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  • CBO Director: There are Costs Involved with Cap and Trade

    Congressional Budget Office Director Douglas Elmendorf testified on October 14 before the Senate Committee on Energy and Natural Resources to discuss the economic effects of reducing greenhouse gas emissions and the effects – most notably the effects of the Waxman-Markey cap and trade legislation. Although Elmendorf felt that Waxman-Markey could greatly reduce the long-term risks of climate change, he acknowledged that “such legislation would also reduce economic activity through a number of different channels.”

    Note: Director Elmendorf’s expertise is budgets and economics, not climate science.

    Some of the channels mentioned the CBO director’s testimony include: shifting production, investment, and employment away from lower cost carbon-based energy industries and carbon energy-intensive goods and services towards higher cost alternatives; reducing productivity of existing capital and labor, reducing household income, discouraging investment both domestically and from international sources, and reducing employment and workers’ real wages.

    Elmendorf made a commonly held assertion that because the economy in 2050 will be twice the size it is today, foregoing 3% of our potential GDP is modest. This ignores the fact that part of the reason the economy continues to grow is because the population continues to grow. For example, better health and medical techniques allows both birth rates to be higher and older adults to live longer. Thus the economy may be twice the size it is today but it also must support a much larger population of people. Second, foregoing potential GDP means lost income opportunities. Income builds wealth because it can be invested in profitable activities. The foregone income could have been re-invested in new technology that could have found a low cost way to reduce emissions rather than higher cost alternative fuel use.

    Our economy is enormous and vastly complex and this is one bill. Table 1 on page 13 of Elmendorf’s testimony shows the reduction ranges in lost economic activity because of cap and trade for select years based on the CBO’s review of other studies. In 2030, gross domestic product loss will be between .4 and 1.1 percent. For the year 2040, the range is .7 to 2.0 percent lost and for 2050 GDP loss would be between 1.1 and 3.4 percent.

    The numbers that the CBO director attests to are in line with estimates done by The Heritage Foundation. Our economic analysis of the Waxman-Markey, which covered the years 2012-2035, found a GDP loss range of .78 percent ($148 billion) for the year 2019 to a high of 2.79 percent ($712 billion) for the year 2031. Single-year GDP losses reach $400 billion by 2025 and will ultimately exceed $700 billion.

    Cumulative GDP losses are $9.4 trillion between 2012 and 2035. And since the emission reduction targets become more stringent – reaching 83 percent below 2005 levels by 2050, the news is only likely to get worse. All because of one very bad bill. Director Elmendorf is right in that the economy will continue to grow, but it will be growing well under its potential.

    Karen Campbell co-authored this post.

    Posted in Energy [slideshow_deploy]

    14 Responses to CBO Director: There are Costs Involved with Cap and Trade

    1. Leon, Durango, CO says:

      Yeah, I saw that testimony on C-SPAN. I was grousing at my TV because the man was lying to Congress right there in front of God and everybody and getting away with it. The science does not exist to prove Global Warming, and yet it has become the common currency. That's just like Evolution. Nineteenth Century junk science that was never proved, evolution is the touchstone for academic approval. You can't get a job in University if you don't agree. That is fascism.

      I am beginning to think that it is already too late for America. Hot revolution is no answer merely because the Left Wing Conspiracy is simply too vast. It has been building for 100 years. Cap and Trade is nothing more than the destruction of our energy industry. The plan was Karl Marx, so then how is it that it is not treason? Our representatives serve foreign interests and ONLY foreign interests. Example, Obama's agreement to fund the International Monetary Fund in its plan to supplant the dollar.

    2. James Richard Tyrer, says:

      I cringe every time that I read "carbon-based energy". The reason that even if human caused global warming does exist, all Carbon Dioxide emissions are not equal. It depends on where the Carbon came from. If the Carbon is contained in a fossil fuel, then, yes, it does increase the amount of Carbon Dioxide in the atmosphere. However, if the Carbon was recently removed from the air by photosynthesis, burning it again does not result in a net increase of the Carbon Dioxide in the atmosphere. So, all Carbon is not equal. Carbon from biomass (including garbage, agricultural waste, manure, and sewage) should not be considered part of the issue and should not be subject to cap and trade.

