In The News
RR: Acid Rain Myth, Part 2
Tuesday October 27, 2009
RR: Cap-and-Trade Destroys Jobs in Ohio and Michigan
Tuesday October 27, 2009
According to the National Association of Manufacturers (NAM), under Waxman-Markey, “Ohio jobs decline by 79,700 under low cost case and by 108,600 under high cost case. The primary cause of job losses would be lower industrial output due to higher energy prices, the high cost of complying with required emissions cuts, and greater competition from overseas manufacturers with lower energy costs.”
Michigan
According to NAM, under Waxman-Markey, “Michigan jobs decline by 66,600 under the low cost case and 90,800 under the high cost case. The primary cause of job losses is lower industrial output due to higher energy prices, the high cost of complying with required emissions cuts, and greater competition from overseas manufacturers with lower energy costs.”
RR: The Economy and the Stimulus Package
Tuesday October 27, 2009
Posted by David Lungren, David_Lungren@epw.senate.gov:
Inhofe EPW Rapid Response:
The Economy and the Stimulus Package
President Obama promised to "save and create" 3.5 million jobs with the $787 billion stimulus package, but since it passed in February, the economy, according to the Bureau of Labor Statistics, has lost nearly 3 million jobs.
In January, the Obama Administration claimed the $787 billion "stimulus" plan would lead to an unemployment rate of below 8 percent by year's end.The unemployment rate now stands at 9.8 percent.
On Sept. 24, Biden told the nation's governors:"In my wildest dreams, I never thought it [stimulus] would work this well."
According to Politico, "The president's chief economic adviser warned Friday that the nation's unemployment rate could stay ‘unacceptably high' for years to come - a situation that would seriously complicate Barack Obama's ability to convince Americans that he's beating back the recession. ‘The level of unemployment is unacceptably high,' National Economic Council Director Larry Summers said Friday. ‘And will, by all forecasts, remain unacceptably high for a number of years.'" http://www.politico.com/news/stories/0909/27052.html
Monthly job losses reported by the BLS are as follows:
Mar: 652,000
Apr: 519,000
May: 303,000
June: 463,000
July: 304,000
Aug: 201,000 (preliminary)
Sept: 263,000 (preliminary)
Total: 2,705,000
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RR: Cap-and-Trade: Little to No Help on Foreign Oil Dependence
Tuesday October 27, 2009
Fact: The EPA predicts cap-and-trade will barely make a dent in petroleum use.
Some proponents of cap-and-trade legislation argue that it will lead to a new era of energy independence. For example, Rep. Henry Waxman, a sponsor of the House cap-and-trade bill,[i] said that "one of the best ways to accomplish the overall goal is through what's called a cap-and-trade mechanism...We won't have to import so much gasoline and oil from a lot of countries that certainly don't look out for our interests..."[ii]
But an EPA analysis indicates that the cap-and-trade portion of the bill[iii] - the most controversial part - would only very slightly reduce petroleum use (see the purple bar at the bottom of the chart on the left).[iv] The chart on the right shows EPA's projection of greenhouse gas (GHG) abatement, heavily focused on electricity.
RR: Clear Skies analysis vs. Kerry-Boxer analysis
Tuesday October 27, 2009
Posted by David Lungren, David_Lungren@epw.senate.gov
Inhofe EPW Rapid Response:
Clear Skies analysis vs. Kerry-Boxer "analysis"
Clear Skies
- Markup was delayed three times to accommodate the request of Democrats asking for more time.
- Despite complaints over lack of modeling data from the Administration, the Committee received over 10,000 pages of data, far more than Congress received during the 1990 Clean Air Act Amendments.
- 24 hearings were held by the EPW Committee on multi-emissions issues.
- Majority and minority staff were informed of the Committee's schedule and focus on Clear Skies on November 15, 2004.
- Bipartisan staff briefings on the legislation were provided by the Administration and industry and environmental organizations.
