Kerry-Lieberman Bill Bad for Consumers

The so-called American Power Act combines useless pork-barrel spending with just about all the bad ideas of previous Cap & Tax bills. The bill creates 60 new agencies and projects. You can read the 987-page sleep-inducing bill here.

The bill seeks to reduce domestic greenhouse gas emissions according to a schedule: 17% below 2005 emissions levels by 2020, 42% below by 2030, and 83% below by 2050. Those goals are similar to the Waxman-Markey bill of last year. The senators say those reductions are necessary to forestall global warming, even though there is no evidence that carbon dioxide significantly drives temperature. The possible effect on global temperature is negligible, too small to measure. Some estimates, based on UN’s climate models, place the potential temperature reduction at 0.043°C (0.077°F) by 2050 and 0.111°C (0.200°F) by 2100. I think those estimates are much too generous. To see why read my post: Your Carbon Footprint Doesn’t Matter.

To aim for a reduction in emissions of 83% by 2050 is completely absurd. That would be equivalent to U.S. emissions in 1910 according to Department of Energy historical statistics on energy consumption. Then, the U.S. population was about 92 million people. By 2050, the Census Bureau estimates the U.S. population will be 420 million. That means by 2050 the per capita emissions will have to be reduced to one-quarter the per capita emissions in 1910 and take us back to the economy in about 1875.

The Congressional Budget Office estimates that imposition of carbon reduction schemes would result in fewer net jobs in the coming decades. They also said, “The increases in prices caused by a tax or a cap-and-trade program would cause workers’ real (inflation-adjusted) wages to be lower than they would otherwise be.”

Congressman Rob Bishop (R-UT), Chairman of the Congressional Western Caucus, said that this bill “will make it virtually impossible for energy companies to cut costs and create new jobs. Instead, they will have no choice but to raise prices for consumers who, in many cases, already find their energy bills unaffordable. Simply put, this bill is a time bomb wrapped in a nice bow. Over time, costs will explode through the roof and when it becomes too expensive for the industry to absorb the new fees and taxes created by this legislation, the consumer will be stuck holding the bill.” The “time bomb” refers to the fact that restrictions will be phased in over time for various industries. The Institute for Energy Research think tank said, “Two things are certain if this bill becomes law: energy prices will skyrocket, and jobs will be shipped overseas.”

Several large energy companies have come out in support of Kerry-Lieberman. That’s were the pork comes in. An analysis by the Competitive Enterprise Institute says, “Environmentalists know it will have no discernible impact on the climate, but it will reward favored companies with massive windfall profits.” “Cap and trade regulation, far from disciplining the energy sector, is poised to become one of the greatest wealth transfers from consumers to private corporations in the nation’s history.” “General Electric, Exelon, BP, Goldman Sachs, and Duke Energy will make out like bandits because of provisions they have written. That’s not democracy or capitalism. It’s political corruption and crony capitalism.”

We will have to learn newspeak. Gasoline taxes are now “linked fees.” “Cap and trade” is now “emissions reduction targets.”

On the plus side, the legislation would authorize $54 billion in federal loan guarantees for new nuclear plant construction, which should be enough to support 12 new reactor projects. On the minus side, the bill also offers $2 billion a year for the commercial-scale deployment of technology that captures and stores carbon dioxide emissions from coal-fired power plants. To see why carbon capture is a bad idea see my post: Clean Coal, Boon or Boondoggle .

President Obama said energy prices will “necessarily skyrocket.” That’s because of two factors. First, producers will have to purchase emissions permits or credits, adding to the cost of doing business, a cost that will be passed on to the consumer, and second, these producers will be forced to buy the privilege of continuing to produce, from the Chicago Climate Exchange, which will raise the cost of doing business even more. Again this will be passed on to the consumer. According to an article in the Cyprus Times, Texas, The Chicago Climate Exchange will be the only exchange for trading these credits and will make hefty commissions buying and selling these credits. I wonder if that deal is a payoff.

The carbon credits will become a new commodity to trade, but unlike gold or pork bellies, carbon dioxide emissions are not something tangible. There will be great opportunity for fraud as has happened in the European market (see here and here ).

The Kerry-Lieberman Cap & Tax bill establishes a price range for CO2 emissions indulgences with a floor of $12 per metric ton (increasing annually by 3% + inflation) and ceiling of $25 (increasing annually by 5% + inflation). According to the EPA, US emissions of CO2 in 2009 were 5787 million metric tons. Thus if, eventually, the legislation is applied to all US emissions, the cost would be $69 Billion (floor) to $145 Billion (ceiling) annually, increasing ~6 to 8+% each year forever. European carbon trading last year was valued at $125 billion. I wonder if there could be a more constructive use for that money instead of buying air?

For some background on global warming science see my blogs:

Natural Climate Cycles, and A Basic Error in Climate Models



  1. Follow the money.  This isn’t about saving the planet or reducing our dependency on foreign oil, but has all the underpinnings of political cronyism,  greed, corruption, and corporate-statism.  This is the final push to impose European-style Cap and Trade via now-discredited global warming alarmism, and fatten the pocketbooks of the privileged few on the backs of  hard-working taxpayers.  To float this tax beast, before mid-term elections, is an ill-conceived godsent— you’ve got to wonder what the political class is thinking.   

    1. The original Cap and Trade bill was supposed to net the federal government $846 billion of revenue. Guess where the money comes from. That averages out to $7761.00 per household per year.

  2. It always amazes me to hear people suggest that 600 million cars being driven plus whatever power plants and other sources of gaseous excretions that humans have created have no effect on the environment. Regardless of what direct evidence exists, it doesn’t take a high school degree to figure that there just might be some kind detriment. Been to Burbank lately?

    1. Well Seth,
      You seem to want to ignore direct evidence and take something on faith because of a feeling. You are also deflecting the argument from potential causes of warming to other problems such as smog. I do not say that use of automobiles does not have environmental consequences; I say only that the carbon dioxide produced has no significant effect on temperature. If you read my post “Your Carbon Footprint Doesn’t matter” and do some arithmetic, you will find that emissions from 600 million vehicles have the theoretical capacity to raise the global temperature by 0.0019 C annually.

  3. In response to AGW hysteria, many states have already passed laws unnecessarily restricting CO2 emissions or mandating the production of solar and wind power.  Arizona’s own version of Cap and Tax is known as the Renewable Energy Mandate, in which the Arizona Corporation Commission (ACC) ordered utilities to acquire 15% of their power from solar and wind by the year 2025, and to charge Arizona businesses and homeowners a tariff to offset the added cost of implementation (note the Green Energy charges on your power bill).   In effect, we are subsidizing cost-inefficient solar and wind, to enable their use in the power system. Or, it can be thought of as a tax on coal, limiting its use and leveling the playing field for more costly renewables.  Residential solar installations include feel-good rebates and various tax credits, to offset sticker shock. But ultimately, we all pay the piper, and long-term, we can expect our power bills to increase exponentially as the renewable energy mandate is gradually implemented, and more people “go solar”.      By mandating energy policy and taxing us without representation, the ACC has exceeded its constitutional authority, set a new standard for government control and spiraling energy costs; ultimately hurting business and costing us more jobs.    

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