Issue Brief

Defining the Unknown: A Look at the Cost of Tighter Ozone Standards

Sep 24, 2015 | Alan J. Krupnick, Joshua Linn, Kristen McCormack

Summary

Controversy surrounds the projected costs of the US Environmental Protection Agency’s new ozone standard, to be finalized in October 2015. Although uncertainty exists, EPA’s cost estimates are likely closer to the mark than critics claim.

Key Findings

  • The US Environmental Protection Agency is preparing to finalize a primary ground-level ozone standard below the current standard of 75 parts per billion (ppb).
  • Although costs are not considered formally when setting the standards, the political implications very much depend on them. Costs will be considered formally when implementing the standards.
  • Setting standards below 75 ppb may raise production costs at oil and gas wells, but critics largely overstate the costs.
  • Although we take issue with some of the cost estimation assumptions made by EPA and other analysts, EPA’s cost estimates are likely to be closer to the mark than those made by opponents of a tighter standard.