State Global Warming Programs Are Budget-Busters

Published March 26, 2003

State governments across the nation are facing record budget deficits. According to the American Legislative Exchange Council, the cumulative deficit now approaches $90 billion. Tough decisions need to be made about what programs to cut and whether or not to raise taxes.

In the middle of this belt-tightening, environmental activists are quietly pushing bills in state capitols that could cost state governments billions of dollars in new spending and billions more in lost revenues. Voters, and even legislators, are not being told the real cost of these programs. By the time they find out, considerable damage may have been done to the nation’s seniors, poor, and middle-income families.

Remember Global Warming?

We all remember “global warming,” the theory popularized by Al Gore that human emissions of greenhouse gases are leading to a gradual warming of the Earth’s atmosphere. Alarmists blame global warming for flooding and droughts, rising sea levels and falling lake levels, and just about any variation on climate that gets in the news.

The Bush administration rejected the Kyoto Protocol, which would have required the U.S. to reduce its greenhouse gas emissions to 7 percent below 1990 levels by 2008-2012. Angry environmental activists turned their attention to state governments, seeking to persuade legislators to pass state-specific greenhouse gas programs. In 2002 alone, 25 states passed or considered legislation regulating greenhouse gas emissions in their states. Most states are debating similar legislation right now.

Typical state programs impose caps on greenhouse gas emissions from utilities, mandate that utilities use renewable resources to generate some percentage of their electrical output, and subsidize conservation programs. California is attempting to force car and truck manufacturers to increase the fuel economy of vehicles sold in that state.

Lots of Pain

Reducing emissions as much as would have been required under the Kyoto Protocol would require the average state to cut emissions by more than 9 million tons per year. According to a new study produced by The Heartland Institute, a typical state would have to spend $530 million a year to enforce laws and subsidize conservation efforts to achieve this.

The direct cost to state governments is only the tip of an iceberg of costs. Higher energy costs reduce the number of jobs and economic activity in states with greenhouse gas programs, meaning lower tax revenues from income and sales taxes. The typical state would lose at least $2.6 billion a year, raising the total cost to a typical state government to $3.2 billion, or 29 percent of a the state’s entire 2001 state revenues.

Obviously, no state can afford to devote 29 percent of its revenues to reducing greenhouse gas emissions. It is equally obvious, then, that states cannot afford to reach the goal set in the Kyoto Protocol on their own.

The enormous cost to the typical state government still understates the real cost to a state’s businesses and consumers. Multiplying the number of tons of emissions a state would need to reduce by the likely cost per ton of switching to alternative fuels and finding other ways to reduce emissions reveals an average annual cost per state of $22 billion, or nearly $10,000 per household.

Imagine, if you can, having to pay $10,000 a year in higher taxes, higher energy costs, and lower wages. Imagine having to pay that amount year after year. What would you have to give up? How many families do you know could take that kind of financial hit?

No Gain

Perhaps the expense would be worth the cost if state efforts to reduce greenhouse gas emissions bring positive results, but they won’t. Reducing greenhouse gas emissions produces little or no benefit to American consumers and businesses. If left unaddressed, by 2060 global warming is likely to have a small positive effect on the U.S. economy (mostly by lowering food costs, heating bills, and construction costs) and a small negative effect on the global community.

The entire concept of global warming caused by human-made greenhouse gas emissions is uncertain at best. Thousands of scientists have signed a petition disputing predictions of catastrophic climate change. (You can read it at They rightly point out that climate fluctuations have occurred throughout recorded history, long before any human generation of greenhouse gases could possibly have been a factor.

Smart Alternatives

Voters and elected officials should seek to steer policy away from the command-and-control regulations favored by professional environmentalists and toward genuinely win-win approaches, such as repealing laws that discourage energy conservation and changing provisions in building codes that restrict innovative design and energy sources. They can encourage the adoption of techniques in farming and forestry that increase the amount of carbon stored in vegetation (a practice called sequestration).

Many state governments cannot pay their bills now. The last thing they should do is adopt laws that will cost billions of dollars and impose an even greater burden on families and businesses. State policymakers must close their ears to the empty and deceptive arguments of environmental activists and look for sensible and fair ways to balance their budgets. Regulating greenhouse gases on a state level is neither.

Greg Lackner is public affairs director for The Heartland Institute. His email address is [email protected].