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LATEST NEWS
The Senate’s Kerry-Boxer cap-and-trade legislation was voted favorably out of the Environment and Public Works committee in November 2009, but in the absence of all minority committee members. This unprecedented move all but doomed this particular legislative vehicle for future consideration. While few are hopeful that this legislation will be approved in 2010, alternative legislative packages have been discussed by proponents including an effort spearheaded by Sen. John Kerry (D-MA) and Sen. Lindsay Graham (R-SC). Energy legislation has also been approved by the Energy and Natural Resources committee which does not include a cap-and-trade provision per se, but does include a renewable electricity mandate which is premised on similar goals.
On September 30, Sens. Boxer (D-CA) and Kerry (D-MA) released the most up-to-date version of their 801-page answer to House-approved Waxman-Markey cap-and-trade bill. According to reports the differences are minimal except for two points of interest: the Boxer-Kerry bill’s initial reduction target is even more stringent than Waxman-Markey’s (20 percent below 2005 levels by 2020 versus 17 percent). Also, the bill does not say how the emissions allowances will be distributed.
Waxman-Markey’s “Biggest Loser” States
The Waxman-Markey “Cap and Trade” bill that passed the U.S. House on June 26 may see Senate action soon. The economic impacts of this new energy tax legislation are not only devastating to the national economy, but they represent an uneven burden for states.
The burden of paying for this legislation will fall to all Americans, but it will burden some states more than others. Some states will pay higher gas prices than others while some will suffer greater job losses. What accounts for the disparities? Certainly the makeup of local economies plays a role, but the language of the Waxman-Markey bill itself picks winners and losers as the details of permit allocation and other provisions reflect compromise deals with lawmakers and industries. The result is a high cost distributed unevenly and unfairly.
Using state-level data published recently by the Heritage Foundation, we have ranked the states based on four measures of average annual economic loss as a result of Waxman-Markey: job loss, gross state product loss per capita*, electricity cost increases, and gas price increases. Remember, even if your state is not in the top 10, you’re still a loser!
To view a quick glance summary of your state’s results click on your state below. Be sure to visit the Heritage Foundation’s website for more data and information on your state and Waxman-Markey in general. We hope this information will prove helpful to you as you consider Waxman-Markey’s impact on your state.
*Average annual gross state product per capita losses were
calculated using the Heritage Foundation’s average annual gross
state product loss findings for 2012 -2035 and state population
estimates for 2008 and state population projections for 2030 from the
U.S. Census.
On June 26, the U.S. House of Representatives passed the American Clean Energy and Security Act, H.R. 2454, also known as Waxman-Markey. After a contentious and limited debate of three hours, the vote was 219-212. For a roll call of the vote, click here. At 3:09am earlier that day, a 300-page “manager’s amendment” was added to the already near thousand-page bill giving members of Congress virtually no opportunity to grasp the full reach and impact of what they were voting to become law. Minority Leader John Boehner took his customary leader’s privilege of unlimited remarks to at least touch on the most alarming and unexpected provisions in the new amendment. For the engrossed version click here. Proponents hope to see action in the U.S. Senate as early as late summer/early fall.
On May 21, 2009 the House Energy and Commerce Committee passed the American Clean Energy and Security Act of 2009 also known as the Waxman-Markey bill (co-sponsors Rep. Henry Waxman, D-CA; Rep. Ed Markey, D-MA). This legislation calls for an 83 percent reduction of carbon dioxide emissions below 2005 levels by 2050. Like President Obama’s proposal, this plan is more aggressive than the Lieberman-Warner plan and would likely impose greater costs than those detailed below.
For example, a recent study by CRA International for the National Black Chamber of Commerce concluded the legislation would cost the U.S. economy $350 billion and 2.3 million to 2.7 million jobs each year from now to 2030. This is a net loss meaning they took into account all the “green” jobs the bill promises to create. To read that study, click here.
New analysis of the legislation from the Heritage Foundation shows the following negative impacts to farmers:
For more of their analysis, click here.
For a summary of the bill, click here.
To view recent hearings on the bill including testimony from former Vice President Al Gore and former Speaker of the House Newt Gingrich as well as many others, visit CSPAN’s video library.
For more on the expected economic impact, see the Comprehensive Staff Analysis report of the U.S. House Committee on Oversight and Government Reform.
To learn more about how the legislation would affect agriculture and rural communities, click here.
