Cap-and-Trade: What's Next?

The House passed a sweeping energy and global warming cap and trade bill Friday. This bill, titled “America’s Clean Energy and Security Act,” or better known as Waxman-Markey, is the Democrats’ answer to the worst recession in decades: a national energy tax — a tax designed to impose economic pain through higher energy prices and lost jobs. Or, as a recent Washington Post editorial put it, the bill “contains regulations on everything from light bulb standards to the specs on hot tubs, and it will reshape America’s economy in dozens of ways that many don’t realize”…

The fact is that the Waxman-Markey bill is just the latest incarnation of costly cap-and-trade legislation that will have a devastating impact on the economy, cost more American jobs by pushing them overseas and drastically increase the size and scope of the federal government. Here in the Senate, we have successfully defeated cap-and-trade legislation in 2003, 2005, and most recently in 2008. Now, just a year later and with the economy in a deep recession, it is hard to believe that many more senators would dare vote in favor of legislation that would not only increase the price of gas at the pump, but cost millions of American jobs, create a huge new bureaucracy and raise taxes by record amounts.

I appreciate that my Democratic colleagues desperately want to pass this bill. They argue that cap-and-trade is necessary to rid the world of global warming and to demonstrate America’s leadership on this noble cause. But their strategy is all economic pain for no climate gain.

This is a global issue that demands a global solution, yet cap-and-trade advocates argue that aggressive, unilateral action is necessary to persuade developing countries such as China and India to enact mandatory emissions reductions. But recent actions by the Obama administration, and by China and other developing countries, continue to prove just the opposite. They continue to confirm what I have been arguing for the past decade: that even if we do act, the rest of the world will not follow.

The logic is not difficult to understand. Carbon caps, according to reams of independent analyses, will severely damage America’s global economic competitiveness, principally by raising the cost of doing business here relative to other countries that have no mandatory carbon policies. So jobs and businesses will move overseas, most likely to China. This so-called “leakage effect” would tip the global economic balance in favor of China and other strategic competitors of the U.S. Clearly, unilateral U.S. action redounds to the benefit of China and to the great detriment of the U.S.

By itself, China has a vested interest in swearing off carbon restrictions, in order to keep its economy growing and lift its people from poverty. Add unilateral U.S. action into the mix, and we give China an even stronger incentive to oppose mandatory reductions for its economy.

The Chicago Tribune, a newspaper I don’t often cite, seems to understand this. … The editorial states: “The bill’s sponsors are still trying to resolve questions over whether and how to impose sanctions on countries that do not limit emissions. That’s crucial. Those foreign countries would enjoy a cost advantage in manufacturing if their industries were free to pollute, while American industries picked up the tab for controlling emissions.”

China understands this all too well. I believe they will actively and unfailingly pursue their economic self-interest, which entails America acting alone to address global warming. …

With China and other developing countries staunchly opposed to accepting any binding emissions requirements, we should be asking a more fundamental question: What, exactly, are we doing this for? If the goal of cap-and-trade is to reduce global temperatures by reducing global greenhouse gas concentrations, and if China and other leading carbon emitters continue to emit at will, then how can this supposed “problem” be solved?

Well, if you accept the alarmist science that anthropogenic gases are causing a catastrophe, then reducing global greenhouse gas concentrations is the solution. But the unilateral solution — again, that American must act first to persuade China and others to follow — is nowhere in evidence. The only thing America gets by acting alone is a raw deal, and the planet is no better off.

My Democrat colleagues want to sweep this reality under the rug. They argue that cap and trade will not only be the leash that pulls China along, but also that it will solve our economic woes, create millions of new green jobs, and promote energy security.