    3. Don Boyer says:

      Cap and Trade must not be enacted. It is based on the premise that an increase in CO2 causes global warming. A very deep ice core was drilled in Greenland and shows that the earth warms for 27 years then cools for 27 years. The last "warming" year was 1997. Since then the earth has been cooling and will continue to cool until 2024. The amount of CO2 in our atmosphere has not risen in my lifetime (I'm 79). A decrease in CO2 would probably be disastrous for all plant life—plants use CO2 to survive and release oxygen. Al Gore has made over $3million by pushing his idiotic "global Warming" idea. I hope Al freezes his butt this winter.

    4. Randy Dutton, CDR, U says:

      Completely missing from the discussion is that Cap and Trade inhibits the development of over $40 TRILLION in domestic oil production. And that much of our production is shifting overseas to countries not so affected with the regulations.

      And almost all the press avoids discussing the real issue of pollution…CO2 isn't the problem. These are some of the reports and studies that just got released:

      Landmark study re-models soot impact in climate change, rivals carbon

      US researchers have remodeled soot emissions, concluding that soot is causing nearly 60 percent of the global warming impact of CO2, and because soot has a shorter lifecycle than carbon emissions (that can last for up to 100 years), tackling soot offers a “faster win” against climate change than carbon strategies.

      The article, in Nature Geoscience, concluded that previous soot models had not previously accounted for the absorption of reflected sunlight. In possible confirmation of the data, significantly higher soot concentrations are found in the Arctic than Antarctic, and observations in the northern polar region show higher ice-melting rates not previously explained by the carbon emission model of climate change.

      “Between 25% and 35% of black carbon in the global atmosphere comes from China and India, emitted from the burning of wood and cow dung in household cooking and through the use of coal to heat homes. Countries in Europe and elsewhere that rely heavily on diesel fuel for transportation also contribute large amounts,” commented nature.com on the sources of soot emissions.

      UN Climate Change panelists urge focus on bio-char as climate urgency escalates

      In Poland, panelists at the UN Climate Change meeting in Poznan advocated urgent action on climate change mitigation, saying that reductions in SO2 concentrations, which have a cooling effect on the planet although causing acid rain, have unmasked new dangers from black carbon that is trapping heat in the atmosphere and, after falling top the ground, is reducing the reflection of heat by ice and snow. The delegates advocated urgent attention to the potential of biochar as a carbon trapping strategy. Biochar, produced from biomass via a fast pyrolysis process that also yields gas and renewable fuel oils, was profiled last week in the Digest as a carbon-reducing strategy when the renewable carbon-rich substance is buried in the soil.

      Today in Biofuels Digest discussion groups: “The agency singles out the use of ‘biochar”.

      At LinkedIn:

      Arturo Velez, CEO and Founder, Agave Project: “The United Nations Convention to Combat Desertification proposes that the UNFCCC (United Nations Framework Convention on Climate Change) recognize practical efforts to improve soils’ ability to take up and store carbon as a greenhouse gas abatement technology, and include them in the Clean Development Mechanism, currently the main financing and technology transfer vehicle for climate change mitigation projects involving both developing and developed nations. The agency singles out the use of ‘biochar,’ a form of charcoal used extensively by Amazonian Indian cultures as a soil enhancement for centuries, as one means of doing so.

      Researchers find that reducing soot, ozone and HFCs, whle adding biochar, will push back catastrophic climate change by 40 years

      In Washington, researchers led by Nobel Laureate Dr. Mario Molina have found that the “dangerous threshold of 2?C warming” can be pushed back 40 years by reducing non-CO2 climate change agents such as black carbon soot, tropospheric ozone, and hydrofluorocarbons, as well as expanding bio-sequestration through biochar production.

