The Costs of Cap and Trade

Stephen Power’s “EPA Says Carbon Caps Won’t Harm Economy Much,” in today’s Wall Street Journal, discusses Friday’s EPA report that the Lieberman-Warner cap-and-trade bill will not significantly harm the U.S. economy. I guess the truth of this depends on your definition of “significantly.”

I wonder if the EPA would consider the following (from the recent NAM/AACF report on the economic impact of the Lieberman-Warner Climate Security Act) “significant.” Under the Lieberman-Warner bill:

• The U.S. would lose between 1.2 million and 1.8 million jobs by 2020, and as many as 4 million by 2030;
• Additional costs per household of $739 to $2,927 per year by 2020, increasing to $4,022-$6,752 per year by 2030;
• Gasoline price increase of up to 144 percent, electricity price increase of up to 129 percent, and natural gas price increase of up to 146 percent by 2030;
• GDP reduced by $151 billion to $210 billion per year by 2020, and by $631 billion to $669 billion per year by 2030; and
• Reductions in the production of coal and electricity of  35 and 12 percent, respectively.

Is it significant that the CBO reported (Page 8, Table 1) that a 15-percent reduction in CO2 emissions will cost the poorest 20 percent an extra $680 per year, in 2006 dollars? Significant that Lieberman-Warner doesn’t propose merely a 15-percent reduction in emissions by 2020, but 30 percent and 70 percent below 2005 levels by 2030 and 2050, respectively? “Significant” that Hillary Clinton and Barack Obama say they will cut emissions 80 percent below 1990 levels by 2050?

Try to minimize it all you want, but drastic CO2 emissions reductions will inflict serious harm upon our economy, and we will all foot the bill.