The Congressional Budget Office (CBO) and U.S. Environmental Protection Agency (EPA) have each released new reports showing global warming legislation would inflict serious economic punishment on American consumers.
Moreover, the economic consequences of carbon dioxide caps would be even worse than CBO and EPA predict. Each agency assumed carbon dioxide reductions would be achieved through an immediate and comprehensive expansion of nuclear power production, instead of far more expensive wind and solar power. In the real world, no such expansion of nuclear power production is likely to occur.
Comparing Alternative Bills
EPA analyzed three bills that would cap and trade greenhouse gas emissions. The least restrictive, sponsored by Sens. Jeff Bingaman (D-NM) and Arlen Specter (R-PA), would require trimming U.S. emissions by less than 4 percent by the year 2050. A more stringent bill, by Sens. Joe Lieberman (I-CT) and John McCain (R-AZ), would require reductions in U.S. emissions of nearly 16 percent by 2050. One of the most restrictive bills, introduced by Lieberman and John Warner (R-VA), would force businesses and consumers to cut their emissions 44 percent by 2050.
Only the Lieberman-Warner bill would mandate reducing emissions to or below the targets set in the Kyoto Protocol, which analysts predict would mitigate merely 0.14 degrees Celsius of twenty-first century warming even if the entire world adhered to it (which will not happen, as the developing nations are refusing to cooperate).
According to EPA and CBO, each of these bills would substantially raise energy prices and reduce economic growth. EPA estimated the Lieberman-Warner bill would increase gas prices $0.53 cents per gallon by 2030 and $1.40 per gallon by 2050.
EPA also documented severe economic consequences beyond consumer energy prices. The agency found by 2050 the Bingaman-Specter bill could cost the United States as much as $1.2 trillion annually (in 2005 dollars) from lost economic production. Lieberman-McCain could cost as much as $1.3 trillion annually, and Lieberman-Warner could cost nearly $3 trillion per year.
Highly Unlikely Assumption
Importantly, EPA assumed in its estimates a near-tripling of nuclear power generation. Many of the same activists who are pushing cap-and-trade greenhouse gas legislation ardently oppose nuclear power and vow not to allow any increase in nuclear power production.
Without the dramatic rise in nuclear power forecast by EPA, each legislative proposal would be far more costly than EPA estimates.
Poor Would Suffer Most
The CBO study confirmed greenhouse gas legislation would inflict its most devastating economic consequences on the poorest U.S. citizens. CBO found cutting carbon dioxide emissions by merely 15 percent would reduce the disposable income of the poor by an additional 3.3 percent, compared to a 1.7 percent drop for the richest Americans.
Deeper carbon dioxide cuts would inflict still more severe economic harm on low-income citizens.
Deneen Borelli, an analyst at the National Center for Public Policy Research, said, “These programs are economy killers; they slow economic growth and increase energy costs. Worse, CBO notes that most of the costs to meet these global warming demands will be borne by low-income households.
“Since minorities are disproportionately represented among the poor households,” Borelli continued, “these global warming regulations are racist because they will harm poor blacks, Hispanics, and other minorities the most.”
Myron Ebell, director of energy and global warming policy at the Competitive Enterprise Institute, said, “Congress should look at the experience on the ground in Europe before moving forward with legislation here, since the Europeans have shown that these climate change regulations are expensive, even when they don’t produce results in terms of reduced emissions.”
H. Sterling Burnett, Ph.D. ([email protected]) is a senior fellow of the National Center for Policy Analysis.