      The scientists are reporting in the Proceedings of the National Academy of Sciences (PNAS) that a binding legal agreement to cut HFC—the Montreal Protocol ozone treaty—has already delayed climate change by seven to 12 years.

      A fast-action strategy presented in the paper is reducing black carbon soot, an aerosol produced largely from the incomplete combustion of diesel fuels and biofuels, and from biomass burning. It is now considered to be the second or third largest contributor to climate change.

      Black carbon is responsible for almost 50 percent of the 1.9?C increase in warming of the Arctic since 1890 as well as significant melting of the Himalaya-Tibetan glaciers that feed the major rivers of Asia, providing fresh water to billions of people. Researchers consider black carbon an ideal target for achieving quick mitigation because it only remains in the atmosphere a few days to a few weeks and can be reduced by expanding the use of diesel particulate filters for vehicles and clean-burning or solar cookstoves to replace those burning dung and wood. With indoor air pollution killing 1.6 million people a year, global action to cut soot emissions would reap major benefits for both public health and climate.

      Ground level or tropospheric ozone doubles as a major climate forcer and health hazard. It also lowers crop yields. A recent study reported that ozone’s damage to crop yields in 2000 resulted in an economic loss of up to $26 billion annually. It is formed by “ozone precursor” gases such as carbon monoxide, nitrogen oxides, methane, and other hydrocarbons, many of which can be reduced by improving the efficiency of industrial combustion processes. Reducing tropospheric ozone by 50 percent could buy another decade’s worth of time for countries to start making substantial cuts in CO2.

      Biochar is one of the few promising “carbon-negative” strategies that can drawdown existing concentrations of CO2. The fine-grained charcoal product is a stable form of carbon, produced from pyrolysis, that can be plowed into soil where it remains for hundreds to thousands of years, also serving as a natural fertilizer.

      • Bio-char from pyrolysis the fastest route to draw down CO2 to safe levels, say expertsIn Washington, Durwood Zaelke, president of the Institute for Governance & Sustainable Development, speaking at the Climate Change & Security At Copenhagen conference at Washington, outlines t…

      • Landmark study re-models soot impact in climate change, rivals carbonUS researchers have remodeled soot emissions, concluding that soot is causing nearly 60 percent of the global warming impact of CO2, and because soot has a shorter lifecycle than carbon emissions (tha…

      • UN Climate Change panelists urge focus on bio-char as climate urgency escalatesIn Poland, panelists at the UN Climate Change meeting in Poznan advocated urgent action on climate change mitigation, saying that reductions in SO2 concentrations, which have a cooling effect on the p…

      • Time Magazine, The Independent (UK) profile pyrolysis of biomass into biochar as CO2-reducing strategyPyrolysis and biochar have surfaced as climate change-fighting techniques in separate reports in TIME and The Independent (U.K.). Both articles point to the rich, dark "terra prete" soils found in the…

      • Biofuels Digest Special Report on Gasification & Pyrolysis: UN Climate Change Panel and bio-charPanelists at the UN Climate Change meeting in Poznan advocated biochar, produced from biomass via a fast pyrolysis process that also yields gas and renewable fuel oils. According to kirhagen,com, ?…

      • Today in Biofuels Digest discussion groups: “The agency singles out the use of ‘biochar”.At LinkedIn: Arturo Velez, CEO and Founder, Agave Project: "The United Nations Convention to Combat Desertification proposes that the UNFCCC (United Nations Framework Convention on Climate Change) …

      And lastly, CO2 is a life essential gas, that increases agricultural production (and most all fluora on Earth) as it increases. More CO2 improves our economy.

    5. Bob, Portland, OR says:

      Leon, telling lies is the main theme of Obama and Pelosie, Reid, Gore, etc.

