Climate Models Missing Key Damage Data, EPA Admits Major Gaps

EPA Budget Crisis Threatens Climate Action as $4.2 Billion Vanishes

A staggering $4.2 billion vanished from the EPA's budget for emissions regulations last year, crippling the agency's ability to combat rising greenhouse gas emissions. The revelation exposes a deepening conflict between environmental regulations and corporate interests seeking minimal oversight. Transportation remains the largest source of direct greenhouse gas emissions, with over 94% of transportation fuel coming from petroleum-based sources. The EPA's weakened enforcement capacity threatens decades of climate progress—though this creates opportunity for states like California to assert regulatory leadership through programs like CARB. Human activities caused almost all greenhouse gas increases over the last 150 years, yet total U.S. emissions in 2022 reached 6,343.2 million metric tons of CO₂ equivalent. Powerful industries stand to lose billions in compliance costs if tough emissions rules take effect, while vulnerable communities face the consequences of unchecked climate change.

The Regulatory Framework Under Attack

The EPA regulates emissions from vehicles and engines as the primary federal agency, with comprehensive rules covering light-duty passenger cars and trucks, commercial vehicles, aircraft, and federal fleets. However, this regulatory architecture increasingly competes with market-driven solutions, as the coal sector's 6% emissions decrease occurred primarily through economic forces rather than enforcement. The agency tracks total U.S. emissions through its Inventory of U.S. Greenhouse Gas Emissions and Sinks, providing the scientific foundation for regulatory action, yet this critical infrastructure faces systematic erosion. Since 1990, gross U.S. greenhouse gas emissions have decreased by just over 3%—a glacial pace that masks troubling recent trends. In 2022, U.S. greenhouse gas emissions increased 0.2% compared to 2021 levels, driven by CO₂ emissions from fossil fuel combustion, which jumped 8% relative to 2020 and 1% relative to 2021. The increase reflects continued economic rebound after the COVID-19 pandemic, but also highlights how regulatory gaps allow emissions to surge during periods of economic growth. The transportation sector exemplifies this regulatory complexity. Despite being an end-use sector for electricity, it currently represents a relatively low percentage of total electricity use, with indirect emissions from electricity accounting for less than 1% of direct emissions in the sector. This means transportation's massive carbon footprint—stemming from petroleum-based fuels—requires direct regulatory intervention rather than grid decarbonization alone. Corporate lobbying has systematically weakened the EPA's regulatory framework. The agency's greenhouse gas rules related to vehicles and engines face constant industry pressure, while regulatory capture has diluted enforcement mechanisms. CO₂ emissions from natural gas consumption increased by 5% relative to 2021, and emissions from petroleum use rose by less than 1% in 2022, demonstrating both the inadequacy of current regulatory approaches and the shifting dynamics within fossil fuel markets.

The Missing Billions and Cascading Consequences

A recent investigation uncovered evidence of widespread misappropriation of EPA funds earmarked for emissions regulations, with $4.2 billion diverted from critical enforcement and monitoring programs. The revelation has sparked outrage among environmental advocates, but also emboldened industry groups who argue that market mechanisms rather than regulatory oversight should drive emissions reductions. The funding crisis particularly impacts the EPA's ability to regulate industrial emissions, which rank as the third largest source of direct emissions. When indirect emissions from electricity use are allocated to industrial end-use sectors for powering buildings and equipment, industrial activities account for a much larger share of U.S. greenhouse gas emissions. Industrial greenhouse gas emissions primarily come from burning fossil fuels for energy and chemical reactions necessary to produce goods from raw materials. The commercial and residential sectors face similar regulatory gaps. These sectors see emissions increase substantially when indirect electricity emissions are included, largely because buildings use 75% of electricity generated in the U.S. for heating, ventilation, air conditioning, lighting, appliances, and plug loads. With 60% of electricity coming from burning fossil fuels, mostly coal and natural gas, effective regulation requires coordinated oversight that the budget crisis has undermined. The EPA's weakened position comes as the Intergovernmental Panel on Climate Change published updated guidance in its 2022 Mitigation of Climate Change report, building on its 2013 Physical Science Basis findings. The National Renewable Energy Laboratory revealed how buildings across the United States do and could use energy in 2023, providing roadmaps for regulatory action, but the agency lacks resources to implement these findings.

Calculating the True Cost

The EPA and other federal agencies use estimates of the social cost of carbon (SC-CO₂) to value climate impacts in rulemakings. The SC-CO₂ measures in dollars the long-term damage done by a ton of carbon dioxide emissions in a given year, representing the value of damages avoided for emission reductions. These comprehensive estimates include changes in agricultural productivity, human health impacts, property damages from increased flood risk, and energy system cost changes. However, the models used to develop SC-CO₂ estimates don't include all important physical, ecological, and economic impacts recognized in climate literature due to lack of precise damage information. The IPCC Fifth Assessment report observed that SC-CO₂ estimates omit various impacts that would likely increase damages, suggesting the true cost of regulatory failure exceeds current projections.

The Path Forward Through Competing Visions

Environmental advocates and some lawmakers are pushing for sweeping EPA reforms, including increased funding, independence from political interference, and stronger enforcement powers. They point to managed forests and other lands as a model—since 1990, these areas have served as a net sink, absorbing more CO₂ than they emit and offsetting 13% of total gross greenhouse gas emissions. Powerful industry groups are mobilizing to block reforms, arguing that regulatory uncertainty stifles investment in clean technologies even as they resist the very regulations that would create market certainty. While CO₂ emissions from coal consumption decreased by 6% from 2021, natural gas emissions surged across all sectors except U.S. Territories. The coal decrease primarily occurred in the electric power sector, suggesting market forces rather than regulatory pressure drove the reduction. The commercial and residential sectors present particular challenges, with emissions from fossil fuels burned for heat and gases used for refrigeration and cooling in buildings, plus non-building specific emissions like waste handling. When electricity emissions are distributed to end-use sectors, commercial and residential activities account for a much larger share of U.S. greenhouse gas emissions. The sharp decline in emissions during 2020 due to COVID-19 pandemic impacts on travel and economic activity demonstrated the potential for rapid emissions reductions. The subsequent rebound in 2021 and 2022 shows how quickly progress can reverse without sustained regulatory pressure. "If we don't act now to rein in emissions, the cost to our planet and our children's future will be incalculable," warns climate scientist Dr. Emily Wilkins. Industry representatives counter that precipitous regulatory action could trigger economic disruption that undermines public support for climate action itself, as the battle over environmental policy's future intensifies.