "CO2 and the Biosphere: The Incredible Legacy of the Industrial Revolution," October 1995, Special Publication, Department of Soil, Water and Climate, University of Minnesota, St. Paul, MN 55108.