Small business

EU Bows to Industry Pressure

The European Union has been devising an emissions trading scheme to trade greenhouse gas permits, that is scheduled to take effect in 2005. According to Reuters (October 2, 2001), “The EU executive originally aimed to propose the regulations in July but was persuaded to redraft them in a more business-friendly form after intense lobbying from industry.”

Firms within the EU have demanded the changes because they fear that the plan would put them at a competitive disadvantage with U.S. firms. “The latest draft bows to several industry demands by halving the proposed fines, allowing the Commission to exempt certain sectors temporarily and enabling member states to give firms extra emission credits in special market conditions.”

Fines for noncompliance were reduced from 200 euros to 100 euros per excess ton of CO2 emitted. If permit prices go too high, then governments can issue extra permits. Governments can also temporarily exempt certain sectors during the first three years of the program if they can demonstrate that they can reduce the same amount of emission by other means.

The ability of governments to issue additional permits is very problematic and is likely to short circuit the trading that would take place otherwise. Increasing the supply of permits not only defeats the cap, but it also decreases the price of existing permits, thereby harming the firms holding them.

EU to Propose Aviation Fuel Tax

The European Union is pushing for a tax on aviation fuel for international flights at a meeting of the International Civil Aviation Organization currently underway in Montreal. Under a long-standing international agreement, aviation fuel for international flights is exempt from taxation. Environmentalists claim that this is a major subsidy to the airline industry.

The EU says that if an agreement cannot be reached it may and unilaterally impose a tax on internal EU flights or impose a tax on airfreight (ABC News, September 15, 2001).

Energy Secretary Spence Abraham began to lay out the administrations energy policies in a major speech at the U. S. Chamber of Commerces National Energy Summit on March 19 in Washington, D. C. He left no doubt that the Bush Administration intends to keep its campaign promises to push policies that will promote more affordable and abundant energy supplies for American consumers.

Abraham characterized the Clinton-Gore Administrations energy policy as, “You cant find it, you cant transport it, and even if you get it, we dont want you to use it. Through neglect or complacency or ideology, this approach has led us to the crisis we face today.”

He addressed three key points that the administrations policies must address:

  • “First, demand for energy is rising across the board, but particularly for natural gas and electricity;

  • “Second, supplies are being limited by a regulatory structure that, in many respects, has failed to keep pace with advances in technology and an uncertain political environment that often discourages investment in desperately needed facilities;

  • “And third, our energy infrastructure that network of the generators, transmission lines, refineries and pipelines that convert raw resources into usable fuel is woefully antiquated and inadequate to meet our future needs.”

Americas demand for energy will continue to increase, according to Abraham. He quoted forecasts from DOEs Energy Information Administration that demand for oil will increase by 33 percent over the next 20 years, for natural gas by 62 percent, and for electricity by 45 percent.

It is difficult to meet these demands, however, when capacity is lacking. “Since 1980,” said Abraham, “the number of American refineries has been cut in half. There hasnt been a new refinery built in the United States in over 25 years.” Much of the problem is due to government interference. “New regulatory interpretations limit the ability of existing refineries to expand capacity,” he said. “Add to that regulations that require the production of more than 15 different types of gasoline and you have a refining industry strained to capacity, leaving us dangerously vulnerable to regional supply disruptions and price spikes.”

To meet Americas rising demand for electricity over the next 20 years, said Abraham, the U.S. will have construct 1,300 new power plants or 65 per year. And he added that if history is a guide, then this may be too conservative an estimate. Abraham reiterated coals importance to electricity generation and pledged that, “The administration will not regulate coal out of existence, and we will not support measures that will threaten electricity supplies and significantly raise electricity prices.”

Finally, Abraham noted the importance of a reliable and affordable supply of energy. “This nations last three recessions have all been tied to rising energy prices and there is strong evidence that the latest crisis is already having a negative effect.”

