The Air War at Home: An environmental policy that everyone should love.

In the last week of November, the Bush administration handed down a new regulation that will simultaneously reduce air pollution and increase energy conservation, all without costing either taxpayers or consumers a dime. Is everybody happy? Not hardly.

The Natural Resources Defense Council instantly condemned the decision: "The Bush administration decided to allow corporate polluters to spew even more toxic chemicals into our air, regardless of the fact that it will harm millions of Americans." The Sierra Club described the new rule as a step backward into barbarian darkness: "The president is trying to give polluters permission to ignore modern technology and keep fouling our air." To Sen. James Jeffords of Vermont, Bush's action was a "devastating defeat for public health and our environment." And Paul Krugman warned readers of the New York Times to "breathe while you still can."

Actually, when you think about it, it's a miracle any of us can breathe at all, what with all that arsenic poisoning us. Yet it's a very odd thing: At almost exactly the moment that each environmental scare story exhausts its fundraising potential, along comes another, even more horrific than the last. It's safe to say that the excitement over Bush's revisions to the Clean Air Act won't be the last environmental blowup. It may, however, very well prove to be the silliest.

To understand just how silly, you have to brace yourself for a little regulatory history.

The story begins a quarter-century ago, when Jimmy Carter stumbled into a Washington political crossfire over his plan to reduce America's dependence on foreign oil. One obvious way to achieve that reduction was to use more coal -- and less oil -- in factories and power plants. Unfortunately, coal is a very dirty fuel. To appease environmentalists, the Carter administration drafted a Clean Air Act in 1977 that allowed existing plants to continue in business -- but that required them to install expensive anti-pollution technology if they changed or expanded. This rule was called "new source review," and for 20 years few paid it much attention.

The power shortages that began in California in 1999 and spread through the western United States got people paying attention again. For the first time since the days of fat neckties, electricity became a sexy topic. And suddenly a lot of people began to notice the perverse effects of the new source rule.

Imagine you own a coal power plant built in 1952. If you decide to upgrade your plant -- say by adding an additional generator, a new one that will produce more power with less fuel and less pollution -- you will trigger a new source review that will force you to spend millions to clean up the otherwise protected, older part of your facility. If, however, you decide to forget about modernization and continue to run the plant the way your grandfather did -- why then, you are free to pump as much coal ash into the atmosphere as you like. Result: Rather than build a cleaner new generator, you'll probably just shovel more coal into your old dirty one.

In the name of environmental protection, new source review deters investment in cleaner new technologies and artificially extends the life of obsolete, dirty, and often dangerous old facilities. Freed from new source review, industry can add new capacity without being forced immediately to update the old facilities that the new plants are meant gradually to replace.

In fact, even environmentalists quietly acknowledge that new source review was perverse and counterproductive. That's why they liked it. They calculated that because the policy was so crazy, industry would cheerfully pay quite a high price to get rid of it. They hoped to use the perversity of new source review as a lever to force a massive new system of regulation of factory emissions through Congress. Bush beat them to the punch -- and that is why the environmentalists are enraged.

Environmentalist organizations may fulminate; everybody else should celebrate. The massive scheme favored by environmentalist organizations would have dramatically raised the price of power. And since many environmentalists also favor tax subsidies to uneconomic power sources like wind and solar, their regulatory scheme would have imposed large, hidden costs on taxpayers as well.

Of course, higher electric prices do not bother enviros. They believe we have too many gadgets already. The environmentalist answer to Americans worried about energy security is a reprise of Sen. Robert Taft's notorious answer to housewives worried about the rising cost of food in the 1940s: "Eat less." The enviros want us to consume less, and nothing reduces consumption like high prices.

The 1990s were America's first cheap-energy era since the 1960s, and that fact as much as new technology may account for the decade's fabulous boom. Over the past three years, energy prices have been rising -- and the pace of growth has been faltering. "Eat less" remains a lousy answer to an important question.

Yet it has to be admitted: Environmentalists have a point about the dirt and danger of coal. Here we are, more than half a century after the splitting of the atom -- and we're still deriving more than half our electricity from the fuel that powered the steam engine. It's a fuel for which hundreds of miners still die every year, that puts millions of tons of emissions into the atmosphere, and leaves more millions of tons of ash and waste behind on the ground.

Though wind and sun cannot substitute for coal, there is a fuel that can: nuclear power. Nuclear power is the whispered theme of the report delivered in May 2001 by the Cheney energy task force. Of course, the enviros hate nuclear power even more than they hate coal. But in the years since Jackson Browne strummed outside nuclear reactors, the enviros have lost the public. During the California energy crisis, in fact, polls found that majorities of Americans now favored the expansion of nuclear energy. Do Americans still feel the same way 18 months later? The pollsters no longer ask, or at least the publicly available pollsters no longer ask. But it would be interesting to know the answer -- to know whether there might be a bigger prize out there for the Bush administration's energy policy than the incremental improvement of the technology of yesteryear, or rather yester-century.