McCain-Lieberman Will Be Costly, Energy Department Warns

Published October 1, 2003

The U.S. Department of Energy’s Energy Information Administration (EIA) has released an analysis of the Climate Stewardship Act of 2003, sponsored by Senators John McCain (R-Arizona) and Joseph Lieberman (D-Connecticut).

According to the EIA, the proposed legislation to curtail greenhouse gas emissions would have far-reaching negative effects on the American economy.

By 2025, the average American family can expect to pay $444 more per year for energy as a result of McCain-Lieberman, according to the EIA analysis. The average American will have paid nearly $2,500 to comply with the law, and the nation as a whole will have lost more than $500 billion in gross domestic product, measured in 1996 dollars.

The EIA analysis did offer some hope, however, suggesting McCain-Lieberman and its attendant costs may not be necessary. “The EIA also found that emissions of carbon dioxide per unit of GDP fell by 17.6 percent (from 1990 through 2002),” observed Iain Murray, a senior fellow at the Competitive Enterprise Institute. “Technology has moved to make energy use more efficient, resulting in cleaner energy.”

Compliance with the proposed legislation, modeled closely after the Kyoto Protocol, will stir up a new round of environmental debates, warned the EIA, as nuclear power’s share of the country’s electricity supply would have to rise 50 percent to meet consumer energy demands without an increase in carbon dioxide emissions. Conservation and renewable energy sources will fall far short of meeting America’s energy needs, the report noted.

Confirms Prior Studies

The EIA report confirms the findings of other studies that have concluded curbing carbon dioxide emissions would be economically prohibitive.

According to Wharton Econometric Forecasting Associates (WEFA), implementation of the Kyoto Protocol would cost 2.4 million U.S. jobs and reduce GDP by 3.2 percent–about $300 billion annually.

Moreover, according to WEFA, American consumers would face higher food, medical, and housing costs, and the average household of four would see its real income fall by nearly $3,000 in 2010 and every year thereafter. Energy and electricity prices would nearly double, and gasoline prices would increase by 65 cents per gallon.

The WEFA findings were largely confirmed in a 1998 analysis by the Clinton Energy Information Administration.

Addressing an Uncertain Hypothesis

Assistant Secretary of Commerce James Mahoney told the Senate Commerce Committee more research is needed before Congress imposes carbon dioxide caps similar to those contemplated by McCain-Lieberman. Mahoney told the committee the U.S. currently spends about $3 billion a year on climate change research. Despite that outlay, scientists cannot verify the hypothesis that human activity is causing a long-term warming of the planet.

“The America that Senators McCain and Lieberman want us to live in is a poorer country in every sense of the word,” said Murray. “People will lose thousands of dollars of income they could use to help their households. [They will] travel less, and may even lose their jobs. Environmentalists who think this is a fair price to pay for their unproven theory that global warming will endanger us might also reflect that the EIA estimates that nuclear power generation will increase by 50 percent.

“If current trends persist,” added Murray, “technological progress will have reduced emissions per unit of GDP by 55 percent from 1990 levels by 2025. It might seem wiser to continue along this path, rather than crippling our economy and putting thousands out of work.”

James M. Taylor is managing editor of Environment & Climate News. His email address is [email protected].