Californias power crisis is causing layoffs and companies to move to states with reliable energy supplies. Abraham noted that “Intels CEO Craig Barrett announced that the worlds leading chipmaker wont be expanding in California: As long as California is a Third World country, Barrett said, we wont build $2 billion manufacturing plants here.” Other regions in the country are also in danger of experiencing California-style crises, Abraham warned.

Secretary Abraham held a press conference at the U. S. Chamber immediately after his speech. Over 60 reporters attended, but there was not a single question about the obvious conflict between the administrations energy policies and the Kyoto Protocol.

Proposed Wisconsin Wind Farm a Poor Alternative

We recently reported on a study by Glen Schleede, president of Energy Market & Policy Analysis, Inc., about the feasibility of the U.S. Department of Energys Wind Energy Initiative. Now Mr. Schleede has released a second report on a proposed wind farm in Addison, Wisconsin.

The wind farm is a proposal of a Florida Company (FPL Group) and two Midwestern electric wind farm would only produce 0.14 percent of the electricity generated by Wisconsins utilities in 1998. Thus the wind farm would have almost no effect on the reliability of Wisconsins electricity supply nor would it reduce environmental impacts.utilities (WEPCo and Alliant Energy/WP&L), who want to build 33 large windmills, each 320 to 350 feet tall, on the scenic Niagara Escarpment. The companies claim significant energy and environmental benefits for the proposal, but Schleede finds the benefits to be insignificant.

Indeed, the wind farm would only produce 0.14 percent of the electricity generated by Wisconsins utilities in 1998. Thus the wind farm would have almost no effect on the reliability of Wisconsins electricity supply nor would it reduce environmental impacts.

As to the costs of the project, Schleede finds that it “would have significant adverse impact on scenic and other environmental values in the areas where it would be constructed, and an adverse effect on property values and other concerns that underlie well-documented objections to wind farms, particularly in areas such as Addison Township.”

The report can be acquired for a fee by contacting Mr. Schleede at

Nukes Needed to Comply With Kyoto

A new report prepared on behalf of the European Commission by the London-based consulting firm, ERM Energy, says that at least 85 nuclear plants must be built in Europe over the next 20 years if the EU is to meet its compliance targets under the Kyoto Protocol.

The report also noted that other energy sources that do not emit carbon dioxide, such as renewables, are not being developed quickly enough to significantly contribute to meeting Kyoto (The Guardian, April 10, 2000).

Little Progress Expected in Buenos Aires

The fourth Conference of the Parties (COP-4) will meet in Buenos Aires, Argentina on November 2-13 to further discuss greenhouse gas reductions. According to Melinda Kimble, acting assistant secretary of state, there probably will be little progress toward reaching the administrations goals. “Buenos Aires has the potential to be a small step forward,” Kimble testified on October 6 before the House Commerce Subcommittee on Energy and Power.

The biggest hurdle is emissions trading. Different countries have different ideas on what an emission trading system would look like under the Kyoto Protocol though views have converged in recent weeks.

Kimble was questioned about the administrations definition of “meaningful participation” by developing countries. She admitted that the administration has “no definition.” But, she said, it will not be a “one-size-fits-all solution.” Targets for poorer countries with low emissions will be different than for richer developing countries with higher emissions (BNA Daily Environment Report, October 7, 1998).

European Union Softening on Limits for Emissions Trading

The European Union appears to have relented, for the time being, on its demand that the use of emissions trading be limited. In a meeting in Luxembourg on October 6 the EU environment ministers agreed that the EU will insist at COP-4 that emissions trading “be defined in a quantitative and qualitative terms based on equitable criteria” at a later date.

At the Council of Ministers moderate countries convinced hard-liners that it would be a mistake to demand a cap on emissions trading. “For tactical reasons there was a majority opinion that there is no reason to narrow ourselves to a precise 50 percent cap now,” said Peter Jorgensen, a European Commission official. “This is especially true when it comes to dealing with the Americans” (BNA Daily Environment Report, October 7, 1998).

