President Obama’s climate plan would have a chilling effect on the economy, not the environment. Here are 11 problems with the plan he outlined this week.
1. Higher energy bills. The Environmental Protection Agency’s carbon dioxide regulations on new and existing power plants would be huge blow to American families. It costs more to heat and cool your home, to cook your meals, to light your home. If the Administration phases out coal, then before 2030, electricity prices would increase 20 percent and cause a family of four to lose more than $1,000 in annual income.
2. Lost jobs. Higher energy prices ripple through the economy. Businesses face higher operating costs and pass those costs on to the consumer. Heritage found that significantly reducing coal, as the President’s climate plan would do, would destroy 500,000 jobs by 2030.
3. Higher natural gas prices would stomp the manufacturing renaissance. Cheap natural gas has led to a manufacturing resurgence in the United States. Both coal and natural gas are important, reliable sources of electricity generation, and artificially shrinking the supply of coal would put upward pressure on natural gas prices. Analysis from The Heritage Foundation (in a forthcoming paper) finds that significantly reducing coal’s share in America’s energy mix would, before 2030, raise natural gas prices by 42 percent. The Obama Administration’s war on coal will drive up natural gas prices, and the American manufacturing base will be a casualty.
4. No impact on climate change. Even if the U.S. stopped emitting all carbon dioxide today (virtually halting all economic activity), the Science and Public Policy Institute found that the global temperature would decrease by 0.17 degrees Celsius—by 2100. These regulations are all pain no gain.
5. Ambiguous on Keystone XL Pipeline. President Obama said the climate effects of Keystone XL will have an impact on the Administration’s ultimate decision. The reality is that the pipeline’s climate effects are minimal. The Department of State’s environmental review “concludes that approval or denial of the proposed Project is unlikely to have a substantial impact on the rate of development in the oil sands, or on the amount of heavy crude oil refined in the Gulf Coast area.” Even those who believe climate change is catastrophic note that Keystone XL is only 0.2 percent of the “carbon budget.”
6. No admission of temperatures leveling off and wrong predictions. There is little controversy over the fact that the recent leveling off of world temperatures (over the past 16 years) is real, and it is inconsistent with and unpredicted by Intergovernmental Panel on Climate Change (IPCC) models.
7. Efficiency mandates drive up prices, drive away choice. Businesses and families understand how energy costs impact their lives and make decisions accordingly to be more efficient. They don’t need the federal government telling them how to be more energy efficient, nor do they need subsidies from the taxpayer to prod them along. The government operates on the assumption that Americans are irrational energy users and that energy mandates make consumers better off, but these mandates make us worse off by taking away our choices. They drive up sticker prices of vehicles, appliances, and more—and they reduce product performance.
8. Subsidies for me but not for thee. Politicians love the “all-of-the-above” energy approach because it typically means “subsidize all energy sources and the special interests win.” But American families lose out. When we politicize the economic process by allowing the federal government to highly influence decisions and investments, the incentive to lobby for those handouts is greater, and the incentive to innovate, lower costs, and rely fully on private investment is substantially weakened. Investment is diverted to projects that have higher political rates of return instead of economic returns. President Obama took credit for the oil and gas production that’s occurring despite his policies—not because of them—and then chose to call for the elimination of subsidies that encourage fossil fuel consumption. We SHOULD get rid of oil subsidies and ALL subsidies, but largely what the President is calling for is removing broadly available tax credits and expensing options. Removing them would be a targeted tax hike that would destroy jobs and discourage energy production.
9. Pretending China and the developing world will cut emissions. President Obama made clear that he did not want to cripple the economic growth of the developing world and said these countries should usher in cutting-edge technologies that would dramatically improve their standards of living. What the President failed to acknowledge, however, is that such a productive future relies heavily on coal. According to a recent report from the World Resources Institute, there are plans to build nearly 1,200 coal-fired power plants in 59 different countries totaling more than 1.4 million megawatts. China and India alone account for 76 percent of the proposals.
10. Hides Obama’s anti-nuclear policy behind pro-nuclear rhetoric. The President likes to portray himself as pro-nuclear energy, because his CO2 reduction goals simply cannot be met without nuclear energy. The truth is, however, that his policies do not match his rhetoric. His decision to terminate—perhaps illegally—the Yucca Mountain nuclear waste project without any backup plan has introduced significant uncertainty into the nuclear industry. And while existing nuclear regulations and regulatory agencies do a good job of protecting public health and safety at existing plants, they do not efficiently permit new reactors or allow new reactor technologies into the marketplace.
11. Bypasses Congress and the American people. One of the most disturbing elements of the President’s plan is his willingness to use unilateral executive actions to achieve his political objectives. Congress and the American people have rejected attempts to limit carbon emissions on numerous occasions, as they understand that the costs of such schemes far outweigh the benefits. Nonetheless, the President has chosen to ignore the will of the people and subject them to these very costly and unnecessary regulations.
The President is right to say that we can have economic growth and an improved environment. But this isn’t the plan to do it.
Nicolas Loris, an economist, is a Policy Analyst at The Heritage Foundation . http://www.heritage.org/ Roe Institute for Economic Policy Studies. Loris researches and writes about energy prices and other economic effects of environmental policies and regulations, including climate change and “cap and trade” legislation. He also articulates the benefits of free market environmentalism.