- Multiple member to member meetings and discussions occurred.
- Daily bipartisan staff negotiations occurred for five weeks.
- Due to specific requests for a process to develop compromise legislation, the business meeting was delayed two weeks so that extensive negotiations could occur.
- Three bipartisan member meetings were held to discuss a path forward. Numerous one-on-one meetings between chairman and ranking member of air subcommittee.
Kerry-Boxer
- No comprehensive economic analysis of the bill. EPA provided a 38-page narrative to the committee.
- EPA did not do modeling runs on key issues, such as the availability of offsets, nuclear power, and international action by China and India.
- The analysis will not be helpful in providing a comprehensive understanding of the bill's economic impacts jobs and on family budgets.
RR: Kerry-Boxer's Bait and Switch: Electricity Consumers
Tuesday October 27, 2009
Switch: Allowances are insufficient and end early, leaving consumers to fend for themselves.
"[U]nder my plan of a cap and trade system, electricity rates would necessarily skyrocket...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."[ii] -- Candidate Barack Obama
RR: Acid Rain vs. Carbon Cap and Trade
Tuesday October 27, 2009
As the following highlights from the study make abundantly clear, the experience of the Acid Rain program simply cannot be compared to cap and trade for GHG:
"Most importantly, the success of the Acid Rain program did not depend on replacing the vast majority of our existing energy infrastructure with new infrastructure in a relatively short time."
RR: Kerry-Boxer's Bait and Switch: Manufacturing
Tuesday October 27, 2009
Posted by: David Lungren David_Lungren@epw.senate.gov
Inhofe EPW Rapid Response
Kerry-Boxer's Bait and Switch: Manufacturing
Bait: "The biggest priority is softening the blow on our trade sensitive industries'' - Barbara Boxer
Switch: Allowances are insufficient and end early, leaving workers to fend for themselves.
"It makes no sense for a plant to be closed here because we follow international climate rules and open up in another country that does not follow them[.]" - Sherrod Brown[ii]
As explained previously,[iii] enacting a unilateral cap-and-trade bill will not help the environment and may even increase emissions of carbon dioxide worldwide. Moreover cap-and-trade would put our economy, and especially our manufacturing sector, at a competitive disadvantage versus countries that do not have a cap on emissions.
This phenomenon is well understood, including among some Democrats in the Senate. Senator Brown was one of 10 Democrat Senators who sent a letter to President Obama seeking his help in advocating for sufficient support for the manufacturing sector in any cap-and-trade bill.[iv] The help is important because all manufacturers will face higher input costs, especially for energy, and many will have to comply directly with the new regulations.
While S. 1733, The Clean Energy Jobs and American Power Act (Kerry-Boxer bill), does not yet specify the precise allocations (there are blanks in the bill), Senator Boxer's staff has said the bill will be modeled after H.R. 2454, The American Clean Energy and Security Act (Waxman-Markey).[v] That bill provides some help in the early years of the program for energy intensive, trade exposed sectors of the economy. As this chart[vi] shows, however, that help quickly evaporates, peaking in the early years and ending completely by 2035.
Waxman-Markey would be a disaster for manufacturing, even with the free allocations included in the bill. Analysis by the National Association of Manufacturers (NAM) shows that economic growth would slow (GDP losses of up to $3.1 trillion from 2012-2030), employment would suffer (up to 2.44 million fewer jobs in 2030), and industrial production would decrease by up to 6.5 percent, which "would make it harder to keep the U.S. economy out of recession or [produce] sluggish growth insufficient to restore job growth."[vii] Moreover, the NAM reported that manufacturing employment would be especially hard hit (up to 740,000 fewer manufacturing jobs in 2030).[viii]
The Kerry-Boxer bill seems to recognize that workers will lose their jobs as a result of the bill because it provides, as the Waxman-Markey bill did, for assistance to displaced workers.[ix]
The bottom line: Promising that workers will be protected and then dropping protection for the manufacturing sector over time is a classic bait and switch.