Clinton Administration to Move Forward With Emission Trading

The Clinton Administration will pursue emissions trading even if there is no agreement reached at Buenos Aires, Kathleen McGinty, chair of the White House Council on Environmental Quality, explained at a congressional hearing held by the House Government Reform and Oversight Subcommittee on National Economic Growth, Natural Resources, and Regulatory Affairs.

There is nothing in the Kyoto Protocol that prevents the U.S. and other countries from pursuing emissions trading even if there is no agreement among the parties regarding the rules governing such a system. “Should push come to shove,” McGinty said, the United States will not be “held hostage to complete a unanimous agreement before we move on with trading measures.” McGinty also said that “while we have our option to proceed unilaterally it is our preference to proceed in partnership.”

She also said that the Clinton Administration will not submit the Kyoto Protocol to Congress until flexible mechanisms “are available and agreed upon by the parties” (BNA Daily Environment Report, October 13, 1998).

Business Could Get Credit for Early Greenhouse Gas Reductions

While many in Congress are holding the line against the unconstitutional implementation of the Kyoto Protocol, others are trying to facilitate implementation without ratification. Sen. John Chafee (R-R.I.) has introduced a bill (S. 2617) that would give businesses credit for voluntarily greenhouse gas reductions. This bill would allow President Clinton to “enter into binding agreements with U.S. businesses to voluntarily reduce their greenhouse gas emissions.”

Kyotos Regulatory Burden II

In our last issue, we discussed a new study by Mark P. Mills of Mills-McCarthy Associates. It demonstrates that if the Environmental Protection Agency classifies carbon dioxide as a pollutant, over a million small businesses would become regulated stationary sources. This would include 28 percent of all schools and 25 percent of all health-care buildings.

Mills has now looked at the actual monetary costs of compliance. To comply, small businesses would have to hire staff “who will install, identify, evaluate, and operate emissions monitoring equipment; some other people to undertake record-keeping and documentation control; yet another team to become expert in and monitor regulatory compliance; still others to consider and implement engineering solutions to the problem of complying with emissions reduction.” Finally, legal staff will also be needed to “consider the entire trajectory of legal exposure and compliance under current rules as well as the interpretations of the regulations as they evolve through inevitable legal battles.”

Mills estimates that these compliance activities will require one person-year of effort. He assumes for the sake of his calculations that a small firm can meet its compliance needs by contracting one-half of a person-year of effort. This, Mills conservatively estimates, will cost about $30,000. Since the threshold for coming under the regulatory purview of the EPA is $8,000 in fossil fuel purchases this means that the cost of fossil fuel for small businesses will jump from $8,000 per year to $38,000 per year.

For firms that purchase $100,000 of fossil fuel their cost will rise by 30 percent. Assuming that a firm would need to use one person-year to comply (a far more realistic assumption) would raise costs by 60 percent. Mills calculates that the total collective cost to American businesses could reach $100 billion. The article is at

Joint Implementation to Offset CO2

A new report by the Government Accounting Office states that the 32 joint implementation (JI) projects that were approved under a U.S. pilot program to reduce greenhouse gas emissions will offset 200 million metric tons of carbon dioxide and 1.3 million tons of methane over the next 60 years if fully implemented. JI allows developed countries to earn emission credits by funding projects in developing countries that would reduce greenhouse gas emissions.

The reliability of the estimates are not known, according to the GAO. “Standard methods for estimating projects emissions reduction benefits specific to the U.S. initiative have not been developed,” the report said.

Seventeen of the approved projects would reduce emissions directly by, for example, reducing methane leakage in the natural gas distribution system in Russia. The other 15 would reduce emissions by planting trees or protecting forests from logging in developing countries (BNA Daily Environment Report, July 21, 1998).

