NCPA - National Center for Policy Analysis

SENATE CLIMATE BILL WOULD BE COSTLY, INEFFECTIVE

November 2, 2007

A global warming bill on the move in the U.S. Senate would needlessly slow economic growth and reduce the nation's ability to pursue other programs with bigger payoffs in terms of improved human health and welfare, according to H. Sterling Burnett, a senior fellow with the National Center for Policy Analysis.

Under the bill:

  • The government would institute a "cap and trade" system which puts a cap on total emissions, and then auctions or gives allowances to the affected industries, allowing them to emit carbon dioxide at certain levels.
  • Companies are also allowed to trade their emission allowances among themselves, so that companies that can cost effectively cut emissions more than their allowed amount can sell their excess emission credits to others.

Burnett noted that an analysis of cap and trade proposals in general by the Congressional Budget Office estimated costs to the economy in tens of billions and perhaps hundreds of billions of dollars annually and concluded that the poor would bear the brunt of resulting higher energy prices.

Meanwhile, the European Union's cap and trade system has been a failure:

  • After implementing their system several years ago, energy prices increased to levels that forced the EU to issue more generous allowances, making the credits virtually worthless.
  • As a result, their emissions continue to increase, rising by 1 to 1.5 percent in 2006.
  • By contrast, the United States last year experienced a 1.3 percent decrease.

Increasingly scientists are advocating geo-engineering approaches, as more immediate, cost-effective ways to reduce warming, says Burnett.  And politicians and analysts world- wide are coming to embrace the need for adapting to future warming.

Source: "NCPA: Senate Climate Bill Would Be Costly, Ineffective," National Center for Policy Analysis, November 1, 2007.

 

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