Economic Cost of Emissions Regulations Term Paper

Pages: 4 (1427 words)  ·  Bibliography Sources: 4  ·  Level: Master's  ·  Topic: Environmental Science

SAMPLE EXCERPT:

[. . .] Some citizens who refuse to pay the costs associated with testing have fought back by urging representatives to abolish testing practices -- as happened in Kentucky in 2005. However, some manufacturers also have attempted to circumvent costs associated with regulation by simply falsifying reports to the government agency and manufacturing and selling automobiles that did not meet the required emissions standards set forth by the government.

Volkswagen is one such manufacturer. In 2015, the EPA sent VW notice that it had violated the Clean Air Act. Volkswagen had rigged its turbocharged diesel engines to enact emissions controls only during lab testing -- i.e., the computer component in charge of regulating the car's emissions was used only for the emissions part of lab testing. Once testing was accomplished and the car passed, the control was deactivated. The diesel automobiles were then shipped out -- with no component in place to actually control emissions to the same degree that had been seen during testing. In fact, as Chappell (2015) reports, when the autos were driven in the real-world, the engines emitted approximately 40x more pollutants than they did in the lab. This was a case of VW attempting to look good on paper for a short time only so as to be able to ship large quantities of product and move it to retailers. In order to correct the situation, VW would have to spend more than $18 billion (Boston, 2016).

These costs of course do not come free of charge. From a high of 250 Euro per share in 2015, VW stock plummeted following the scandal, losing more than 50% of its value in a matter of months. Shareholders who held and did not sell have been crushed. The market's confidence in VW has evidently been shaken. The social cost of emissions regulation therefore can be quite large: it can lead to consumers feeling that they are shouldering an unfair portion of the blame as a result of state-wide testing; suspicion and paranoia can result as an effect of manufacturers duping regulators (VW is not the only manufacturer to do so -- many have). Yet in today's global economy and era of global awareness, environmental concerns continue to grow. The recent United Nations Climate Change Conference in 2015 showed how seriously the world's nations' leaders want to appear to be taking climate change. However, as global prosperity retraces and economic slowdown manifests itself through slowdown in global shipping (Durden, 2016), societies may soon find themselves wondering if the economic costs are worth it in the end. On the one hand is the fate of the planet and the people on it; on the other hand is the grim reality that enforcing regulations may be more costly in economic terms than an already strained global economy can actually bear.

Conclusion

In conclusion, emissions regulations are an important part of auto manufacturing in today's world. The EPA is vigilant and manufacturers who are caught misleading regulators end up paying hefty fines. However, consumers are also feeling the pinch as costs associated with conforming to federal guidelines are passed on to retail buyers. Prices go up as protection does. Environmental awareness and safety may be good ideas on paper -- but when the paper is that which has Federal Reserve Note stamped on the front beside a picture of George Washington, citizens may find themselves if safety and awareness are really so valuable to them after all.

References

Boston, W. (2016). Bad news? What bad news? Volkswagen bullish despite emissions costs. The Wall Street Journal. Retrieved from http://www.wsj.com/articles/volkswagen-says-diesel-car-buy-backs-to-cost-almost-9-billion-1461831943

Chappell, B. (2015). It was installed for this purpose: VW's U.S. CEO tells Congress about defeat device. NPR. Retrieved from http://www.npr.org/sections/thetwo-way/2015/10/08/446861855/volkswagen-u-s-ceo-faces-questions-on-capitol-hill

Durden, T. (2016). Global supply chains paralyzed after world's 7th largest container shipper files bankruptcy, assets frozen. Zerohedge. Retrieved from http://www.zerohedge.com/news/2016-08-31/global-supply-chains-paralyzed-after-worlds-7th-largest-container-shipper-files-bank

EPA History. (2016). EPA. Retrieved from https://www.epa.gov/aboutepa/epa-history

Furth, S. (2016). A new car will cost you at least $3,800 extra because of government regulation. The Daily Signal. Retrieved from http://dailysignal.com/2016/03/28/a-new-car-will-cost-you-at-least-3800-extra-because-of-government-regulation/

Kentucky Dumps Emission Testing. (2005). Cincinnati Enquirer. Retrieved from http://www.thenews***.com/news/06/678.asp

Sperling, D. (2004). The price of regulation. Access, 25:… [END OF PREVIEW]

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"Economic Cost of Emissions Regulations."  Essaytown.com.  September 5, 2016.  Accessed December 11, 2018.
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