Morning Bell: The Transparent Costs of Cap and Trade

Conn Carroll / October 26, 2009

On June 26th of this year, the House of Representatives narrowly passed H.R. 2454, the American Clean Energy and Security Act. More commonly known as the Waxman-Markey bill (named after bill sponsors Reps. Henry Waxman (D-CA) and Ed Markey (D-MA), the 1,427-page bill tries to control global temperatures by creating a “cap” on greenhouse gas emissions, and then hoping that greenhouse emitters would “trade” emissions permits meet the cap. Under the scheme, the government would issue fewer allowances each year, causing the cost of the permits to rise. The cost of these allowances is a tax, and under Waxman-Markey, the tax would rise each year. As with any tax, it will ultimately be passed on to consumers in the form of higher energy and product prices.

On August 6th, the Heritage Foundation’s Center for Data Analysis released a report detailing the economic costs of the Waxman-Markey. Since energy is the lifeblood of the American economy, 85 percent of which comes from CO2-emitting fossil fuels, the Waxman-Markey bill’s arbitrary and severe restrictions on the current energy supply and infrastructure will not only have direct impact on consumers’ budgets through higher electric bills and gasoline prices, but also cause unnecessary inefficiencies at virtually every stage of production. CDA estimates that Waxman-Markey legislation would cost the average family-of-four almost $3,000 per year, cause 2.5 million net job losses by 2035, and a produce a cumulative gross domestic product (GDP) loss of $9.4 trillion between 2012 and 2035. (more…)