Cap-and-Trade: Environmental Saving Grace or National Energy Tax?
As our economy continues to struggle, Wyoming families are tightening their belts and preparing for an expected summer of increased energy costs. At the same time, Democrat congressional leaders in our nation’s capital continue to work to ram through the largest tax ever enacted on America’s consumers. Either common sense has flown out the window, or someone missed a memo. This is not the time to raise the cost of living on hard working Americans.
The House has already passed a bloated global warming bill, and a handful of Senators are demanding that body follow suit. Whether you believe that humans cause climate change, that it is a natural occurrence, or that it doesn't exist at all, the legislation and regulations being proposed in Washington to deal with it will have a very real, lasting, and economically detrimental impact on us all.
The Devastating Economic Impacts of the Democrat’s National Energy Tax
On June 26, 2009, the House passed the Democrat’s bill creating our nation’s first “cap-and-trade” system for the control and reduction of carbon dioxide emissions. As currently written, however, this ill-conceived measure is nothing more than a “national energy tax.”
It works like this: Under a cap-and-trade system, the government will set an overall cap on how much carbon dioxide our nation emits into the atmosphere. Next, companies or individual facilities that emit CO2 as a function of manufacturing, energy production or agricultural work are issued credits – essentially, licenses to emit carbon dioxide, based on how large they are and the industry in which they work. If a company comes in below its cap, it has extra credits which it may trade with other companies. If it exceeds its cap, it must purchase additional credits.
What does this mean for the average consumer? Imagine you run a bakery, and the government passed a law saying that you had to pay a new fee every time your oven hit a certain temperature, or was baking for a particular amount of time. To offset this cost, you would be forced to increase the price of your cakes and cookies. In basic terms, cap-and-trade system would have the same effect.
Higher costs to create energy by American industries will be passed directly on to the American consumers who use it. Further, these increased costs will disproportionately impact lower-income families and the working class. This proposal will have a devastating impact on the price at the pump and utility bills. It will also dramatically hinder Wyoming coal, oil, and natural gas producers and their employees, and energy industry and wreak havoc on family budgets, small businesses and family farms.
Let’s look at Wyoming’s agriculture industry as an example. Agricultural production is an energy intensive industry, so it is particularly affected by fluctuations in energy prices. When the price of energy goes up even a little bit, Wyoming’s farmers and ranchers feel the pain. As the price of energy increases under the national energy tax proposed by President Obama and Congressional Democrats, so too will the prices for seed, equipment, machinery, steel and other supplies needed for agriculture operations.
Last year, as a direct result of high fuel prices, the price of food at the grocery store climbed higher and faster than at any time since 1990. Imagine what will happen to food prices when the Democrat’s national energy tax takes effect. Not only will every American pay more for energy under the Democrat’s national energy tax, but every American will pay more for bread, milk, and sugar. That’s a pretty serious one-two punch: pay more for a gallon of milk, and pay more to keep it cold.
The agriculture community will likely not even take the biggest hit. Various studies suggest anywhere from 1.8 million to 7 million American jobs could be lost when energy-intensive facilities and the energy industry they depend on must change the way they do business – or relocate overseas – to meet these sweeping new government mandates. Wyoming’s energy-based economy will likely be one of the first to suffer from these job losses.
In Wyoming alone, mining and related industries account for over 19,780 jobs with a payroll of over $1.35 billion. As coal goes, so does the majority of that employment. Technologies are progressing every day to significantly reduce the amount of CO2 coal burning emits into the atmosphere – but those technologies are not yet commercially viable.
The most frustrating aspect of the cap-and-trade proposals being discussed in Washington, however, is the fact that all of the economic sacrifices outlined above will be made for the sake of negligible to no actual environmental benefit. According to the Council of Economic Advisers’ Report to the President, global carbon dioxide emissions will be virtually unaffected by U.S. carbon reductions unless developing countries participate – and they’ve given little indication that they will in any meaningful way. Instead, we will hamstring our own economy while our primary trade competitors reap the benefits.
