NCPA - National Center for Policy Analysis

Negative Impact of Proposed Clean Power Act (S. 556)

December 18, 2001

The proposed Clean Power Act of 2001 (S. 556) would lump carbon dioxide (CO2) in with mercury, nitrogen oxide and sulfur dioxide -- air pollutants regulated by the Environmental Protection Agency (EPA) --and require power plants to reduce emissions of these gases via a "cap-and-trade" mechanism.

The government would determine the total amount of allowable CO2 emissions, then auction "emission rights" or credits to emit CO2 to energy producers, and permit them to trade these allowances.

However, CO2 is a naturally occurring gas, not a pollutant. Thus many analysts view its inclusion as an attempt to implement the Kyoto Protocol. Yet according to the National Center for Atmospheric Research, even if the Kyoto targets for greenhouse gas emissions were met, it would have no measurable effect on global warming.

  • Power plants would have to reduce CO2 emissions to 1990 levels.
  • The EPA forecast that the bill would raise electricity prices in 2015 by 32 to 50 percent.
  • The Energy Information Administration (EIA) estimated S. 556 would reduce gross domestic product (GDP) by 0.8 percent, or about $100 billion, in 2007, with a loss of about one million jobs.
  • By 2020, the EIA estimates electricity prices would rise 33 percent and natural gas prices more than 20 percent.

Indeed, a 1999 NCPA study estimated that cutting CO2 emissions to 1990 levels would reduce U.S. GDP between 2.7 percent and 3.7 percent by 2010 (see Figure).

Finally, a study sponsored by the National Black Chamber of Commerce and the U. S. Hispanic Chamber of Commerce estimated that meeting Kyoto's emission reduction goals would cost up to 3.2 million jobs, with almost half of them lost by Hispanic and African-American workers.

Source: H. Sterling Burnett (NCPA senior fellow), "S. 556: A Backdoor Attempt to Implement the Kyoto Protocol," Brief Analysis No. 386, December 18, 2001, NCPA

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