      Cap and Trade is only a temporary destruction of our energy industry. They will nationalize it and take down to rock bottom, then watch them invest in it and bring it back in full capacity.

      Billionaires all of them.

      Gore could care less about the environment. The carbon issue is a lie and so is the math he used grossly exagerate it.

      Telling the truth needs to come back to America.

      Stand by.

    6. Ham Lake MN says:

      I'm with you Leon in Co! American's have always beaten the odds though. It's never too late.

      It was common folks who started and built this great nation. We need to become the land of the Free and the home of the Brave again.

      My feelings are, "Everything can be done with God's help".

    7. Leon, Durango, CO says:

      Bob, I agree. The Hell of it is that behind the Socialist conspiracy there is a Plutocrat conspiracy the Democratic Party has been duped into serving. Picture a human face and a boot smashing it and it never stops. Where is the CIA? Where is the U.S. Military Intelligence? They have refused to protect us all these years. I wondered what happened to our Cold War Damage Assessment? In fact our Country lost the Cold War because the Left Wing Socialists actually took us over. And all of us cheering how "We Won!"

      Somewhere there are patriotic Americans who know what happened. Are they in the Gulag?

    8. Jerry from Chicago says:

      Cap & Trade is a farce. It will do nothing to end pollution; it will just charge industries that do pollute for "carbon credits", which cost will be passed along to consumers. It's just another way for the government to pick our pockets and take even more control over our lives, using the excuse that "we know what's best for everyone".

      It has been proven by scientists that there are cycles of global warming and global cooling. Since 1999, we have actually been in a period of global cooling. Previously, there was a 9 to 10 year cycle of global warming.

      I don't know about the rest of you folks, but I am nowhere near as concerned about the polar bears as Al Gore seems to be. If Al is so damned concerned, he can afford to round them all up and re-settle them in the Antarctic.

      The dedicated liberals will keep up this kind of nonsense until we stop them. The first thing we must do is vote every one of these people out of office. Under the guise of "doing what's best for everyone" these wackos have turned off the irregation water to California's San Joaquin Valley farms, turning the once fertile Valley into a dust bowl, putting 40,000 people out of work and reducing the food supply. And why? Because they think that the "Delta Smelt", a 2 inch fish is on the verge of extinction. According to them, it's better that the farmers and the farms become extinct.

    9. Duane Phinney Pensa says:

      Cap and Trade is nothing but a redistribution of wealth scheme.

    10. Leon, Durango, CO says:

      Randy, all you need to do is figure out how Al Gore can make millions off carbon particulate filters and you might get the Greenies on board. Saving the Earth has nothing to do with it.

      But then, the Global Warming crisis is just baloney anyway. My bet is that our Earth is due for another Ice Age and these idiots are actually speeding that trend.

    11. mary, ohio says:

      Cap & Trade is the most desrutive bill to ever come before the HOUSE & SENATE. It wll destroy our economey, as well as the average AMERICA CITIZEN to meet their energy needs, food on the table. People like AL GORE, have no ideal, & don't even care what they may do to the our way of life, this is because PEOPLE in his position, Have all Made their MILLIONS, but they want MILLIONS MORE. We are all supposed to be good stuarts of the EARTH, this means giving back as much as you take! Are you giving back, or just taking? Just remember one thing, you cannot take it with YOU! When you are in haydes, you cannot take it back!

    12. Tricia, Arizona says:

      The problem is that too many people buy into the lie that we can do anything to change the climate. There is nothing we can do. It's a lie and the progressives know it's a lie. An evil lie.

    13. Judy, Mass says:

      Do some research into the Copenhagen Treaty. That is where this is all going. If Obama signs onto this Treaty you can kiss our Wonderful America goodbye and our Freedom. You think the Obama health care reform will be damaging. Think again. This will be in addition to Socialism transformed on our Great Land. God Bless our Country.

    14. Pingback: Media Coups and Congressional Hearings « Carrots & Sticks

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