Now, of course, these are laudable goals. And Republicans have a simple answer to this. Let’s provide incentives, rather than taxes and mandates, to produce clean, affordable, and reliable sources of energy, whether it’s nuclear, wind, solar, clean coal, or natural gas. Cut the red tape. Encourage private investment. Let all technologies compete in the market place. However, that is not what the Democrats are proposing in the Waxman-Markey bill…

In fact, that bill does the exact opposite. It closes access to affordable sources of energy by trying to price certain kinds of energy out of the market. It picks winners and losers that will leave places like the Midwest and the South paying higher energy prices to subsidize areas in the rest of the country. And it creates more bureaucracy that will only increase the costs that consumers bear and add more layers of regulation on small businesses.

Why, then, do my colleagues believe that creating a national energy tax is necessary? It’s all rooted in global warming science. In fact, just last week the Administration produced yet another alarmist report on global warming, which of course is nothing new. It takes the worst possible predictions from the U.N.’s Intergovernmental Panel on Climate Change’s (IPCC) Fourth Assessment Report and attempts to localize them to instill fear throughout the country. It’s no surprise that such a report was released just in time for the House vote on Waxman-Markey. However, what’s becoming clear is that despite millions of dollars spent on advertising, the American public remains rightly skeptical of the so-called ‘consensus’ on global warming. This is why my colleagues are now forced to talk more about green jobs and energy security, since the fear mongering isn’t working. …

Any isolated U.S. attempt to avert global warming is a futile effort without meaningful, robust international cooperation. No one disputes this fact. The American people need to know what they will be getting with their money: all cost with no climate benefit.

And we mustn’t forget where the Senate stands on global warming treaties. As senators may recall, in 1997, the Senate voted favorably 95-0 on the Byrd-Hagel resolution. Byrd-Hagel stated that among other things, the U.S. should not sign any international climate change treaty that would: 1) mandate greenhouse gas reductions from the U.S. without also requiring new, specific commitments from developing countries over the same compliance period; and 2) result in serious economic harm to the United States. I think Byrd-Hagel still commands strong support in the U.S. Senate. Therefore, any treaty the Obama administration submits must meet the resolution’s criteria, or it will be easily defeated. Proponents of securing an international treaty are slowly acknowledging that the gulf is widening between what the United States and other industrialized nations are willing to do and what developing countries like China want them to do. I suggest the gulf has always been wide, and will continue to widen. Recent actions by the U.S. and China continue to confirm my belief.

Take China’s initial reaction to the Waxman-Markey bill. The bill, hailed on Capitol Hill as a historic breakthrough, went over with a thud during international negotiations. Get this: Waxman-Markey, which will be economically ruinous for the U.S., was criticized by China for being too weak.

Another troubling aspect coming out of those meetings was the U.S. government’s official submission. Many here in the Senate may be surprised to learn that that this administration’s position is to let China off the hook. Nowhere in the U.S. submission to the conference do we require China to commit to any binding emission reduction requirements before 2020. In fact, before 2020, the submission only asks for “nationally appropriate” mitigation actions, followed by a “low carbon strategy for long term net emissions reductions by 2050.” I would submit that this position is perfectly suited for the U.S. Instead, we give the best to China and leave America with Waxman-Markey.

So what then, is the Chinese government’s idea of a fair and balanced global treaty? Well, the Chinese believe the U.S. and other Western nations should, at a minimum, reduce their greenhouse gas emissions by 40% below 1990 levels by 2020. For comparison’s sake, Waxman-Markey, which could become the official U.S. negotiating position, calls for a 17% reduction below 2005 levels by 2020…

Finally, and most telling of all, the Chinese and other developing countries collectively argue that the price for reducing their emissions is a massive 1% of GDP from the U.S. and other developed countries.

So, let me get this straight: China opposes any binding emission reduction targets on itself; China wants the U.S. to accept draconian emission reduction targets that will continue to cripple the U.S. economy; and on top of that, China wants the U.S. to subsidize its economy with billions of dollars in foreign aid. In the final analysis, one must give China credit for seeking its economic self-interest. I sure hope the Obama administration will do the same for America…