• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • Why Environmentalists and Energy Producers Prefer Cap and Trade

    The Politico has a story today on the Warner/Lieberman cap-and-trade bill expected to win floor consideration later this spring. The article focuses on whether or not the bill should include a cap on the price of carbon credits, and whether or not credits should be given away, or auctioned off to companies. If the cap and trade system is to be in any way effective (and so far Europe’s cap and trade system has been a complete failure), then the issues covered in the Politico article are irrelevant. Whether they are given away or auctioned off, any costs born by manufactures and utility companies will be passed on to the American consumer.

    Cap and trade is nothing more than an energy tax in disguise. It works by reducing the demand for energy by increasing its price. It is a regressive tax, as low-income households spend a larger share of their income on energy. The genius of cap-and-trade as opposed to an honest carbon tax, is that the tax is hidden. Instead of a line on a home heating bill itemizing the tax, cap-and-trade hides the costs of reducing carbon emissions through complex transactions that the public never sees. The costs to the economy are real. Heritage calculations show under the Warner/Lieberman bill:

    • Total GDP (adjusted for inflation) losses are at least $1.5 trillion and realistically could grow to $4.8 trillion by 2030.
    • Single-year GDP losses hit at least $136 billion and realistically could exceed $400 billion.
    • Job losses exceed one-half million annually before 2030 and may approach one million in some years.
    • The annual cost of emission permits to energy users will be at least $390 billion by 202 and could exceed $690 billion by 2030. To put these numbers in perspective, taxpayers spent $43 billion on the Department of Homeland Security and $549 billion on the Department of Defense in 2007.
    Posted in Energy [slideshow_deploy]

    Comments are closed.

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.

    ×