What Cap and Trade Could Mean to You

Laurie Neverman

Last Friday the US House of Representatives passed H.R. 2454 American Clean Energy Act. This bill (in summary from OpenCongress.org) “includes a cap-and-trade global warming reduction plan designed to reduce economy-wide greenhouse gas emissions 17 percent by 2020. Other provisions include new renewable requirements for utilities, studies and incentives regarding new carbon capture and sequestration technologies, energy efficiency incentives for homes and buildings, and grants for green jobs, among other things.”

While these would appear to be laudable goals, even the EPA’s own scientists are not all in agreement as to the reality of AGW (anthropogenic, or “man-made” global warming). Alan Carlin, 38 year EPA veteran who received his undergraduate degree in physics from CalTech and a PhD in economics from MIT, concluded in a report submitted earlier this year that, "My personal view is that there is not currently any reason to regulate (carbon dioxide)," he said. "There may be in the future. But global temperatures are roughly where they were in the mid-20th century. They're not going up, and if anything they're going down." Carlin’s supervisor declined to forward his findings and instructed him not to communicate his findings outside of their working group. He was removed from further work on AGW related material.

If the bill is enacted, estimated costs per household range from several hundred dollars to several thousand dollars per year. A Clemson University study estimates that “the cap-and-trade approach is the equivalent of a permanent tax increase for the average American household, which was estimated to be $1,100 in 2008, would rise to $1,437 by 2015, to $1,979 in 2030, and $2,979 in 2050.”

Similarly, a report from the Heritage Foundation concludes this bill will:

Reduce aggregate gross domestic product (GDP) by $7.4 trillion,
Destroy 844,000 jobs on average, with peak years seeing unemployment rise by over 1,900,000 jobs,
Raise electricity rates 90 percent after adjusting for inflation,
Raise inflation-adjusted gasoline prices by 74 percent,
Raise residential natural gas prices by 55 percent,
Raise an average family's annual energy bill by $1,500, and
Increase inflation-adjusted federal debt by 29 percent, or $33,400 additional federal debt per person.

Rather than increasing our energy independence, this legislation could potentially make us even more dependent on foreign energy sources as companies bring in foreign fuels that are cheaper because they are not subject to this type of regulation. Also, it is anticipated that companies will shift production facilities overseas, again to avoid costs associated with increased regulation. Further, a lot of money stands to be made by carbon credit traders. Call me old fashioned, but I don’t care for the idea of making windfall profits off of a commodity that doesn’t actually produce any meaningful input into the economy.

Educate yourself about this legislation and contact your senator and let them know what you think.

Related Links:

The Economic Impact of Waxman–Markey by William W. Beach, David Kreutzer, Ph.D., Karen Campbell, Ph.D. and Ben Lieberman posted at The Heritage Foundation

The Cost of Climate Regulation for American Households – by Bryan Buckley and Sergey Mityakov, Clemson University

H.R. 2454 – Includes summary and full text version of the bill and related materials.

Big Oil’s Answer to Carbon Law May be Fuel Imports – by Joe Carroll and Edward Klump

Study says offsets make ACES carbon cap almost meaningless – from the Weekly Carboholic