The economic cost of climate change legislation
Chairman Henry Waxman of the House Energy and Commerce Committee announced yesterday that his American Clean Energy and Security Act of 2009 “will create millions of jobs, revive our economy, and secure our energy independence.”
The 648-page bill, co-sponsored by Waxman and fellow Democrat Edward Markey, Chairman of the House Energy and Environment Subcommittee, has been the subject of four days of committee hearings this week. It would set new limits for greenhouse gas emissions, and prescribe radically new standards for energy production and use.
The most surprising word in the 648-page bill is one that isn’t there, not even once. That word is “nuclear.” To discuss clean energy and security without mentioning increased development of nuclear energy, now powering 20 percent of America’s electricity with no greenhouse gas emissions, shows that Chairmen Waxman and Markey are not taking the issue seriously. They’re just trying to raise taxes on Americans and enhance the power of Congress and the agencies it oversees.
Over 100 pages in the bill are spent on measures to reduce greenhouse gases. The bill requires greenhouse gas emissions in 2012 to be no more than 97 percent of 2005 emissions, 58 percent in 2030 and 17 percent in 2050. This last target, four decades into the future, is incompatible with our present standard of living—and illustrates the arrogance of politicians who think that they can micro-manage the economy far beyond anyone’s capacity to foresee events.
The mechanism for this is a “cap-and-trade” program, proposed by President Obama in his budget, under which allowances—the number and price as yet unspecified—to emit greenhouse gases would be issued by the Environmental Protection Agency. If a firm’s emissions exceeded its allowance, or cap, it would have to purchase more allowances, either from the government or from other firms.
As allowed emissions decline over time, firms would have to buy more allowances, driving up costs that inevitably would be paid to consumers. The Obama March Budget forecast that revenues of $646 billion over eight years would be collected from cap-and-trade.
Representative Joe Barton of Texas, ranking Republican on the Energy and Commerce Committee, offered his version of candor at yesterday’s hearing. “Ladies and gentlemen, if you like the idea of reducing your carbon footprint to the size that this legislation proposes, you can test drive these carbon emissions levels by living in Nigeria,” he said.
Cap-and-trade is only one part of the bill that would drive up prices. Consider energy production. The bill would require doubling in three years of the share of electric utility output that comes from renewable sources—wind, solar, geothermal, biomass—from three percent now to six percent in 2012. In a further leap of central-planning arrogance, the bill would raise that standard in stages to 25 percent in 2025.
Sounds good? Maybe, but the technology to do it doesn’t exist. Nor do transmission lines to deliver wind energy from where it is likely to be produced, in the central states, to the population centers on the coasts, where it would be consumed.
Solar energy might be produced in the southwestern desert and California, yet exporting it to Rhode Island and foggy Washington State is practically impossible. The bill could address this problem by giving the Federal Energy Regulatory Commission additional authority to site transmission lines, yet it does not do so.
Or, take energy efficiency. If people don’t conserve energy voluntarily, the bill would require them to do so. Existing federal energy efficiency standards for commercial and residential buildings would rise by 30 percent until 2016 for new buildings, and 50 percent thereafter. EPA would set by next year new emissions standards for cars, trucks, trains, and aircraft. Electricity distributors would be required to achieve energy savings beginning with one percent in 2012 and reaching 15 percent in 2020.
If this bill would create millions of jobs and revive our economy, why not make the standards tougher and create even more jobs?
With the global economy in the depths of the worst recession since the Great Depression, according to the International Monetary Fund, now is not the time to raise the cost of energy and consumer goods. Chairmen Waxman and Markey should reconsider.