Tax Shifting

by William Yeatman on April 25, 1998

in Small business

One of the policy options for reducing greenhouse gas emissions that is beginning to receive a lot of attention is tax shifting. The idea behind the proposal is that governments shift taxes away from “goods” (i.e., labor and investment) and begin taxing “bads” (i.e., pollution and energy use). The Clinton administration and others who wish to control energy use have seized upon this tax proposal as a nearly cost-free way to reduce energy use. States such as Vermont, New England, Massachusetts, Minnesota, and New York are considering policies of this type.

A study done in June 1997 by the Tellus Institute analyzes the economic affects of tax shifting on the state of New York. It is a good preview of how these types of policies may be sold to taxpayers. The study treats tax shifting optimistically stating that “There need not be a trade-off between environmental policies and economic well-being.” According to the study, “Ecological tax reform is a policy strategy in which this double goal is built by design.”

The authors concede, however, that some people will be hurt by the new tax policies. Those who depend on energy intensive industries may find themselves in economic straits. “Thus,” says the authors, “concrete tax reform policy would require provisions to ensure that businesses that would be hard hit by simple tax shifting, and the employees of these businesses, would be assisted in this transition, through measures such as targeted tax credits, subsidies for energy-efficiency investments, and retraining assistance for workers. Such measures could be focused on communities that depend on energy-intensive industries.”

But such adverse effects should not be cause for undue alarm. Structural change is natural in a capitalist economy. Unlike the messy, unpredictable changes that occur in a capitalist economy, however, “ecological tax reform could help give direction to this process,” say the authors. The study also touts the advantages of tax shifting for New Yorks industrial planners. State industrial policy has become a hodgepodge of tax credits, infrastructure services and other targeted policies designed to lure businesses to the respective states. The study recommends that states adopt ecological tax reform as a way to simplify existing tax systems and eliminating what many economists see as counterproductive competition between states.

The study analyzes three levels of carbon taxes: $10, $30, and $50 per ton of carbon dioxide (CO2). The taxes would be fully implemented by 1997, would be assessed on carbon content of fossil fuels and at first point of entry to the state. The study also analyzes two policy scenarios: Scenario I returns the entire carbon tax to taxpayers through reduced traditional taxes. Scenario II uses one-quarter of the carbon tax revenue to subsidize energy efficiency investments while the rest is returned taxpayers.

Coal would experience the largest price increase due to a carbon tax. A $10 carbon tax would increase the price of coal by $20.82/ton, $62.46/ton under a $30 tax and $104.09/ton under a $50 tax. Gasoline prices would increase by $0.10/gallon, $0.31/gallon and $0.52/gallon for the respective tax levels and natural gas prices would increase by $0.58/mcf, $1.74/mcf and $2.90/mcf respectively.

The authors claim that additional energy reductions can be achieved through the reinvestment plan under scenario II. Under the $10 tax a 25 percent reinvestment would triple energy reductions relative to no investment. Under the $30 tax energy reductions would be 90 percent higher while under a $50 tax energy reductions would be 55 percent higher.

Finally, the authors claim that ecological tax reform would lead to net job creation. They reason that taxing energy use would discourage capital-intensive production and would encourage labor-intensive production, increasing labor demand. Furthermore, non-energy, labor-intensive products (such as services) are generally produced within the state while energy-intensive products are more often imported into the state. Ecological tax reform would prevent money from leaving the state. The study, Ecological Tax Reform: Carbon Taxes with Tax Reductions in New York can be obtained through the internet at for $25.

Contact: Consumer Alert 202-467-5809

Members of the National Consumer Coalition today denounced the Presidents comments on global climate change issues in last nights State of the Union Address. Following are statements of several groups.

“President Clintons State of the Union comments on global warming vastly overstate scientific consensus on the issue while overlooking the enormous threat to American consumers of drastic cutbacks on energy use. The Kyoto agreement would require about a 40 percent reduction in energy use by 2012. Throwing away $6 billion of taxpayers money for magic bullets wont do a thing to diminish this consumer impact, which will be felt disproportionately by the poor.”

