Obama Risks the Economy for the Sake of His Legacy

July 1, 2013

In a major address on energy and the environment at Georgetown University, President Obama said he will direct the Environmental Protection Agency (EPA) to set emissions standards on power plants -- limits that will drive up electricity costs, tax our economy and slow growth. This, despite the fact that carbon dioxide (CO2) emissions in the United States have dropped 12 percent in the past five years, are down to 1996 levels and may well have peaked, says the Fiscal Times.

His proposal risks undermining the energy cost advantage over Europe and Japan that the United States enjoys today.

  • Since 2005, the European Union and Japan have seen electricity costs jump 40 percent and 20 percent, respectively.
  • In the United States, the price of electricity has dropped 5 percent, giving domestic producers a huge advantage.

European manufacturers are flocking to the United States, attracted by electricity and natural gas costs that run about 50 percent and 75 percent below those at home. Companies like BMW and Austrian steel maker Voestalpine are providing jobs for American workers. Those are the kinds of jobs that Obama has declared to be the top priority for his administration. Unless, apparently, the "legacy" hunt intervenes.

  • The administration wants to set carbon emission limits for our entire power industry, which accounts for about 40 percent of greenhouse gases.
  • The real target iscoal -- which Mr. Obama referred to as "dirtier fuel sources."
  • Coal accounts for some 28 percent of our nation's emissions, but it is plentiful and cheap.
  • It is also especially important to the Midwest -- our manufacturing belt, because of its proximity.

Unemployment remains high, the nation is anxiously eyeing the roll-out of Mr. Obama's sweeping health care program, the financial industry faces sizeable uncertainty because of the evolving Dodd-Frank regulations and the Federal Reserve confronts the challenge of winding down its quantitative easing efforts. It is not the time to tackle another polarizing industrywide program that will likely raise electricity costs directly, and also reduce the power industry's flexibility.

Europeans have seen what high energy costs can do to their economies.  Country after country, faced with high unemployment, has abandoned damaging green policies, to boost growth. Bjorn Lomborg, writing for Slate, notes, "Since 1990, the EU has heavily subsidized solar and wind energy at a cost of more than $20 billion annually. Yet its per capita CO2 emissions have fallen by less than half of the reduction achieved in the U.S. -- even in percentage terms, the U.S. is now doing better."

Source: Liz Peek, "Obama Risks the Economy for the Sake of His EPA Legacy," Fiscal Times, June 26, 2013.

 

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