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Just What Is Waxman-Markey For?

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Just What Is Waxman-Markey For?

Op-ed in The Washington Examiner

As the House of Representatives girds to debate the Waxman-Markey
energy and global warming bill, no one seems to be asking the most
important question: Just what is it for? Any honest look at the bill
would show that it cannot be about reducing global temperatures, so
President Obama and Congressional Democrats must be putting so much
effort into it for other reasons.

Why is the bill not about
reducing global temperatures? Because the United States, although it
emits a lot of greenhouse gases, won’t be the main driver of emissions
as the century goes on. That role will fall to the developing world.
China, India, Indonesia, Brazil and a host of other large developing
countries are developing, and that means they will need energy. That
energy will come from the most affordable source—fossil fuels.

For
example, the Tata Nano a new, affordable small car, recently went on
sale in India. Retailing at about $2,500, the car has already had
200,000 orders placed, by Indians in need of safe, affordable
transport. The Nano gets over 50 mpg, and has already sold more units
in India than the Toyota Prius did in the U.S. all of last year, when
gas prices reached record levels.

This means that developing
countries’ emissions will likely dwarf America’s even if Waxman-Markey
becomes law. That in turn means that the bill’s provisions will have
negligible effect on global temperatures. According to a new analysis
by climatologist Chip Knappenberger, the bill, assuming it achieves
everything it sets out to do, will reduce temperatures by a mere 0.09
degrees Fahrenheit.

Put another way, the world will reach
temperatures it would have reached in 2100 only two years later, in
2102—all this at an annual cost of about $3,000 per American household.
The benefit-to-cost ratio is downright microscopic.

So will
the bill actually do? Let’s be charitable and assume that it shows
leadership to the developing world. China, India, and other large
emerging countries have it crystal-clear that they will only cut
emissions if the West pays for it. Some of these countries have asked
for 0.5 percent to 2 percent of Western nations’ GDP
to be transferred to them to help them build clean energy projects.
That would amount to an annual payment of up to $280 billion from the
U.S. alone—an additional $2,400 per household on top of Waxman-Markey’s
costs. Oh, and China has also said that the emissions reduction targets
in Waxman-Markey aren’t good enough. Thus, there is very little chance
that this bill will persuade anyone to follow our lead without their
being paid to do so.

Therefore, the bill will have no
appreciable direct effect on temperatures and will have no utility in
persuading other countries that count to reduce their emissions. Why,
then, are Congressional Democrats and the President himself putting so
much effort into ensuring it passes?

One likely answer may
be the revenues it promises to bring. Most estimates place the revenue
from the auction of emissions permits at about $600 billion a year. The
increased costs to American households result from companies pass those
costs on to consumers. That’s a lot of money, even in these days of
trillion dollar deficits. Does the administration have any projects
lying around for which it needs that level of funding?

Well,
yes it does. The President’s budget includes $684 billion over the next
10 years for just “down payment” on health care reform. Total national
health care expenditure is expected to rise to over $5 trillion by
2018, so the administration will need huge amounts of cash to pay for
any expansion of coverage—and $600 billion a year seems like a good
start.

In all, it seems very likely that Waxman-Markey’s
“cap and trade” scheme is not about cooling the planet, but about
creating a new income stream for government to pay for a completely
unrelated and vastly expensive new entitlement.

Meanwhile,
whatever the bill’s effect on global warming, it will hit the average
American household with one of the best-hidden tax grabs of recent
times.

Iain Murray is Director of Projects and Analysis and
Senior Fellow in Energy, Science and Technology at the Competitive
Enterprise Institute.