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Poznan's Price Tag By: Patrick Bell
Heritage Foundation | Tuesday, December 16, 2008

U.S. Congressman Jim Sensenbrenner, R-WI, is the ranking Republican on the Select Committee on Energy Independence and Global Warming.Rep. Sensenbrenner served as an official U.S. observer to the UN climate talks in Poznan, Poland, and took time to answer the following questions I posed to him this week:

President-Elect Obama has said he wants to commit the U.S. to reducing emissions by 80% of 2005 levels by 2050. What impacts might such a plan have on the U.S. economy?
A: The economic impacts depend on the approach used. However, the effect of the many Democratic proposed “cap-and-tax” schemes would be large. Last year, Democrats in the Senate weren’t able to get a full vote on a less ambitious emissions-reduction bill. Several studies showed that that bill, backed by Sens. Lieberman, Warner and Boxer, would have substantially raised energy costs for the average American by up to 65 percent by 2015 and up to 120 percent by 2050 and cut into our GDP.One study, by CRA International, showed that this approach could evaporate 3.4 million jobs by 2020, and add up to $1,300 in additional household costs by 2015. A study by the Energy Information Administration showed electric bills could rise by $723 by 2030. And the Environmental Protection Agency said GDP growth could slow down by up to 3.8 percent by 2030. Those numbers mean large impacts on American consumers and businesses.A “cap-and-tax” system will take money out of taxpayers’ wallets and put it in government coffers. This is not the approach we need right now, especially when our economy is ailing.

Q: What is your sense at the U.N. climate talks in Poznan in terms of the willingness of other countries to bind themselves to new mandatory targets in tough economic times?
A: I have had discussions here in Poznan with representatives of many countries, including China and India. At this time, India and China will not commit to binding reductions. Other nations, such as those in the European Union, are also reconsidering their views as they confront their own economic problems.

Q: Why do you call cap and trade, “cap and tax”?
A: Because when it walks like a duck and quacks like a duck ….. The scheme results in shifting private capital to the public sector, and that fits the definition of a tax. Some politicians don’t want to tell you that they are taxing you. But what some call “cap-and-trade” is simply a tax that’s buried deep in your electric bill or added to your gasoline costs. People won’t see a line that says “global warming tax,” but they’ll be paying it nonetheless. I think we need to be honest about what this proposal truly is: a tax on carbon.

Q: Do you think it is in the best interest of the United States to sign onto a new international emissions agreement without similar commitments from India and China?
A: Absolutely not. In fact, studies by Battelle and others show that without binding and verifiable emission reductions by the developing nations as well as the developed nations, greenhouse gas emissions will only continue to increase dramatically. Furthermore, if China and India don’t pay the additional energy costs associated with emissions reductions, their manufacturers will have a competitive advantage over their American counterparts. We are already struggling with outsourcing, but if we raise our energy costs by taxing carbon, manufacturers will have more incentive to relocate overseas. That’s not fair to our industries and their employees. Lastly, international participation is absolutely critical for any international agreement to pass the Senate. When I led the House delegation to Kyoto, Japan in 1997, the Senate passed a resolution by a 95-0 vote instructing President Clinton not to sign any agreement that didn’t include international participation. The Kyoto Protocol didn’t, and as a result, President Clinton never submitted it to the Senate for ratification.

Q: Some are skeptical of the environmental benefits of “carbon offsets.” What potential pitfalls do you see with allowing the importation of international offsets if the U.S. were to adopt a cap and trade program?
A: Offsets do not necessarily result in emission cuts.European nations that rely on offsets are simply outsourcing their emission cuts to other nations. Studies have shown that the EU has not reduced its greenhouse gas emissions, despite the implementation of its own cap-and-tax system. Offsets are part of the problem. In many cases, the efficacy of offsets is questionable, since there is no way to guarantee that the projects and programs they fund weren’t going to exist anyway.

Mr. Bell is a U.S. Fulbright Fellow to Austria, and MPA student at Seattle University.

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