The Committee on Environment and Public Works of the U.S. Senate is considering the proposed bill S. 2754, the “American Innovation and Manufacturing Act of 2019,” (hereafter “AIM”) which would mandate a phaseout of hydrofluorocarbon (HFC) refrigerants, ostensibly to reduce the climate change (“radiative”) impacts of HFC leakage into the atmosphere. This would engender in substantial part a large shift to hydrofluoroolefins (HFOs), the only viable replacement option in a number of such applications as auto air conditioning. Other substitutes may be available in various functions, or may prove over time to become so, but that does not change the basic benefit/cost problem discussed in section II. Note that HFCs previously had replaced hydrochlorofluorocarbons (HCFCs) due to the purported adverse effects of the latter in terms of the depletion (thinning) of the stratospheric ozone layer. And prior to that HCFCs had replaced chlorofluorocarbons (CFCs), which had effects on the ozone layer stronger than those created by emissions of HCFCs.
We urge the Committee to reject the proposed AIM legislation for the following central reasons:
- The climate benefits of the proposed legislation, even (or in particular) under mainstream scientific assumptions, would be trivial or unmeasurable. Accordingly, the mandates for refrigerant replacement specified in the proposed legislation could not satisfy any plausible benefit/cost test. This is true even if the AIM Act is viewed as part of a larger effort, whether by the U.S. or under an international agreement, to reduce emissions of greenhouse gases (GHG).
- Endorsement of policy proposals that cannot satisfy a plausible benefit/cost test leaves few principles available to be invoked against such proposals as the green new deal and other “climate” proposals, all of which would have future climate effects virtually unmeasurable.
- The economic benefits of the proposed legislation are illusory, driven in substantial part by confusion about the distinction between the gross and net impacts of resource reallocations driven by legislative mandates. Moreover, even if the asserted economic benefits are assumed correct, it is not at all clear why legislation is needed to obtain them; market forces would lead firms and industries to pursue them as a simple matter of profit-seeking behavior.
- Endorsement of such legislative proposals as AIM would encourage future efforts by numerous interest groups to obtain economic benefits by lobbying public officials (“rent-seeking”) rather than by innovating or by finding new production efficiencies.