President-elect Barack Obama has pledged to force electricity prices to “skyrocket” and to “bankrupt” any new coal-fired power plants in an effort to reduce greenhouse gas emissions, according to an interview with the San Francisco Chronicle that surfaced November 2.
Wants Higher Prices
With the planned imposition of strict limits on carbon dioxide emissions, electricity providers would have to purchase prohibitively expensive alternative power from sources such as wind and solar. Obama pledged he would not allow electricity providers to use less-expensive nuclear power or clean coal technology any time in the near future.
As a result, said Obama, “I’m capping greenhouse gases, coal power plants, natural gas, you name it—whatever the plants were, whatever the industry was, they would have to retrofit their operations. That will cost money. They will pass that money on to consumers under my plan of a cap-and-trade system. Electricity rates would necessarily skyrocket.”
Bankrupting a Major Industry
Pressed as to why he would not explicitly ban coal-fired power plants, Obama responded, “If somebody wants to build a coal-fired plant, they can. It’s just that it will bankrupt them,” under his cap-and-trade restrictions.
Obama repeatedly emphasized his cap-and-trade plan will make coal power unfeasible, thus bankrupting new coal plants and making coal a poor energy investment.
Chris Horner, a senior fellow at the Competitive Enterprise Institute, applauded Obama’s honesty about his cap-and trade scheme, though he thinks it is an altogether misguided policy.
“I think it was the first intellectually honest thing we have heard from a politician about cap-and-trade for some time, possibly ever,” Horner said. “Its impact would, if it worked, chase coal from the market. That’s the intent behind cap-and-trade. … It is a dumb idea, and a potentially tragic one.”
The Obama cap-and-trade plan would set a national cap on the amount of carbon dioxide emissions industries could produce. The government would then auction off emission allowances that could be traded or sold.
At that point, if a manufacturer, electricity provider, agricultural enterprise, or any other business seeks to engage in any economic activity that produces carbon dioxide emissions, it would have to purchase credits adding up to the amount it wants want to produce.
Kenneth Green, a resident scholar at the American Enterprise Institute, points out while Obama’s proposal would indeed cut U.S. carbon dioxide emissions, it also would destroy much of the economy.
“I think it is refreshingly honest of the president-elect to admit that the aggressive greenhouse gas reduction targets he’s planning would render coal power plants unprofitable and essentially wipe out this sector of the economy,” said Green.
“This is precisely the kind of thing Americans need to understand: One side-effect of Obama’s cap-and-trade plan is the elimination of about 83,000 mining-related jobs, 60,000 coal-energy power plant jobs, 31,000 coal transportation jobs, and the tens of thousands of indirect jobs that produce products used by the coal sector,” Green added.
Public Acceptance in Doubt
Once the American public understands electricity and other energy-related costs will skyrocket, a strong political backlash will develop, says Myron Ebell, director of energy and global warming policy at the Competitive Enterprise Institute.
“As gasoline prices increased this summer, Obama said that the problem wasn’t high gas prices, but rather the suddenness of the increase. [He said] people were going to have to pay higher prices in order to stop global warming, but prices needed to go up gradually so that people could get used to them,” said Ebell. “However, after public anger over high gas prices exploded this summer, both candidates stopped talking about global warming or cap-and-trade.”
Jobs in Peril
James M. Taylor, senior fellow for environmental policy at The Heartland Institute, says Obama’s cap-and-trade plan is dangerous to a staggering economy.
“The U.S. coal industry can supply the United States with cheap, abundant, domestically produced energy, yet electric bills are skyrocketing because of the push to use more-expensive sources of energy at a time when the U.S. economy is in crisis and needs all the help it can get,” observed Taylor.
“Global temperatures are no higher today than they were two decades ago, so it doesn’t make any sense at all for politicians to destroy tens of thousands of jobs and push up energy prices significantly higher by rushing to impose rash, drastic laws in response to speculation about an alleged potential problem that has yet to show any signs of actually occurring,” Taylor added.
‘Absolutely Atrocious Policy’
Green points out while Obama’s emissions policy will likely reduce U.S. carbon dioxide emissions, doing so would have only a minimal impact on global emissions and on temperatures.
Accordingly, the plan would create little progress environmentally—ostensibly the goal of the proposal—while crippling an important part of U.S. industry and energy production.
“Cap-and-trade is an absolutely atrocious policy for reducing greenhouse gas emissions, [and] will do far more harm than good. The small amount of emission reductions we get will come at a high cost, and as China and India are doing nothing, the amount of avoided climate change will be too small to measure,” said Green.
“A better policy would be a very modest, revenue-neutral carbon tax, but such a policy is not nearly as stringent as what Obama seeks, and would almost certainly turn into just another tax grab,” Green concluded.