Policy Documents

Cap-and-Trade in Pennsylvania

Zonia Pino –
December 22, 2008

Pennsylvania, among other states, is mulling programs that would establish a carbon dioxide cap-and-trade system for the purpose of reducing carbon dioxide emissions, even as the scientific community becomes increasingly skeptical of claims that global warming is a crisis caused by human emissions of CO2. A cap-and-trade regulatory and tax scheme would significantly raise energy prices, cost the Commonwealth many jobs, and increase the cost of living considerably.

Far from being a dangerous pollutant, carbon is a basic component of all living cells, and life on Earth depends on carbon dioxide. Increased CO2 concentrations in the atmosphere make plants grow faster and bigger and provide improved food chain conditions for humans and animals. It would be wrong to classify such an essential and beneficial resource as a pollutant.

CO2 cap-and-trade systems threaten the nation's economy and citizens' financial well-being. A cap on energy production amounts to a tax on all goods and services. Studies have found that a modest cap-and-trade system to limit carbon emissions to Kyoto Protocol guidelines (7 percent below 1990 levels) would reduce domestic economic growth by almost 2 percent per year, increase gasoline prices by 53 percent, and raise other energy prices by 86 percent.

If Pennsylvania were to adopt former vice president Al Gore's desired 90 percent reduction in carbon dioxide emissions, the resulting energy scarcity and price inflation would destroy the state's economy.

All that sacrifice would likely be for nothing. When a cap-and-trade system was implemented in the European Union, emissions actually rose more rapidly, as a share of GDP, than in the United States. Cap-and-trade systems are notoriously difficult to enforce, and many politically connected companies in Europe have been found to be fudging the numbers and selling "unused" credits without actually reducing emissions. Europe's carbon cap-and-trade systems are permeated by fraud.

In any cap-and-trade system, Harrisburg would essentially take ownership of all CO2 emissions and distribute "carbon credits" to the private sector. Politicizing energy distribution and use through cap-and-trade systems is a great way to reward politically connected energy producers at the expense of the general population, the energy consumers.

The following articles will help you understand the environmental and economic consequences of cap-and-trade policies, and the global warming alarmism that is behind such proposals.


Nature, Not Human Activity, Rules the Climate
http://www.heartland.org/Article.html?articleId=22835
The Nongovernmental International Panel on Climate Change examines the evidence on the causes and consequences of climate change.

Fact and Comment: Brrr!
http://www.forbes.com/forbes/2008/0310/019.html
Steve Forbes questions where there is a manmade global warming crisis, considers the lack of benefits from adopting cap-and-trade, and describes the problems Europe has encountered with its program.

NBC: Cap-and-Trade System Would Magically Make Unaffordable Energy Affordable
http://www.businessandmedia.org/articles/2008/20080314091551.aspx
The Business and Media Institute reports on an NBC 'Nightly News' report praising a carbon-free solar energy plant. But electricity from solar energy costs four times as much as energy from natural gas or coal-fired plants.

Cap-and-Trade Would Stifle Economy, Delay Transition to Cleaner Fuels
http://www.heartland.org/Article.html?articleId=22944
The George C. Marshall Institute outlines the numerous practical difficulties in implementing a cap-and-trade system, as well as its negative effects.

Beware of Cap-and-Trade Climate Bills
http://www.heritage.org/Research/Economy/wm1723.cfm
The Heritage Foundation looks at several government studies, summarizes numerous serious problems a cap-and-trade system would cause, and questions the basis for such legislation.

Cap-and-Trade Could Cost Average Family $10,800 in Lost Income, Says Economist Arthur Laffer
http://prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/09-17-2007/0004664103&EDATE
This article addresses the cost of a cap-and-trade system to the average consumer, using the analysis of economist Arthur Laffer.

Cap-and-Trade: A Bad Tradeoff for the Economy and Company Earnings
http://www.freeenterpriser.com/documents/Capital%20Comment%201.pdf
The Free Enterprise Education Institute provides an excellent summary of the costs and problems inherent in a cap-and-trade system, especially the harm it would do to economic growth.

'Growing Accumulation' of Science Challenges Warming Fears
http://www.heartland.org/article.html?articleId=24211
Climate change skeptics on Capitol Hill are quietly watching a growing accumulation of global cooling science and other findings that could signal the science behind global warming is too shaky to warrant cap-and-trade legislation.

Why Cap-and-Trade Could Backfire
http://www.csmonitor.com/2008/0716/p09s02-coop.html
This article explains how environmentalists' claim that capping greenhouse gas emissions and creating a market for emissions trading--a policy prescription called "cap-and-trade"--would reduce carbon dioxide output and with it the risk of global warming. But it could achieve the opposite.

Potential Costs to America From Cap-and-Trade
http://www.humanevents.com/article.php?id=26621
If you think energy is expensive now, warns Human Events, just wait until our next president, working with a Democratic-majority Congress, implements cap-and-trade rules tailored for the greatest possible gain for special interests and the highest possible costs to consumers and taxpayers.

Cap & Trade: Why it's Tax & Spend
http://www.nypost.com/seven/06022008/postopinion/opedcolumnists/cap__trade__why_its_tax__spend_113509.htm
According to the New York Post, a cap-and-trade bill would impose an average of more than $80 billion in new energy taxes every year. It would turn carbon dioxide into the new tobacco--a "vice" that Uncle Sam profits from in the name of combating.


Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this and other environment topics, visit The Heartland Institute's Web site at http://www.heartland.org and PolicyBot, Heartland's free online research database.

If you have any questions about this issue or The Heartland Institute, you may contact me at 312/377-4000 or zpino@heartland.org.