Will Support for Cap-and-Trade Energy Tax Melt Away? It’s Costly and Won’t Help the Environment

by Hans Bader on September 1, 2009

in Blog

People aren’t willing to pay much to reduce the emission of greenhouse gases to fight global warming, according to a Washington Post-ABC News Poll. 52 percent said they would support a law that “significantly lowered greenhouse gas emissions” — but only if it cost them less than $10 a month. Only 39 percent said they would support such a law if it cost them $25 a month — which is vastly less than it would actually cost.

In the name of cutting greenhouse gases, the House passed a cap-and-trade carbon tax scheme backed by the Obama Administration in June. But the bill won’t significantly lower greenhouse gas emissions even in the U.S. One reason is that the bill was larded up with corporate welfare. 85 percent of its carbon allowances were given away to special interests free of charge, thanks to lobbying that turned the bill into an orgy of corporate welfare.

The bill also contains environmentally-harmful provisions, such as massive ethanol subsidies, which will result in “damage to water supplies, soil health and air quality.” Ethanol subsidies have resulted in forests being destroyed in the Third World, and caused famines that have killed countless people in places like Haiti.

Worse, the cap-and-trade tax will cost much, much more than $25 a month — with politically connected businesses like GE profiting at the expense of the taxpayer, as the Washington Examiner’s Tim Carney has chronicled in story after story. Carney calls the bill a “hidden bailout” for GE and other well-connected businesses.

Capping emissions through taxes and regulations isn’t cheap — Obama himself told the San Francisco Chronicle that under his cap-and-trade tax to fight global warming, Americans’ electricity bills would “skyrocket,” and coal power plants that now provide much of the nation’s energy would go “bankrupt.” There’s no free lunch (except for the politically-connected businesses that are backing the bill, and will be able to hike consumer prices as a result).

Under the bill, the average household will pay about $248 more a month, say economists, about ten times more than voters said they were unwilling to pay in the Post-ABC News poll. Electricity bills alone will rise by more than $30 a month, utilities will rise by $69 a month, and other consumer goods will also become more expensive, because energy is part of the cost of almost everything we buy.

Even the researchers backing the bill say it will have a tiny effect on global warming by the year 2050 — “much less than one degree.” But it will cost the economy $7.4 trillion, destroying much of our industrial base.

So it’s all pain and no gain, something reinforced by the bill’s poor drafting and politically-motivated giveaways — and the fact that most greenhouse gas emissions occur outside the U.S. and beyond the reach of U.S. cap-and-trade taxes. In fact, the bill could actually increase pollution by driving smokestack industries overseas to places like India and China, where they would avoid not only costly greenhouse gas regulations, but also American law’s restrictions on traditional pollutants like sulfur dioxide that were restricted because of their dangerousness long before global warming even became an issue. (China has restrictions on auto emissions, but its restrictions on industrial pollution are minimal and poorly unenforced, leading to vast amounts of smog and acid rain).

Meanwhile, the Administration is undermining alternative energy, which doesn’t give off greenhouse gases. Obama is killing a state-of-the-art nuclear waste facility at Yucca Mountain after billions of taxpayer dollars had already been spent preparing it for use. Doing that foolishly puts taxpayers on the hook for up to $100 billion in payments to nuclear power plant owners under government contracts. The killing of the facility will make it more difficult to dispose of nuclear waste from existing power plants, and harder to construct new nuclear power plants to generate badly-needed energy.

The Obama Administration is also doing nothing to use federal law to preempt state and local barriers to alternative energy. Wind and solar power continue to be blocked by people who say “Not in My Backyard.” California’s liberal Senators oppose developing solar power in the barren Mohave Desert, where virtually no one lives, wanting to keep it in its pristine state. But if solar panels can’t be put there, where plants and animals are sparse, where on Earth can they be put? The Kennedy family long blocked a wind power facility near Cape Code, worrying that it would interfere with their view of the oceean.

Rather than doing anything constructive about this, the Obama Administration is opposing preemption that would reduce the arbitrary power and prerogatives of local bureaucrats and trial lawyers. For ideological reasons, it issued an “anti-preemption” rule on May 20 that will undercut federal policies like developing alternative energy. The federal government should be using its power under the Commerce Clause to override parochial regulations that interfere with alternative energy projects and refineries.

One of Obama’s own advisers admits that the cap-and-trade energy-rationing scheme backed by the “Obama Administration and Congressional Democrats” would “have a trivially small effect on global warming while imposing substantial costs on all American households. And to get political support in key states, the legislation would abandon the auctioning of permits in favor of giving permits to selected corporations.”

Obama adviser Martin Feldstein notes that “the Congressional Budget Office recently estimated that the resulting increases in consumer prices” from capping the amount of carbon dioxide energy users can emit “would raise the cost of living of a typical household by $1,600 a year,” a figure that “would rise significantly” from year to year.

Bob R Geologist, Tuc September 1, 2009 at 8:53 pm

ECI published a report around 2 weeks ago, about a total failure of over $30 billion of research dollars on climate modelling to prove the claim that any increase in our atmosphere's CO2 content would result in dangerous levels of global warming. They state that "no one is able to point to a single piece of empirical evidence that man-made CO2 has a significant effect on the global climate." That would be the "kiss of death" to any ordinary science based hypothesis. The trouble with AGW (Anthropogenic Global Warming) is that it a baseless idea of some radical enviros that has gained the status of public POLICY and the love of politicians, industrialists and a few hundred climate scientists endowed with liberal research grants. I have been in a virtual war with my old geology department at U Chicago, who at

first tried to win me over as I have been a donor for geology research. (I have long since forbid its use for anything to do with climate.) Anyhow, I think the claim that Cap & Trade is to save our planet, is now moot.

Bill Beckham September 2, 2009 at 2:25 pm

Bob R is right. In any real science, proof must follow hypothesis which leads to the obvious conclusion that those that believe in AGW (Anthropogenic Global Warming)are following it as a religion. No matter how much data is presented to disclaim AGW, it is ignored. This leads to the next axiom: follow the money. Those that are promoting ‘Cap and Trade’ to combat global warming are doing so for profit at the expense of the taxpayer.

Rice A. September 4, 2009 at 6:34 pm

This is crazy! American can't afford to paid that much money! I just read what Bob R said. As of now he has a point.

Daisy September 5, 2009 at 2:52 pm

The bill is not about science. It's about corporate welfare.

The robber barons get rich, while they ship American jobs overseas.

Auto world September 26, 2009 at 3:15 am

I really liked your blog and bookmarked it

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