[i]
Senator Boxer in Environment and Public Works Hearing, July 16, 2009. See coverage of comments here: http://epw.senate.gov/public/index.cfm/press-releases-all?ID=850753f9-802a-23ad-48ea-b618f97ee450.[ii]
"CLIMATE: Key Senate votes hinges on trade protections - Brown" E&E, October 1, 2009. Available here: http://www.eenews.net/eenewspm/2009/10/01/1.[iii]
"U.S. Cap-and-Trade Without International Action: All Pain and No Gain," RPC Energy Facts, July 10, 2009. Available here: http://rpc.senate.gov/public/_files/EnergyFactsInternationalAction.pdf.[iv]
Letter signed by Senators Brown (D-OH), Stabenow (D-MI), Feingold (D-WI), Levin (D-MI), Bayh (D-IN), Casey (D-PA), Byrd (D-WV), Specter (D-PA), Rockefeller (D-WV), and Franken (D-MN). Available here: http://brown.senate.gov/newsroom/press_releases/release/?id=AD9CC0FA-53C2-442C-AB20-EEE0A7572F02.[v]
See "Climate Bill Would Ease Energy Costs, Senator Says," The Washington Post, October 2, 2009. Available here: http://www.washingtonpost.com/wp-dyn/content/article/2009/10/01/AR2009100103908.html?hpid=sec-politics.[vi]
Chart by: John Stoody, Office of Senator Bond. Sources: H.R. 2454 and Peterson Institute for International Economics, 2009.[vii]
"Analysis of the Waxman-Markey Bill "The American Clean Energy and Security Act of 2009," conducted by Science Applications International for the American Council for Capital Formation and the National Association of Manufacturers, pp. 4-5. Available here: http://www.accf.org/media/dynamic/3/media_387.pdf.[viii]
Id.[ix]
See S. 1733, Secs. 311-313.RR: Cap-and-Trade, with or without Nuclear Title, is an Energy Tax
Tuesday October 27, 2009
Posted by: David Lungren David_Lungren@epw.senate.gov
Inhofe EPW Rapid Response
Cap-and-Trade, with or without Nuclear Title, is an Energy Tax
Despite the new national energy tax that cap-and-trade proposals will impose on the American people, its sponsors are hoping that adding a more robust nuclear title will mask the higher taxes and co-opt support from those who support expansion of nuclear-generated power.
Nuclear power has wide support among Senate Republicans who understand that nuclear power, the nation's biggest source of zero-emissions electric power, needs to be part of America's diversified, clean energy future.
But even if a nuclear title is included in a cap-and-trade bill that becomes law, the American people will still face a new energy tax that will destroy jobs.
Cap-and-trade legislation with a major expansion of nuclear power would still cost every family in America more than $1,200 a year, according to a recent Environmental Protection Agency (EPA) analysis.[i] EPA assumed a massive increase in nuclear generation of 150 percent from today's levels in one of its scenarios (#2).[ii] That would mean about 150 additional nuclear plants plus replacement of the vast majority of the 104[iii] current, aging plants. This would be a major change in policy since the United States has not ordered even one new nuclear power plant since 1978.[iv]
The graph below shows the significant increase in nuclear power in EPA's scenario #2.[v] Even with aggressive nuclear expansion, scenario #2 would still end up costing American households up to $1,287 in 2050.[vi]
It is hard to conceive of any nuclear title that could result in more nuclear power plants than this, given construction and time constraints. Thus, we already know from the EPA that nuclear power incentives, while good policy in isolation, cannot make up for imposing a huge new job-killing energy tax on Americans.