Frances B. Smith — Executive Director, Consumer Alert

“I urge the Congress to study the Kyoto Treaty and familiarize themselves with the scientific debate on this issue. There is not a consensus within the scientific community on the causes or effects of global warming, despite the administration claims of an overwhelming scientific consensus. Congress must be very cautious before it commits itself to any programs that will assist implementation of this treaty.”

— Grover G. Norquist — President, Americans for Tax Reform

“Clinton seeks to bribe American companies into jumping on the Kyoto bandwagon. Super accurate satellite records, spanning nearly twenty years, show no global warming; and the modest warming that may occur over the next century would likely boost agricultural output and produce milder weather. The Clinton R&D proposals energy-efficient appliances, solar panels, hybrid cars, and the like are nothing more than a phony, all gain, no pain energy diet. Federally-sponsored energy R&D, from Synfuels to electric cars, has been a spectacular history of boondoggle and failure. The climate treaty is a grand pretext for reviving centralized economic planning. The subsidies are obviously an effort to co-opt consumer and business opposition to the treaty.”

— Fred Smith — President, Competitive Enterprise Institute

“Once again President Clinton has proposed a wrath of new federal programs and initiatives which greatly expand both the size and scope of government. Most of these intrusive proposals will fall on the backs of small business and our workers. Whatever happened to the end of big government? And how come American taxpayers can afford these expensive new programs, but cant afford a well-deserved tax cut?”

— Karen Kerrigan — President, Small Business Survival Committee

“The Kyoto treaty will stifle the very free market forces that created this unprecedented period of economic growth and clean environment. Lets not continue to careen down an unknown path to an uncertain destination. The members of The Seniors Coalition, like the US Senate, oppose this Treaty and any programs that seek to implement it.”

— Thair Phillips — CEO, Seniors Coalition

The National Consumer Coalition is a non-profit, non-partisan consumer coalition representing over 4 million Americans.

In a letter to Nature (March 13, 1997) James W. Hurrell and Kevin E. Trenberth questioned the reliability of the satellite temperature data which show a slight cooling trend over the last 20 years. They argue that the data contain significant discontinuities due to various factors, the most important being the replacement of worn out satellites. The main contention in the Hurrell/Trenberth paper is that there are two “spurious” downward jumps in the satellite record due to changes in satellites and that the real temperature trend is slightly positive.

There are some serious errors with the method used by Hurrell and Trenberth, however. Drs. John R. Christy, Roy W. Spencer, and William D. Braswell, who track and publish the satellite temperature data, point out those errors in correspondence to Nature (September 25, 1997).

There are two methods to directly measure the temperature of the lower troposphere (surface to 7 km). One is balloon-borne instruments known as radiosondes which rise through the atmosphere. The other are microwave sounding units (MSUs) mounted on satellites which measure the intensities of microwave emissions from atmospheric oxygen which are proportional to temperature.

There is strong agreement between the two records even over the periods where Hurrell and Trenberth claim that the spurious jumps take place. Another data set is also available from the NOAA-06 and NOAA-07 satellites which were measuring temperatures at the time of the breaks that Hurrell and Trenberth claim to have discovered. These also agree with the MSU data.

Hurrell and Trenberth ignore the balloon data and estimate atmospheric temperatures using sea-surface temperatures (SSTs). There are a couple of problems with this method, however. First, the regions where Hurrell and Trenberth find the greatest disagreement is in the Pacific and Indian Oceans where ship data are scattered. Buoy data have also been available since the early-1980s. But, as Christy points out in correspondence with The Cooler Heads Newsletter, “the SST dataset is not homogeneous for these critical regions. Ships and buoys do not measure the water temperature to the agreement necessary for the types of variations we look at for climate change over a decade or so.”

Second, Hurrell and Trenberth derive atmospheric temperatures from the SSTs using general circulation models (GCMs). Christy argues that “There is considerable evidence that SSTs and the atmospheric temperature do not behave in the rigid fashion believed by Hurrell and Trenberth and represented by their simple [linear] regression model. Several studies show that for long periods of (months to years) there are differences between SSTs and air temperatures due to the natural variability of the vertical structure of the atmosphere.”

