Cap-and-trade costs consumers

To solve the global warming crisis — to the extent that such crisis is real — alarmists often propose a cap-and-trade scheme. It seems like a reasonable solution, using the power of markets to let carbon emitters decide their preference between emitting carbon vs. reducing emissions.

But it’s not so simple. As George Will has written: “Speaking of endless troubles, ‘cap-and-trade’ comes cloaked in reassuring rhetoric about the government merely creating a market, but government actually would create a scarcity so that government could sell what it had made scarce. The Wall Street Journal underestimates cap-and-trade’s perniciousness when it says the scheme would create a new right (‘allowances’) to produce carbon dioxide and would put a price on the right. Actually, because freedom is the silence of the law, that right has always existed in the absence of prohibitions. With cap-and-trade, government would create a right for itself — an extraordinarily lucrative right to ration Americans’ exercise of their traditional rights.”

This benefit to government comes at a price to consumers. The George C. Marshall Institute has just released a study that estimates some of the increased costs that consumers will pay under likely cap-and-trade plans. It’s a lot. “Put another way, the cap-and-trade approach is the equivalent of a permanent tax increase for the average American household, which was estimated to be $1,100 in 2008, would rise to $1,437 by 2015, to $1,979 in 2030, and $2,979 in 2050.”

To place these increased costs in perspective, last year the electric utility Westar proposed a rate increase of $10 per month for the average household in Kansas. That was met with strong resistance from consumer groups. When the City of Wichita proposed a $1 per month extra fee on water bills, one city council member worried about its effect on her constituents. These increases are far, far less than the extra costs cap-and-trade will impose.

Read the short introduction to the Marshall Institute study by clicking on The Cost of Climate Regulation for American Households. A link to the entire study is there.

3 Comments

  • Spin Skeptic -

    President Obama’s plan is to “implement an economy-wide cap-and-trade program to reduce greenhouse gas emissions 80 percent by 2050”, and you can learn about it through his allied think-tank Center for American Progress at http://www.americanprogress.org/issues/2008/01/capandtrade101.html. Such a plan envisions generating federal revenues from auctioning greenhouse gas permits at $50 billion to $300 billion per year. It’s the only big money-making plank of Obama’s agenda for paying for everything else he wants to do. That’s why the entire health, education, and energy gameplan is being pushed so rapidly in tandem. You just can’t tax the top 2% of income earners enough to make a dent in the new expenses. Are folks really serious about allowing government to sell the right to “pollute”? Not even our 1990 experiment with sulfur dioxide trading made government the financial beneficiary. And how would people feel if the feds started auctioning off the right of Free Speech so that those cheerleaders with enough money could purchase the unexercised right of those who silently watch big government grow?

  • Wondering -

    How come they ignore the new evidence that shows there are major flaws in their theory? What about all those bad probes?

  • As I stated before the Sedgwick County Commission in August 2008. This Cap and Trade proposal (at the time was estimated at $750 billion) now the estimates are lower coming in at just under $350 billion.
    2010 projections are $79 billion. with Sedgwick county paying 79 million, our economy is 1/1000th of the national economy. Which equals $160 for every man woman and child, or $480 per family of three. The truth of the matter is that it
    could all be avoided with a little planning.
    The County commission or City, could negotiate to have our area supplied by Nuclear power only. Using 500 sections of farm ground we could grow cane sorghum and run our vehicles on ethanol.
    We could provide incentives to heat with electric only and would avoid all cap and trade taxes. So far my proposal has fallen on deaf ears.

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