There is no disputing that our planet experiences climate change – it has been cycling between cooling and warming periods long before we were here to experience the effects. I believe the jury is still out on whether mankind can alter global climate trends. Regardless of if or how much human activities are impacting our climate, it only makes sense to find ways to use our energy resources more efficiently and by the cleanest methods possible. But we shouldn’t do it at such a pace that it further cripples our already struggling economy.
This “cap-and-tax” energy vision assumes that a massive national carbon tax is the only possible solution to create new energy jobs and reduce our carbon footprint.
Both sides agree that America needs to wean itself off of foreign sources of energy. Where we differ is that Democrats seem to believe the best way to do that is to make domestic energy as expensive as possible.
They seem to believe that we can tax, dictate and regulate ourselves to economic prosperity and job creation. They seem to believe, almost in an Orwellian fashion, that by hamstringing our economy, we are strengthening it. They seem to believe that by putting America at a competitive disadvantage, we are improving our strength in the world.
The Obama Administration’s Attempt to Circumvent Congress
On April 2, 2007, the United States Supreme Court ruled that the EPA has the authority under the Clean Air Act to regulate greenhouse gas emissions. The EPA responded to that ruling by issuing an "endangerment finding" for greenhouse gases on December 7, 2009. Several months earlier the agency also proposed new greenhouse gas regulations for new motor vehicles. It is clear that when Congress passed the Clean Air Act, it did not intend to regulate greenhouse gases under that law. For that reason, I am a cosponsor of several legislative initiatives to prohibit the EPA from taking such action. Be assured that I will continue to fight this attempted overreach by the Obama Administration.
Represented by numerous officials from the Obama Administration, the U.S. was one of almost 200 nations present at the Copenhagen negotiations. The resulting “agreement,” referred to as the Copenhagen Accord, is neither a treaty nor legally binding. What it does accomplish is pledge billions of dollars from developed nations – e.g. American taxpayers – to assist still developing countries fight impacts of climate change, all while setting no actual emission targets or enforcement provisions.
Finding Real Solutions to America’s Energy Crisis
Republicans in Congress have an alternative vision on energy; one we believe is shared by the majority of the American people. This vision looks to innovation, conservation, and production as the means to greater economic prosperity, a cleaner environment, real job creation and realistic environmental achievements in the near future. This alternate energy vision is premised on the idea that tax increases never lead to job creation and that arbitrary government mandates only stifle American ingenuity. It is based on the understanding that the government cannot dictate and regulate job creation.
I support a number of energy alternatives that would promote an “all of the above” approach to energy that will help our nation develop energy as cleanly as we can, and as quickly as we can, without raising energy prices. One specific example of the alternative Republican energy vision is the American Energy Innovation Act (H.R. 2828), a bill I, along with over 70 other House Members, cosponsored this Congress. This legislation represents a comprehensive, positive, forward-thinking proposal that will spur the best in American ingenuity and foster market-based approaches to America’s energy needs. It represents a fiscally responsible approach to reducing our dependence on foreign energy, providing a cleaner environment, and putting Americans to work by:
1) Encouraging innovation within the energy market to create the renewable fuel options and energy careers of tomorrow.
2) Promoting greater conservation and efficiency by providing incentives for easing energy demand and creating a cleaner, more sustainable environment.
3) Increasing the production of American energy by responsibly utilizing all available resources and technologies and streamlining burdensome regulations.
We need more, not less, nuclear power. We need more, not less, clean coal technology. We need more, not less, private sector innovation and expansion to provide more energy to power America’s advancement. That is the conservative way.
We do not have to have a one-size-fits-all cap-and-trade regime imposed on the entire country. There is still time to change course. We can, and should, give both federalism and the free-market ingenuity-focused approach to energy embodied in the American Energy Innovation Act a chance.
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