Once again advocates of the global warming hypothesis use imperfect models to attack actual observed data, standing the scientific method on its head. In the past, when data contradicted the models, the models were rejected. With highly politicized global warming science, however, empirical evidence that contradicts the politically predetermined outcome is either ignored or explained away as anomalous.

What Do Scientists Say?

A survey of state climatologists by Citizens for a Sound Economy found that there is little support for the global warming hypothesis. When asked if they agreed with the statement by President Clinton, “The overwhelming balance of evidence and scientific opinion is that it is no longer a theory but now a fact, that global warming is for real. There is ample evidence that human activities are already disrupting the global climate.” 36 percent agreed, while 58 percent disagreed.

Asked whether “recent global warming is largely a natural phenomenon,” 44 percent said yes while 17 percent said no. Nine out of ten surveyed agreed that “scientific evidence indicates variations in global temperature are likely to be naturally-occurring and cyclical over very long periods of time.” Eighty-nine percent of the climatologists agreed that “current science is unable to isolate and measure variations in global temperatures caused only by man-made factors,” and 61 percent said that the historical data do not indicate “that fluctuations in global temperatures are attributable to human influences such as burning fossil fuels.”

Sixty percent of the respondents said that reducing man-made CO2 emissions by 15 percent below 1990 levels would not prevent global temperatures from rising, and 86 percent said that reducing emissions to 1990 levels would not prevent rising temperatures. Finally, by a 39 to 33 percent margin, more climatologists say that, “evidence exists to suggest that the earth is headed for another glacial period.” The survey can be found at and

What Does the Science Say?

Dr. S. Fred Singer of the Science and Environmental Policy Project has just released a overview of the current state of climate change science and asks whether drastic reductions in greenhouse gases are justified.

The objective of a global climate treaty would be to prevent “dangerous interference with the climate system.” But, according to Singer, there is no scientific evidence that would suggest what level of interference would be dangerous. An article appearing in Science argued that 350-400 ppm is a dangerous level of CO2. However, they base this on an arbitrary “dangerous” temperature increase of 2 degrees C.

Singer also challenges the claim in the 1996 report of the Intergovernmental Panel on Climate Change (IPCC) that it is now possible to discern the human influence among the noise on climate change. First, the “natural” variations are derived from computer models rather than actual observations. Second, the computer models exclude the cooling effects of mineral dust and of smoke and soot from burning biomass and the cloud production effects of sulfate aerosols.

Singer also contends that warmer weather would be beneficial to mankind. Warmer global temperatures, the models predict, would reduce the temperature gap between the northern and southern hemispheres reducing storm intensity at the mid-latitudes. Northern hurricanes, for example, have fallen in both frequency and intensity over the last 50 years. Rainfall has fallen worldwide for the last 40 years. As for rising sea levels Singer argues that they are correlated with falling temperatures.

Singer concludes there is little evidence to justify drastic reductions of greenhouse gases. The best way to avoid the adverse effects of climate change is to adapt. He notes that societies that are economically advanced are the least affected by changes in climate and more readily adapt to changes. Economic development (which will require greater emissions) then is necessary if we are to avoid adverse effects which may arise from climate change. The report is available by contacting SEPP at (703) 352-7535 or by e-mail at


A study completed in August 1997 shows a severe economic impact on the people of Texas if the Clinton Administration commits to a global climate change treaty to restrict energy use in the United States.

The study, The Impact of Potential Greenhouse Gas Emission Limits on the People and Economy of Texas, was prepared by Glenn R. Schleede for the National Consumer Coalition under the auspices of Consumer Alert.*

The study focuses on one state, Texas, and identifies the potential costs that might be imposed on the people of Texas as a result of measures to force or encourage reductions in U.S. greenhouse gas emissions, particularly CO2.

The U.S. is expected to make commitments at the UN Climate Change meeting in Kyoto, Japan, this December to significantly reduce greenhouse gas emissions. The treaty negotiations have attracted little public attention because most people seem to think that the commitments will only affect big business.