A robust nuclear title would not solve other problems with the Kerry-Boxer bill[vii]:
1) Transportation fuels. The Energy Information Administration projects that gasoline prices would skyrocket under cap-and-trade (Waxman-Markey[viii]), reaching up to $5.10 per gallon in 2030 ($5.61 per gallon diesel).[ix]
2) Expensive. Kerry-Boxer is more stringent, and thus likely more expensive, than the House passed Waxman-Markey bill. It has a more aggressive greenhouse gas reduction of 20 percent below 2005 levels by 2020 (Waxman-Markey had a 17 percent reduction), and it would restrict international offsets to half the level in Waxman-Markey.[x] The EPA noted that without international offsets, allowance prices would increase by 89 percent.[xi] EPA has not yet modeled Kerry-Boxer.
3) Manufacturing & Jobs. Manufacturing is harmed under cap-and-trade both by having to obtain permits and by higher input costs. Adding more nuclear to the energy mix could help somewhat with input costs, but it will not help those entities that will be required to obtain allowances. Multiple studies have looked at the job losses caused by cap-and-trade and concluded that America could have millions fewer jobs, even accounting for new green jobs. For more information, see RPC Fact Sheet, "Cap-and-Trade Destroys Jobs."[xii]
4) Still all pain for no gain. During last year's debate on cap-and-trade, EPA published a chart showing that a U.S. cap-and-trade scheme, adopted without international action, would do little to stop (or even slow) the accumulation of global CO2 concentrations. (See chart at left: the red line is without U.S. or international action and the red dotted line is with U.S. cap-and-trade but no international action).[xiii] EPA Administrator Lisa Jackson recently confirmed that observation at a Senate hearing, saying, "I believe the central parts of the [EPA] chart are that U.S. action alone will not impact world CO2 levels[.]"[xiv] For more information see RPC Fact Sheet "U.S. Cap-and-Trade Without International Action: All Pain and No Gain."[xv]
Bottom Line: Cap-and-trade, even with a robust nuclear title, is still a massive energy tax.
[i]
"EPA Analysis of the American Clean Energy and Security Act of 2009, H.R. 2454 in the 111th Congress," June 23, 2009 ("EPA study"). Available here: http://www.epa.gov/climatechange/economics/pdfs/HR2454_Analysis.pdf.[ii]
EPA Study, p. 10.[iii]
CRS Report RL33558 "Nuclear Energy Policy," April 6, 2009. ("CRS Report") Available here: http://www.crs.gov/Pages/Reports.aspx?ProdCode=RL33558.[iv]
CRS Report.[v]
EPA study, p. 10.[vi]
EPA study, p. 13.[vii]
S. 1733, The Clean Energy Jobs and American Power Act.[viii]
H.R. 2454, the American Clean Energy and Security Act of 2009.[ix]
"Energy Market and Economic Impacts of H.R. 2454, the American Clean Energy and Security Act of 2009," August 2009, p. 14. Available here: http://www.eia.doe.gov/oiaf/servicerpt/hr2454/pdf/sroiaf(2009)05.pdf.[x]
"A Summary of the Clean Energy Jobs and American Power Act," by EPW majority staff, p. 10. Available here: http://www.epw.senate.gov/public/index.cfm?a=files.serve&file;_id=FBC5A0E4-96B6-401D-9B25-7D585BF39E7A&b;=fbc5a0e4-96b6-401d-9b25-7d585bf39e7a[xi]
EPA study, p. 40.[xii]
Available here: http://rpc.senate.gov/public/_files/CapandTradeDestroysJobs.pdf.[xiii]
"EPA Analysis of the [Lieberman-Warner] Climate Security Act of 2008," p. 192. Available here: http://www.epa.gov/climatechange/downloads/s2191_EPA_Analysis.pdf.[xiv]
Before the Senate Environment and Public Works Committee. See EPW minority staff press releases: http://epw.senate.gov/public/index.cfm/press-releases-all?ID=564ed42f-802a-23ad-4570-3399477b1393&Region_id=&Issue_id= and http://epw.senate.gov/public/index.cfm/press-releases-all?ID=5c511c3c-802a-23ad-4fbe-c237ea9d5aca&Region_id=&Issue_id=.[xv]
Available here: http://rpc.senate.gov/public/_files/EnergyFactsInternationalAction.pdf.RR: Consumers, Not Polluters, Pay for Cap-and-Trade
Tuesday October 27, 2009
Inhofe EPW Rapid Response
Consumers, Not Polluters, Pay for Cap-and-Trade
Myth: "Polluters" will pay for cap-and-trade
Fact: Consumers will pay for cap-and-trade
One of the new talking points for proponents of cap-and-trade is that it makes polluters pay.
