Commentary - The High Cost of Hot Air
Friday, October 9, 2009 | SowegaLive The High Cost of Hot Air
By Benita M. Dodd
President John F. Kennedy once noted, “The great enemy of the truth is very often not the lie, deliberate, contrived and dishonest, but the myth, persistent, persuasive and unrealistic.” Ne'er a truer word was spoken as Washington's attention turns to proposed cuts in the nation's greenhouse gas emissions.
The moves to mandate reductions in greenhouse gas (GHG) emissions defy common sense, science and technology. But to their misguided proponents, these moves are supposed to reduce pollution, promote U.S. energy independence, significantly improve health, security and the economy and protect “massive portions of the infrastructure of the United States, including critical military infrastructure ... at risk from the effects from climate change.” And oh, yes: Cure the common cold.
The Senate is considering the 821-page Clean Energy Jobs and American Power Act that, by 2050, would require that GHG emissions not exceed 17 percent of 2005 levels. The House passed the 1,480-page American Clean Energy and Security Act, known as Waxman-Markey, which also aims to cut emissions 83 percent below 2005 levels. Both bills employ a cap-and-trade mechanism, whereby the government restricts the total amount of emissions and companies buy or sell permits to emit carbon dioxide. The “cap” tightens over time to reduce total emissions.
Not to be outdone by legislation, the federal Environmental Protection Agency has announced its planned regulation. The EPA is piggybacking on the U.S. Supreme Court ruling stating that “the EPA has statutory authority to regulate emission of such gases from new motor vehicles,” which the agency interpreted as restrict, and its proposed restrictive fuel-economy rules would take effect next year. Now, the EPA proposes a permit process to regulate GHG from any stationary source emitting at least 25,000 tons per year – power plants, factories and refineries.
“These permits must demonstrate the use of best available control technologies and energy efficiency measures to minimize GHG emissions when facilities are constructed or significantly modified,” the agency states. Two problems: There is no current control technology for carbon dioxide, or EPA definition for “significantly modified.”
The House and the Senate must reach a compromise on their complex bills; the EPA, on the other hand, merely needs to impose its pie-in-the-sky mandate. The challenges arise as the nation tries to meet the mandates, but whether they are regulatory or legislative, the outcome is predictable: an economic disaster with far greater devastation than any environmental disaster we're asked to believe will take place unless policy-makers take action to prevent a 3.6-degree increase in global temperature. How realistic is a pricey mandate aimed at reducing energy use in a growing economy with a growing population and growing needs?
In Georgia and the South, especially, where electricity generation is dominated by the nation's most abundant fuel, coal, energy costs will soar as carbon cap and trade is implemented, along with myriad mandates on energy use and “renewables” production. Gasoline prices will increase; personal income will decline and the cost of living will increase for families – and hardest hit will be low-income families. The cost of doing business and production will increase, and industry and jobs will relocate – not just out of the state, but out of the country. A Times of London columnist notes that while the European Commission worries about holes in its carbon trading system, “It is not carbon that is leaking, but investment. Billions of dollars of potential investment in heavy industry, notably refining and petrochemicals, is moving east in search of lower costs — and carbon trading is making the money drain flow faster.”
The Heritage Foundation analyzed the impact of the Waxman-Markey bill by congressional district for the first 24 years. It's painful. In Georgia, it estimates, the average loss in Gross State Product (GSP) between 2012 and 2035 would range from a low of $425 million in the Third District to $1.26 billion in the Seventh District. The average loss in personal income during that period ranges from $171 million in the Third District to $327 million in the Eighth District. The total estimated losses for the state's 13 congressional districts in 2012 alone: a GSP loss of more than $4.5 billion; a personal income loss of more than $5.5 billion and 51,653 jobs lost. So much for “green job” gains.
There are productive ways to improve the environment. Encouraging investment and research into cleaner, more efficient, reliable energy production – such as nuclear – is smart. Whether by legislation or regulation, depriving Georgians and Americans of income and jobs is not. Nor is driving abroad the economic opportunity this country so desperately needs.
| How the Waxman-Markey Climate Change Bill Would Affect Georgia | |||||||
| Gross State Product | Personal Income | Non-Farm Jobs | |||||
| District | Representative | GSP Loss in 2012 (in Millions) | Average GSP Loss, 2012-2035 (in Millions) | Personal Income Loss in 2012 (in Millions) | Average Personal Income Loss, 2012-2035 (in Millions) | Non-Farm Job Loss in 2012 | Average Non-Farm Job Loss, 2012-2035 |
| 1 | Jack Kingston (R) | -$330.61 | -$658.23 | -$470.49 | -$272.49 | -4,427 | -3,290 |
| 2 | Sanford Bishop (D) | -$284.31 | -$566.05 | -$373.57 | -$216.36 | -3,517 | -2,614 |
| 3 | Lynn Westmoreland (R) | -$213.61 | -$425.28 | -$296.03 | -$171.45 | -2,723 | -2,024 |
| 4 | Henry Johnson (D) | -$378.21 | -$752.99 | -$464.30 | -$268.91 | -4,336 | -3,223 |
| 5 | John Lewis (D) | -$297.35 | -$592.00 | -$439.28 | -$254.42 | -4,160 | -3,091 |
| 6 | Tom Price (R) | -$439.38 | -$874.78 | -$416.99 | -$241.51 | -4,578 | -3,403 |
| 7 | John Linder (R) | -$633.28 | -$1,260.82 | -$529.47 | -$306.65 | -5,263 | -3,911 |
| 8 | Jim Marshall (D) | -$461.99 | -$919.79 | -$565.13 | -$327.31 | -5,009 | -3,723 |
| 9 | Nathan Deal (R) | -$278.11 | -$553.70 | -$368.09 | -$213.18 | -3,466 | -2,576 |
| 10 | Paul Broun (R) | -$352.82 | -$702.43 | -$455.52 | -$263.82 | -3,419 | -2,541 |
| 11 | Phil Gingrey (R) | -$306.10 | -$609.43 | -$398.91 | -$231.04 | -3,696 | -2,747 |
| 12 | John Barrow (D) | -$361.46 | -$719.64 | -$469.72 | -$272.05 | -3,980 | -2,958 |
| 13 | David Scott (D) | -$219.48 | -$436.96 | -$338.26 | -$195.91 | -3,079 | -2,288 |
| -$4,556.71 | -$5,585.76 | -51,653 | |||||
Benita M. Dodd is vice president of the Georgia Public Policy Foundation, an independent think tank that proposes practical, market-oriented approaches to public policy to improve the lives of Georgians. Nothing written here is to be construed as necessarily reflecting the views of the Georgia Public Policy Foundation or as an attempt to aid or hinder the passage of any bill before the U.S. Congress or the Georgia Legislature.
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