New Year’s resolution: It’s time for a fresh look at climate change policy
Sioux City Journal|
The new year has always been an opportune time to reflect on the past and resolve to improve for the future. When it comes to climate change policy, the U.S. would be served well by taking a fresh look at policies to curb global greenhouse gas emissions, particularly in light of the lack of international support for a “targets and timetables” approach to emission reductions evidenced by the nonbinding agreement reached by President Obama and other international leaders at the December gathering in Copenhagen.
Many global leaders have lost their appetite for stringent emission reduction targets, particularly if they don’t bring developing countries to the table. It’s also resonating with Americans back home. According to polling from the Gallup organization, Americans prefer 75-10 not to enter into an emission-reduction scheme that doesn’t include nations like China and Brazil.
This should be important news and give pause to the president and many congressional leaders whose preferred climate change policy has centered largely on a “cap and trade” scheme by which the government sets a steadily declining limit on U.S. greenhouse gas emissions and then requires companies to purchase permits for each ton of carbon they emit. The very nature of this plan makes energy more expensive for the Great Plains states and everyone in the economy, including manufacturers and consumers.
According to recently published economic research from the American Council for Capital Formation and National Association of Manufacturers, the burden of the House of Representatives’ Waxman-Markey bill (passed in the House in June of this year) will fall heavily on Iowa, Nebraska and South Dakota. According to the study, the manufacturing sectors of all three states will suffer economic output losses resulting in approximately 33,000 jobs lost in Iowa by 2030, nearly 20,000 in Nebraska and approximately 8,700 jobs in South Dakota. Iowa households would see a reduction of as much as $1,351 in household income by 2030, while Nebraska households would lose as much as $1,410, and $1,380 in South Dakota.
By 2030, gas prices in these states would rise by 24 percent, electricity prices would increase by 64 percent and natural gas prices would rise by 77 percent.
These continued losses in output and rises in energy prices will have a serious, lasting, negative effect on the state’s economic base. Lower industrial output due to higher energy prices, the high cost of complying with required emissions cuts, and greater competition from overseas manufacturers with lower energy costs all add up to making it more difficult to stay in business, grow, and keep people employed.
This troubling combination of high-energy prices, fewer jobs, and loss of industrial output will be a difficult pill to swallow for states that are already suffering in a tough economy.
Even if Congress abandons cap and trade legislation, President Obama’s Environmental Protection Agency (EPA) is prepared to step in and regulate U.S. greenhouse gas emissions under the Clean Air Act (CAA). While the CAA has been appropriately used to curb smog and pollution in the 1970s and acid rain in the 1990s, using it to combat greenhouse gases makes about as much sense as using a power drill to do brain surgery. The costs of compliance would be severe, particularly since technologies to capture and sequester carbon are not commercially available.
Those sectors that fall victim to severe Clean Air Act regulations will have no choice but to pass along the costs of compliance to consumers or, if technologies were not available to abate emissions, shut down or move to other countries not subject to CAA type regulations. The costs of such compliance would make it much harder for U.S. companies struggling to overcome the recession to resume expansion and increase hiring.
For all the pain under either of these “go it alone” scenarios to reduce GHGs it will do little for the environment because developing nations like India and China are suggesting they will only slow the rate of increase in their CO2 emissions rather than actually reducing them.
There are better means of addressing energy and environment, though. These include international efforts such as technology transfers, promoting use of nuclear energy, reducing the cost of U.S. energy investment through tax code improvements, and seeking truly global solutions such as expanding the Asia Pacific Partnership on Clean Development and Climate.
Most Americans want to lead the world in addressing energy and environment, but that means taking the right policy path. Down the cap and trade or EPA road are high costs, lost jobs, and little benefit. It is time to take the path less traveled and figure out real-world solutions that benefit the environment without harming America’s economy. That’s a New Year’s resolution worth keeping.