"At a time of great fiscal challenges, this legislation is paid for by the polluters who currently emit the dangerous carbon emissions..."[i] - President Barack Obama
This claim has been refuted by the Congressional Budget Office (CBO).
"[A]t any point in which we are putting a price on carbon emissions, that would be passed through to the cost that consumers face on energy products but also all other products that are made using fossil fuels...I don't know if there are any goods that use no energy in their production. It seems to me unlikely."[ii] - CBO Director Douglas Elmendorf
"Q: ‘Is it possible to design a system using the revenue it generates to ensure no net increase in the overall burden to consumers?' A: ‘No, sir.'"[iii]
- CBO Director Douglas Elmendorf, answering a question by Senator Grassley
"Under a cap-and-trade program, firms would not ultimately bear most of the costs of the allowances but instead would pass them along to their customers in the form of higher prices."[iv]
- CBO Senior Advisor Terry Dinan
Before this new talking point was developed, even proponents of cap-and-trade were more candid about who would pay for a cap on carbon emissions.
"[U]nder my plan of a cap and trade system, electricity rates would necessarily skyrocket...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."[v] -Candidate Barack Obama
"Cap-and-trade would increase the cost of energy...[T]hat's necessary if you're going to change how people use energy."[vi] -Treasury Secretary Tim Geithner
"If we raise the price of energy, which will happen if we're reducing the amount of carbon emissions..."[vii] -Rep. Henry Waxman
"Under a cap-and-trade program, firms would not ultimately bear most of the costs of the allowances but instead would pass them along to their customers in the form of higher prices."[viii]
-Peter Orszag, then Director of the CBO, now head of the Office of Management and Budget
"Cap-and-trade is a tax and it's a great big one."[ix] -Rep. John Dingell
"Whether you call it a tax, everyone agrees that it's going to increase the cost to the consumer[.]"[x] -Rep. Charlie Rangel
[i] Statement at a press conference, 6/23/09. Available here: http://www.washingtonpost.com/wp-dyn/content/article/2009/06/23/AR2009062301656.html.
[ii] Testimony before the House Ways and Means Committee, 3/26/09. Available here: http://republicans.waysandmeans.house.gov/News/DocumentSingle.aspx?DocumentID=116686.
[iii] Testimony before the Senate Finance Committee, 5/7/09.
[iv] "The Distributional Consequences of a Cap-and-Trade Program for CO2 Emissions," statement before the House Ways and Means Committee, 3/12/09.
[v] Interview with the San Francisco Chronicle, January 2008. http://www.breitbart.tv/?p=211663&comments=1.
[vi] Testimony before Senate Finance Committee, 3/4/09.
[vii] Interview on the Tavis Smiley show, 4/13/09 http://www.pbs.org/kcet/tavissmiley/archive/200904/20090413_waxman.html.
[viii] "Implications of a Cap-and-Trade Program for Carbon Dioxide Emissions," Statement before the Senate Finance Committee, 4/24/08. http://www.cbo.gov/ftpdocs/91xx/doc9134/04-24-Cap_Trade_Testimony.1.1.shtml.
[ix] Question during hearing in the Energy and Environment subcommittee of the Energy and Commerce Committee, held on 4/24/09. http://www.youtube.com/watch?v=muX-uRKOGLY.
[x] "Waxman, Boucher Signal Deal On Cap-And-Trade Measure," Congress Daily PM, 5/14/09.
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