In fact, the U.S. negotiators’ commitment to set binding targets and timetables to restrict emissions will affect every individual, family, organization and community in the U.S.: either because less energy will be available or the prices of energy will rise dramatically.

The effects across the country will vary in the level of severity, with a greater impact on those states that are heavily dependent on the use of fossil fuels for energy production.

The Impact on People in Texas

Texas would be particularly hard hit by emission reductions because coal, oil, and natural gas (the fossil fuels) supply 96.2 percent of the total energy needs in Texas. Average per capita energy consumption in Texas in 1994 was 65.2 percent higher than the national average, largely because of the state’s energy-intensive industrial and agricultural activities.

In this study of global climate policies’ impact on Texans, various taxes on energy resources are used as “proxies” to estimate a range of costs that might be borne by Texas consumers resulting from proposed emission reduction approaches.

Using taxes as proxies recognizes that the Administration may propose or accept other measures, such as an international emissions trading scheme. However, such measures will have similar impacts as they would require major changes or reductions in U.S. energy use, force large increases in energy costs, and have other adverse impacts on the U.S. economy.

Among the adverse effects that various alternative measures and tax proxies could have on Texas people are the following:

  • Texas would be forced to reduce its 85 percent dependence on coal and natural gas to generate electricity. Yet economical, alternative sources of energy are not available in Texas and are not likely to become available in the near future. Thus, the likely result would be a forcing up of electricity prices for all electricity customers, including residential customers.
  • Emission reduction measures — considered separately — would cause Texans’ electric bills to increase annually by 10.3 percent to 48.4 percent.
  • Tax increases of $.50 per gallon on motor fuels will cause an increase of 43.5 percent in motor fuel costs, adding $285 per year to each Texan’s tax payment flowing to Washington. A $1.00 per gallon tax would raise motor fuel costs 87 percent resulting in an outflow of $570 per person annually.
  • The added annual cost and dollar outflow to Washington for a Texas family of four would average $1,140 for a $.50 per gallon motor fuel tax and $2,280 for a $1 per gallon tax.
  • The annual cost per household would be $491 under a $100 per metric ton carbon tax (a tax on carbon associated with utilities= use of coal to generate electricity); that cost would double with a $200 per metric ton carbon tax.

  • Texans would see an added annual outflow of their dollars to Washington ranging from $1.7 billion to $11 billion as a result of the tax alternatives considered in this study.

  • Higher costs for electricity and motor fuels hit most individuals and households directly and take a larger portion of their after-tax income. Since per capita personal income and disposable income in Texas are lower than the national average, and, in particular, lower than states along the East and West coasts, people in Texas will be harder hit than residents in those regions.

  • Older people and others living on fixed incomes are especially vulnerable to energy cost increases; in Texas, 10.2 percent of the population in 1994 was 65 or older.

  • Higher costs for energy, through taxes or other mechanisms, mean that fewer dollars would be available for Texans’ other needs C food, clothing, shelter, medical needs, education, purchases of appliances and household goods, savings, and insurance.

* Glenn R. Schleede is president of Energy Market and Policy Analysis, Inc., a consulting practice on energy and related environmental and economic issues. Mr. Schleede previously was vice president of New England Electric System and president of New England Energy Incorporated. In Washington, Mr. Schleede served as executive associate director of the U.S. Office of Management and Budget, senior vice president of the National Coal Association and associate director (Energy and Science) of the White House Domestic Council. He has held career service positions with OMB and with the U.S. Atomic Energy Commission.

The National Consumer Coalition, organized by Consumer Alert, is an on-going educational coalition of 24 public policy groups that are committed to the consumer value of a market-economy in providing consumer choice, competition, and advances in technology that improve the health and safety of consumers. Consumer Alert is a non-profit, non-partisan consumer group, with individual members in all 50 states, which focuses on public policy issues and consumer education.