Obama Climate-Change Goals Hurt Recovery
Investor’s Business Daily | President Barack Obama’s weak Copenhagen accord may make it harder for Congress to pass punitive cap-and-trade legislation that requires greenhouse- gas emission cuts.
A recent Gallup Poll showed that Americans prefer 75% to 10% not to enter into an emission-reduction scheme that doesn’t include nations like China and Brazil.
That should be important news for the president, whose preferred domestic policy solution of a 17% reduction in U.S. greenhouse gas emissions from 2005 levels by 2020 would be implemented without the guarantee of similar action by other nations.
“Cap and trade” is a 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 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 Midwest states dependent on coal and natural gas electric generation capacity.
According to the study, the nation’s manufacturing sectors will suffer economic output losses of approximately 6% by 2030. Meanwhile, while gas prices would increase by as much as 26%, electricity prices would go up by as much as 50% and natural gas would increase by as much as 73%.
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.
These are not abstract figures; they have a direct impact on the home life of each resident.
In a cap-and-trade world, Americans would see disposable household income reduced by as much as $1,248 by 2030. Of course, many families will be lucky to still have jobs.
In 2030, as emission-reduction targets and other Waxman-Markey provisions phase out, there are 1.8 million fewer jobs in the U.S. under the low-cost scenario and 2.4 million fewer under the high-cost case.
This troubling combination of high energy prices, fewer jobs and loss of industrial output are estimated to reduce gross domestic product by a truly staggering $3.1 trillion over the 2012-30 period. That’s “trillion” with a capital T and expensive with a capital E.
It doesn’t end there. America’s schools, universities and hospitals will likely experience a significant increase in both energy expenditure and cost by 2030, making it more difficult to pay for vital public necessities.
For government entities, costs for services, including public transportation and vehicle fleets, such as school buses, will also rise under the proposed legislation.
We know these are not theoretical costs because European companies already operating under a carbon trading system are feeling the pain.
The German steel company ThyssenKrupp is building a new plant in Alabama in part because it is feeling and fleeing the high energy costs imposed by environmental laws aimed at making fossil energy more expensive in the European Union.
These same burdens will be felt by millions of Americans, who are already reeling. A recent report stated that the level of Americans on food stamps is near an all-time high, and median household income has been falling.
For all this pain, a U.S.-only plan to cap our energy use will do little for the environment because developing nations like India and China are suggesting they will slow the rate of increase in their CO2 emissions rather than actually reducing them.
It is encouraging that President Obama is seeking international policy solution, but there are better means of addressing energy and environment.
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 the president to be successful at leading the world in addressing energy and environment, but that means taking the right policy path.
Down the cap-and-trade 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.