The economy is performing poorly. Unemployment is up and economic output is down. Would you offer a policy to exacerbate the situation? Congressional Democrats and the Obama Administration are doing just that with the Waxman – Markey bill or Cap and Trade as it is also known. This is an attempt to placate environmental groups and global warming alarmists, but instead it will saddle the country with no or low economic growth and a long period of high unemployment. 

            In years where greenhouse gasses decrease, the Environmental Protection Agency (EPA) attributes the decreases to less manufacturing because of a slower economy, less driving because of higher gasoline prices, increased nuclear power output and warmer winters and/or cooler summers. The Energy Information Agency (EIA) estimated the total 2007 (last year’s have not been published yet) greenhouse gas emissions at 7282.4 million metric tons carbon dioxide equivalent (MMTCO2E). The bill in the House aims to cut emissions to 17% below 2005 levels by 2020. In 2005, emissions were 7256.9 MMTCO2E and a 17% reduction is 6023.2 MMTCO2E. This means the United States will have to make a total cut of 20%, since we already emit more than the 2005 benchmark.  That 20% reduction over 11 years equals an annual reduction of 1.82% a year. Can it be a painless transition? I don’t believe so. The country’s greenhouse gas emissions have never decreased two years consecutively and the largest annual decrease ever was 1.7% in 2001.

            Emissions decreased last year due to massive job losses, less motor vehicle use, and many factory closings. The Bureau of Labor Statistics (BLS) data show a loss of 2.9 million jobs for 2008. The country would have to lose 2 million more jobs a year until 2020 to reach the legislative emission reduction. Unemployment would have to hover around 20% for this to work.   Any hope of a manufacturing rebirth would be dashed, as factories are one of the biggest emitters. Congress coyly admits this by provisions secretly tucked deep in the bill. There is a “Climate Change Adjustment Allowance” for workers displaced by this legislation. It pays 70% of the unemployed worker’s wages for up to 3 years and up to 3 years of job training. After the 3 years of training, if the assisted person needs to move for a new “green job”, the Federal government pays up to a $1500 job search allowance and then a $1500 moving allowance to live near the new job. Finally, while enrolled in the training program, the government picks up 80% of the cost of the former health insurance plan. 

            The bill also mandates 20% of electricity to be powered by renewable sources. Renewable energy is very expensive and already has high subsidies to try and compete against coal, oil, and natural gas electricity plants. The EIA states that coal is subsidized $0.44 dollars per megawatt hour (MWh) and is our biggest electric producer. Solar received a subsidy of $24.34 dollars/MWh and wind received $23.37 dollars/MWh in fiscal 2007. Even with these subsidies, the EIA projects wind to grow from .8 percent of generation to 2.5% by 2030 and for biomass (biological matter such as wood, grass clippings, ethanol, etc.) to go from .9% to 4.5% by 2030. How does Congress plan to guarantee 20% by 2020 when the government experts aren’t projecting anything close to 20% even 10 years later? With respect to other renewable sources, EIA believes there is limited potential for expansion at conventional geothermal sites, enhanced geothermal is economically infeasible, and solar energy remains too costly for grid connection applications. Consequently, EIA does not even include solar and geothermal in its projections.

            Congress wants to impose taxes and regulations in the process, which will make it inefficient and could cause the unemployment rate to go higher. One result of this legislation is a doubling of your electric bill according to a Heritage Foundation study.   If you are not inclined to believe the Heritage Foundation, look at the International Energy Agency’s (IEA) figures comparing electricity cost in the U.S. against Denmark, Germany and Spain. These three European countries have incorporated the most renewable energy capability in their economies. The cost of electricity as measured in dollars/KWh, is $.1002 for the US, $.3237 in Denmark, $.2124 in Germany and $.1647 in Spain. Going green is not cheap. Congress claims they can mitigate the job losses by moving people to “green jobs”. Unfortunately, this hasn’t happened in real life. According to a study of green jobs in Spain, 2.2 jobs were lost for each green job created. Michigan likes to tout their state as the cutting edge of a “green economy”. Yet the “green economy” can’t replace the old manufacturing economy of Michigan as evidenced by Michigan’s unemployment rate of over 14%, the highest in the nation.

            Congress has a decision to make. Do they want to “feel good” about dealing with so called climate change and control every aspect of daily living? Or do they want a good, prosperous economy and a bright American future?