President Obama wants to pay you to support global warming regulation. What he isn’t saying, however, is that his enticement won’t come close to covering what the regulations will cost you.
In his 10-year budget released last week, the President proposed a so-called “cap-and-trade” scheme to reduce greenhouse gas emissions. Under the proposal, 100 percent of the permits to emit greenhouse gases would be auctioned to coal and natural gas-burning electric utilities, industrial plants and other emitters still to be designated. The proceeds from the auctions would then be distributed to individual Americans “to help the transition to a clean energy economy,” according to his budget proposal.
But what does this proposal mean for the average person in terms of actual dollars and cents? It’s difficult to work out the precise financial impacts, but you can get an idea by doing some back-of-the-envelop calculations with some of the facts and figures that have recently been bandied about.
Based on past global warming legislation, like the Lieberman-Warner bill that failed in the Senate last June, a cap-and-trade plan would probably cover about 80 percent of U.S. greenhouse gas emissions -- about 5.8 billion tons based on a total of 7.3 billion tons emitted during 2007.
Assuming that permits are auctioned at a price of $12 per ton – a safety valve price included in past climate bills -- the Obama plan would raise about $70 billion in its first year. Given that President Obama has proposed to spend about $15 billion per year of the auction proceeds on “clean energy” projects, about $55 billion would be leftover for distribution to individuals – that is, every American with a social security number. Dividing the $55 billion among more than 300 million Americans, then, works out to about $180 per person and $720 per family of four per year. It’s not like winning the lottery, but it’s better than nothing -- or is it?
The liberal think tank Center on Budget Priorities and Policy estimated last week that reducing greenhouse gas emissions would cost the poorest families in America $750 per year as higher energy prices ripple through the economy affecting all goods and services. So if the poorest families, who use far less energy than the rest of America, are in a financial hole under the President’s plan, one can easily imagine how the rest of us will end up. Consider the potential consequences on just your electric bill.
The Lieberman-Warner bill would have auctioned only 25 percent of the permits -- not 100 percent as President Obama is proposing. The remaining 75 percent of the credits would have been distributed for free to electric utilities and other designated greenhouse gas emitters. But even under that scheme, Duke Energy CEO Jim Rogers told the New York Times last summer that electricity rates would rise by 40 percent in the first year to cover his utility’s $2 billion outlay for credits. So a 100 percent auction could increase electricity bills for Duke’s 4 million customers by 160 percent -- meaning a $100 monthly electric bill becomes, perhaps, a $260 monthly bill. Based on these calculations, a family of four that pays more than $40 per month for electricity -- that is, every family -- is a net loser under President Obama’s plan.
And those are the potential increases for just your electric bill. Not included are other likely price hikes for goods and services -- gasoline, food, travel, etc. -- that will necessarily be passed along to consumers. As you can readily see, your share of President Obama’s auction proceeds does not need come close to breaking even on greenhouse gas regulation.
Maybe you’re thinking that these extra costs are worth it, as they will be dwarfed by the environmental benefits of tackling the much-dreaded global warming. Think again. There will be no detectable or tangible benefits from reduced greenhouse gas emissions. First, carbon dioxide, the main greenhouse gas targeted by regulation is invisible, colorless and odorless. Since it exists in the atmosphere at levels measured in the parts per million, unless you’re plant that needs CO2 to live, you’re not going to notice it.
Next, there is no evidence that human emissions of carbon dioxide are causing detectable changes, much less any harm, to the climate. (Check out this popular YouTube video I made on this issue.) This means, of course, that there is no evidence that reducing carbon dioxide emissions will have any detectable changes on climate.
Even assuming for the sake of argument that manmade carbon dioxide emissions were changing climate, President Obama’s cap-and-trade bill will still have no detectable impact. First, EPA projects that a maximum clamp down on future U.S. emissions would reduce atmospheric carbon dioxide levels by about 5 percent or less -- a trivial change no matter what you believe about carbon dioxide. Moreover, China and India have vowed not to harm their economies because of global warming -- so their emissions can be expected to soar as they develop and more than make-up for our reductions.
If the economics of Obama’s cap-and-trade rip-off don’t bother you, the fact that the rip-off will also accomplish nothing should give you pause.