For more on the viewpoints of proponents and the sponsors of the bill, click here.
ALEC Opposes Cap & Trade Bill: House Energy and Commerce Committee passed the American Clean Energy and Security Act of 2009
May 22, 2009
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This legislation will raise energy prices on American consumers, will
cause job loss and will put the
Recent analysis of the legislation by respected and independent CRA International for the National Black Chamber of Commerce concluded that it would cost the U.S. economy $350 billion and 2.3 million to 2.7 million jobs each year through 2030. This is after taking into account the “green” jobs proponents promise to create.
“The zeal to reduce carbon dioxide emissions at any cost at a
time when so many American families are struggling economically is
disappointing,” said
The bill also includes a federal standard for renewable energy use for electricity, an unnecessary and unfair mandate on states. States have developed their own policies on renewable energy and this one-size-fits-all approach will benefit some states at the expense of others because of vast differences in states’ natural resources and conditions.
Introduction Will
On another front, the President released a framework for his own cap
and trade program in his budget plan that he estimates will raise $646
billion in new government revenues. In anticipation of this
presidential priority, Congressional leaders in the House and Senate are
preparing to consider legislation soon. Meanwhile a few states
have adopted their own cap and trade programs and many others are making
preparations to do so. The result is a looming patchwork
development that some are pointing to as justification for a national
program. As the
The pressure is mounting on many fronts, but the big question
remains: what will this cost us and can we afford it? More than
eighty percent of Americans say the economy and jobs are top priorities
compared to only thirty percent who believe global warming is a top
priority.
What is Cap and Trade? A cap and trade policy for greenhouse gases would limit the nation’s greenhouse gas emissions by issuing or auctioning a limited number of permits to those who emit. The purpose of cap and trade is not simply to reduce greenhouse gases but also to raise energy prices so that conventional sources of energy lose their natural cost advantages over alternatives. The President’s Office of Management and Budget Director Peter Orszag testified before Congress that “price increases would be essential to the success of a cap and trade program.” For this and other reasons, many opponents are referring to cap and trade proposals as “cap and tax” proposals since the effect would be a new tax on Americans’ energy. The cap can often be expressed in terms of a percentage reduction from some baseline year’s emissions by a certain deadline. For example, the Lieberman-Warner legislation that failed to pass the Senate in 2008 called for a 70 percent reduction in emissions below 2005 levels by 2050. The President’s new plan goes further requiring an 83 percent reduction in emissions below 2005 levels by 2050. Much of the economic impact research available below is based on the Lieberman-Warner plan. Analysis of the President’s more aggressive approach cannot be undertaken at this time since details have not yet been announced. However, you can expect the economic impacts of the President’s plan to be worse than Lieberman-Warner since it requires even deeper cuts in emissions.
Another element worth noting in a cap and trade proposal is the mechanism by which permits will be distributed. They can be auctioned to the highest bidder or they can be allotted to emitters or both. For example, the Lieberman-Warner proposal would have allotted 40 percent of permits to emitters and auctioned the remaining 60 percent. The President calls for the auction of 100 percent of permits in his plan. This represents an immediate and upfront tax on all emissions.
Does it work?
Northeastern states in the
Proponents often point to acid rain as an example of an effective use of cap and trade policy. This is not a useful comparison, however, since sulfur dioxide is nowhere near as ubiquitous as greenhouse gases and technologies designed to mitigate sulfur dioxide were available on a commercial scale when the acid rain cap and trade program was adopted. Control technologies for greenhouse gases such as carbon capture and storage are still in the research and development stage and no one knows for sure what the timeline will be for large-scale commercial viability. Instituting a cap and trade program that depends on such critical uncertainties is very risky.
What will it cost? A cap and trade program carries many direct and indirect costs. Below you will find various costs expressed in jobs, taxes, energy prices and economic growth. Again, these numbers are mostly based on the Lieberman-Warner plan. The President’s new plan is actually more aggressive than the plan that generated the following estimates.
Job Losses
Taxes
Energy Prices
Economic Growth
Conclusion The purpose of cap and trade is to raise energy prices. All
estimates of previous
View the studies here: The NAM study
Other resources: Institute for Energy Research: Eight Reasons Why Cap and Trade Harms the Economy and Reduces Jobs U.S. Chamber of Commerce on EPA’s plan to regulate greenhouse gases
For more information contact Matt Warner, director of ALEC’s Natural Resources Task Force at mwarner@alec.org.
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