The hot debate about climate change has now found expression in an actual piece of legislation, the American Clean Energy and Security Act of 2009 (ACES). If a vote on the bill occurs, what Congress will in fact be weighing is the implementation of carbon rationing in the United States. The evidence is clear that the regulatory regime under consideration would be contrary to the public interest. Good economic sense should trump ACES.
The bill represents a terrible deal for American taxpayers. According to the Environmental Protection Agency, ACES is projected to impose costs averaging about $1,100 each year on every American household by 2050. What do we get in return? Even if the law works precisely as intended — not very likely — the grand result will be that, a century from now, we should expect surface temperatures to be a about one-tenth of one degree Celsius lower than they otherwise would be. Of course global warming will impose costs, but the expected costs of ACES are at least ten times the program’s expected benefits, even using the EPA’s cost estimates and assuming the full achievement of its goals.
Our green friends concede that ACES may be a terrible deal by itself, but insist that the United States should lead the world by example — and thereby achieve wider benefits. These hopes are vaporous: The strategy of unilaterally giving away our best negotiating leverage (reducing our emissions only if other nations reduce theirs) in the hope that those nice men who rule China will be shamed into sacrificing their own economic interest — if only we jump off the cliff first — is naïve. More fundamental, the global deal that we would theoretically be chasing isn’t all that attractive, even if we assume every climate-change prediction by the UN IPCC to be correct.
The original sales pitch advertised that cap-and-trade permits would generate $80 billion annually in new government revenue. But that’s not going to happen: So many shameless sops have been given away to special interests in order to try to wrangle the votes needed to pass ACES that the CBO now estimates the bill would net just over $2 billion per year in new revenue — call it about one one-thousandth of this year’s budget deficit. Not exactly the wide-open spigot of cash early proponents promised.
A further effect of all of these side deals (which are entirely predictable and unavoidable in a democracy) is that ACES is in fact unlikely to achieve even the limited benefits that are claimed for it. The details of the bill as actually written ensure that there will not be a hard cap on emissions for at least the first decade under ACES. And the normal interest-group pressures of a democracy aren’t going to magically disappear in ten years, so the odds are excellent that ACES will never impose a real cap.
So here are the cards Democrats want to deal us: ACES would impose costs at least ten times as large as its benefits, would not reduce the deficit, and would not really cap emissions. It’s a losing hand.