Corporate Support for Global-Warming Measures Won’t Make It Any Cheaper for the Rest of Us

One of the myths of environmental-policy battles is that they pit environmentalists on one side and industry on the other. In truth, it is unusual for affected businesses to be united against such measures. After all, if the greens want to ban or restrict x — whether x is a pesticide that gives cancer to lab rats, or a refrigerant that supposedly depletes the ozone layer, or a means of generating energy that produces a lot of greenhouse gases — there is always substitute y waiting in the wings, and producers of y who smell an opportunity by making common cause with environmentalists against x. Add to that the promise of government handouts to makers of x to help them cope with the transition, not to mention the chance for good PR, and there are almost always some corporations and industry sectors happy to lobby green on any particular issue. So it is with global-warming policy and the upcoming debate over the Kerry-Boxer global-warming bill. But the fact that this bill has corporate cheerleaders as well as critics is hardly a reason to support it, and Congress would do well to focus instead on the adverse impact on the public.

Much has been made of several high-profile defections from the U.S. Chamber of Commerce over its steadfast opposition to this bill as well as Environmental Protection Agency efforts to do a regulatory end-run around Congress. These include utilities well-positioned to pass on their costs and even pocket some windfall profits via excess free allowances — the valuable rights to emit carbon dioxide that can be sold like commodities. There are also a few manufacturers whose competitors are likely to be hurt more than they — the bill only targets domestic factories and thus is easier on those who have already outsourced. Natural-gas producers may see some benefit (at least for a while) as the cap-and-trade approach in this bill targets coal first.

While there will be both winners and losers among directly regulated entities, the same cannot be said of their customers. Few, if any, energy end users can expect anything other than higher costs. Both higher direct energy costs and the indirect impact on goods and services works out to nearly $3,000 per household of four per year, according to a Heritage Foundation analysis of the Waxman Markey version of the bill which narrowly passed last June. Net job losses are projected to exceed one million. The political value of corporate support for cap and trade needs to be balanced against the fact that the public is going to be very unhappy with the results.

Next time you hear company announcing with pride that it wants to help fight global warming by supporting a cap-and-trade bill, it is at least worth asking who they expect to pick up the tab.

  — Ben Lieberman is senior policy analyst for Energy and Environment in the Thomas A. Roe Institute for Economic Policy Studies at the Heritage Foundation.