CO2 Regulation Certainty?

Does regulating carbon dioxide emissions provide industry and investors with “certainty”? Does legislation such as the Lieberman-McCain climate change bill remove political uncertainties that complicate long-term investment planning and, in turn, depress shareholder value and economic growth?

There are many propagating this view, including Natural Resources Defense Council and Denise Nappier, the Connecticut state treasurer. As Nappier testified before the EPW Committee on June 5, opposing command-and-control climate change policies “can erode shareholder value and place today’s seemingly solid investment in jeopardy.” And further: “The consequences for those companies that do not act responsibly today and take steps to assess and mitigate the risk associated with climate change can be quite devastating.”

By “acting responsibly” Nappier means, of course, supporting policies — Lieberman-McCain, to name just one — that place an artificial cap on carbon emissions, which she argues “is an investor security issue of the highest magnitude.”

FACT: Lieberman-McCain does bring manifold certainties, but of a wholly different kind than Nappier and others believe.

What is the certainty for shareholders? The Congressional Budget Office couldn’t be clearer: “Losses to industry — in the form of lower stock values — would be broadly distributed among investors…”

What is the certainty for the economy? According to the Energy Information Administration, cumulative GDP (in 1996 dollars) declines by $1.4 trillion.

What about certainty for workers? Lieberman-McCain, according to EIA, would cost 50,000 coal industry jobs, and as CBO said: “Many coal workers could lose their jobs if carbon emissions were reduced significantly.”

And certainty for consumers? The bill would drive up home energy costs by 46 percent, meaning consumers would pay $444 more for energy each year.