Politics & Policy

Bad Time for Green Schemes

Higher taxes to fight global warming would create political and economic disaster.

The numerous energy taxes and regulatory schemes being proposed internationally, federally, and locally in the name of fighting global warming are a dire threat to freedom and prosperity. The costs associated with some of these proposals — both in dollars and lost liberty — are staggering. But the political costs of “being green,” and taxing green, may be just as high.

A recent Gallup poll reveals that the general economic situation is far and away the top concern among voters, and that high energy prices are tied with health care as the third biggest concern. Global warming, as such, doesn’t even register on the list. And related though ambiguous issues like “lack of energy sources” and “environment/pollution” rank near the bottom, registering just 1 or 2 percent.

But that’s not stopping politicians from pursuing feel-good and supposedly “costless” environmental policies that always draw the adulation of the media elites. Governors from both parties are appointing climate commissions while ceding control of the process to liberal outside consultants. (This can lead to some disturbing results, as my friend Paul Chesser at Climate Strategies Watch has been documenting.) Bureaucrats in California have proposed placing radio control devices in thermostats so that the government can decide how hot or cold homes and businesses should be. International negotiators and U.N. officials are touting vast redistributions of wealth under the banner of global warming. And perhaps most disturbing of all, the costly Lieberman-Warner legislation now in the U.S. Senate could come up for a vote in the next couple of months.

If the economy is indeed the top concern of voters, this bill is a surefire political disaster. An analysis commissioned by the American Council on Capital Formation and the National Association of Manufacturers projects the economic impact of the bill by 2030: 3 to 4 million fewer jobs, $4,022 to $6,752 in lower annual disposable income per household, an annual hit to GDP of between $631 billion and $669 billion, and much higher energy prices — 60 percent to 144 percent higher for gasoline and 77 percent to 129 percent higher for electricity.

These figures are all adjusted for inflation. The study also found that lower-income families — people who are least able to absorb higher energy costs — will be the hardest hit.

But these costs are not unfortunate side effects of the bill; they are intended effects. The bill’s key regulatory scheme is called “cap and trade,” which is a complicated, indirect way of levying an energy tax. Instead of charging a set amount for carbon-dioxide emissions, the government would sell a fixed number of permits, with prices set at auction and then determined by trading on Wall Street. This has all the costs of a tax, with price uncertainty and administrative costs thrown in.

Al Gore acknowledged that the House-sponsored energy tax of 1993, which he championed as vice president, contributed to Democratic congressional defeats. Yet while the cap-and-trade scheme helps hide the tax from voters, its purpose remains the same: Make energy much more expensive so that people use less of it.

And what do we buy, environmentally, with this $600 billion hit to the economy?  Basically, nothing.

Cap-and-trade is already failing to reduce emissions in Europe. And even if emissions targets are met, climate models show that the reductions would have only a miniscule impact on global temperature and would not be detectable against the background of natural variation. That’s why leading climate alarmists have hailed a Kyoto-style cap-and-trade regime as just the first step of thirty to curb global economic activity.

Back in 1992, U.N. climate chief Maurice Strong was remarkably candid about the green movement’s real purpose: “Isn’t the only hope for the planet that the industrialized civilizations collapse? Isn’t our responsibility to bring that about?”

Fortunately, there are alternatives.

We can address climate change in ways that do not impose onerous taxes or rationing schemes on energy and which make sense regardless of whose climate predictions are right. One common-sense idea would be to expand alternative-energy generating capacity, including nuclear power, by lowering regulatory barriers. Another good idea would be to invest in traffic-light coordination, so that drivers don’t get stuck at corner after corner idling unnecessarily. We also need to explore ways to adapt to a slightly warmer world (if the models predicting warming are right) since the carbon dioxide is already in the atmosphere and it’s unlikely that India and China are going to reduce their emissions.

Climate change can only be effectively addressed with the luxury of wealth that a free-market provides. That’s why it would be such a mistake to impose tax-and-rationing schemes on energy that would only undermine our prosperity.

According to Gallup, voters seem to have a better grasp than politicians on which issues are most important today. And that’s good news: In our democracy, voters, not politicians, ultimately call the shots.


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