Waxman Markey Cap and Trade’s Biggest Losers: Wood Products

One of the advantages of The Heritage Foundation’s economic analysis of the Waxman-Markey climate change bill is we can determine out who loses most of all the losers. We’ve detailed the negative impacts cap and trade would have on farmers, manufacturers and construction workers. This time, it’s the wood product industry.

Wood products encompasses everything from logging, sawmills and planning mills, manufacturing veneer and plywood, treating wood products, building wood and mobile homes, building wood containers and pallets, etc. Simply put, it’s everything dealing with wood, and Waxman-Markey hits the industry hard. Wood product employment falls by over 23,000 on average (2012-2035) due to Waxman-Markey climate change legislation. By 2035, cap and trade would reduce the industry by 68,573 people.

The industry is already struggling: “Booming timber towns with three-shift lumber mills are a distant memory in the densely forested Northwest. Now, with the housing market and the economy in crisis, some rural areas have never been more raw. Mills keep closing. People keep leaving. Unemployment in some counties is near 20 percent.”

Allegedly, the forestry industry could collect paychecks from the carbon offset program. If a company believes it’s cheaper not to reduce its carbon footprint, it can pay someone else to do so. For instance, a company could pay a logger not to cut down trees, or they could pay someone to grow trees, since trees absorb carbon. The problem is, it’s highly susceptible to fraud and corruption. This has been most evidenced by the EU’s carbon trading plan. As a result, electricity prices are up, windfall profits are plentiful, and carbon reduction is negligible. Consequently, environmental groups are upset knowing businesses profit, consumers suffer, and there is no chance for environmental change. Even the Italian mafia’s getting involved.

There is also the problem of “proving that emissions cuts are reductions that would not have occurred absent the offset payments is proving difficult. For example, India’s largest exporter of Basmati rice, KRBL, was set to receive several hundred thousand dollars’ worth of CDM credits a year for installing a $5 million generator to produce electricity from rice husks, a renewable energy source. Though the company claimed the biomass generator would not have been installed without funding from the credits, the senior manager at the plant admitted to the British Broadcasting Corp. that KRBL ‘would have done the project anyway.’”

For the logging industry, there is the lost opportunity of cutting down timber to make profit. It’s highly unlikely the offset program would recover the economic costs Waxman-Markey would inflict. And those offsets wouldn’t cover the rest of the wood products industry hurt by cap and trade.

If a tree falls in the woods after policymakers pass cap and trade, would anyone hear it? The loggers won’t, because they won’t have jobs anymore.