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Economy / Energy

Cap and Trade Dangerous for Missouri

By Caitlin Hartsell on Jun 30, 2009

A cap and trade bill was narrowly passed in the House of Representatives on Friday afternoon. If passed in the Senate, the bill would set a ceiling for carbon and greenhouse gas emissions, then allowing companies to buy and sell permits to produce more.

This cap would severely damage the coal-reliant Midwest economy, while being ambiguously effective (even the Progressive Democrats of America agree that it won’t work.) The Missouri Public Utility Alliance estimates the legislation could bring as much as an 80-percent increase in energy prices during the next 20 years. Science Applications International Corp. estimates that the Missouri economy would lose between $2.7 and $3.7 billion per year from cap and trade.

The legislation would result in high costs across the country. The Congressional Budget Office estimates that cap and trade will cost each American household $175 in higher annual energy costs by 2020. However, this analysis has been rebutted by other groups that say the CBO ignored the negative impact that this legislation would have for the GDP as a whole. The Heritage Foundation has released a report estimating that the bill would lead to an extra $1,870 in annual energy costs for a family of four by 2020, and $6,800 by 2035. This would amount to a huge tax increase on Americans, especially on the poor, who spend a higher percentage of their income on energy.

Some might argue that this high cost is worth the environmental gains that cap and trade might bring, but such projections are controversial. Previous cap and trade regulations in Los Angeles and Europe have failed to deliver on their promises, creating energy delays and huge profits for utilities without leading to reduction in emissions. A relevant op-ed in the Philadelphia Inquirer points out that the U.S. bill would allow companies to profit from polluting during the next 20 years, without any real environmental improvement.

On top of all this, the Competitive Enterprise Institute has released a report showing that the Environmental Protection Agency has been using outdated data to support its conclusions about how severe global warming is. According to this report, the EPA has ignored developments that include “a continued decline in global temperatures, a new consensus that future hurricanes will not be more frequent or intense, and new findings that water vapor will moderate, rather than exacerbate, temperature.”

There is still debate about how bad the climate change situation actually is, and much dispute about whether cap and trade will even be effective in reducing carbon emissions.

Existing evidence suggests that cap-and-trade legislation would hurt Missourians without providing the results claimed by advocates. More successful alternative routes to a reduction in emissions might include alternative and nuclear energy, solutions worth trying before we impose the largest effective tax increase in the history of the United States.

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About the author

Caitlin Hartsell

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