Concerns Loom Large Over Global Warming Bill

Posted on Wed 04/29/2009 by

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waxman_markey090428Nick Loris.

Republicans and Democrats alike are voicing their concerns over the Clean Energy and Security Act that includes a renewable portfolio standard, federal spending for clean energy technology, and above all else, a cap-and-tax program that would attempt to reduce carbon dioxide emissions.

Introduced by Chairman Henry Waxman (D–CA) of the House Energy and Commerce Committee and Chairman Edward Markey (D–MA) of the House Energy and Environment Subcommittee, the bill would have devastating long-term economic effects, which in turn, is causing Members of Congress from both sides of the aisle to raise a number of legitimate concerns. Among their primary concerns are:

Job Losses. Members always want jobs coming in to their respective home states. They may want to believe green job creation will be the answer but believing can only take you so far. When it comes down to it, 85 percent of our energy demand is met by fossil fuels and virtually every Member, including those in the energy committees, faces costly tradeoffs. Take, for instance:

Utah: Congressman Jim Matheson, “sees several ways this bill could result in a huge ‘income transfer’ from his state to those less fossil-fuel dependent.” And he’s absolutely right, but it would be much more than income transferred out of his state. In our analysis of the less stringent Lieberman-Warner cap-and-tax bill, in the year 2025 alone Utah would have lost over 5,000 jobs and nearly $1 billion in GDP. Matheson’s district alone would have lost between 1,375-1,884 jobs.

Indiana: Representative Baron Hill “has a similar problem; not only does his district rely on coal, it is home to coal miners.” As shown by The Heritage Foundation’s Manufacturing Vulnerability Index (MVI) (which measures a state’s direct and immediate vulnerability to an energy tax based on the extent of the state’s manufacturing workforce and its reliance on coal power generation), Indiana would be particularly hit hard, along with the rest of the Midwest.

mvi-map1

Ohio: Another state in the red of our MVI, industries in Ohio, most notably steel plants, would suffer dramatically as a result of this bill. Consequently, Congressman Space and Congresswoman Sutton expressed justifiable concern. Again, The Heritage Foundation’s Center for Data Analysis estimated that the Lieberman-Warner bill would have dire consequences for Ohio’s economy. The study projected state job losses of 21,184 and $4.5 billion in lost GDP for the year 2025.

Texas: Congressman Gene Green of the 29th district of Texas has a number of chemical and petroleum jobs he would see vanish in the near future if a cap-and-trade bill were enacted. His district would lose 1,200 jobs in 2025 while his entire state would lose over 40,000. It is worth mentioning that these are jobs lost after any green jobs are created.

Renewable Portfolio Standards (RPS). What seems to be the second biggest concern is a federally mandated RPS or RES (renewable electricity standard) in which the federal government would mandate to have twenty-five percent of the nation’s electricity from renewable energy by 2025. Put simply, this makes a bad bill extremely worse. Members are recognizing that a cap-and-tax and RPS is an economic one-two punch that would make it very difficult for the economy to stand back up again. Again,

North Carolina: During the Congressional hearings, North Carolina Congressman G. K. Butterfield told Chairman Waxman that “Not only is [a 25% mandate] impractical, it is impossible.” Congressman Butterfield did propose a lower mandate but the suggestions is still bad policy. A federally mandated RES is proposed only because renewables are too expensive to compete otherwise. In effect, Washington is forcing costlier energy options on the public. North Carolina would have lost 15,690 jobs in 2025 from a bill with emission reductions similar to Lieberman-Warner; enacting a bill with stricter emission cuts and paired with an RPS mandate would only cause those numbers to jump higher.

Arkansas: Arkansas’ fate would be similar. The state also has high vulnerability according to our MVI, and Congressman Mike Ross worries his state’s jobs will go overseas. This is surely a legitimate concern. When energy prices increase, so does the cost of doing business, making it advantageous to move elsewhere. Higher energy prices also translate to real money stripped from real families – causing families to face difficult trade offs and make important budgetary decisions. Congressman Ross’s concern that an RPS will increase energy prices even more and hurt the poor in his state is another legitimate concern.

Pennsylvania: Speaking about the Waxman-Markey bill, Rep. Jason Altmire (D-Pa.) recently told Politico, “Any way you do it, it hurts Pennsylvania, especially western Pennsylvania.” Rep. Mike Doyle (D-Pa.) also expressed concerns with an RPS, saying a 25 percent mandate was too aggressive and could not be met by some states. Doyle also mentioned that some states are pushing for nuclear to be included in the list of renewable energy. A federal mandate is troublesome since some energy sources such as wind are more efficient in some parts of the country than others. But in total, these sources of electricity are intermittent and unreliable and thus pose problems beyond the added costs. Furthermore, narrowing down a RPS standard to specific sources of energy crowds out private sector investment on other technologies, perhaps technologies that are more efficient that have not even been invented yet. Pennsylvania, like all other states, comes out on the losing side from a Lieberman-Warner type cap-and-tax bill (22,000 jobs lost and $5 billion in GDP lost). Forcing Pennsylvanians to buy costlier electricity will only make it worse.

One thing should be clear from the Waxman-Markey bill: There are losers and there are bigger losers.

Contributing Author Nick Loris writes at The Heritage Foundation and he is a Research Assistant at The Heritage Foundation’s Roe Institute for Economic Policy Studies.

Read more informative articles at Heritage – The Foundry.

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