Economic gloom fast engulfing the US economy contains at least one reason for hope. The new attention it forces onto cost might keep the country from rushing into peril over global warming.
Politically, sad as it is to say, the global-warming debate is over in the US. All candidates with any hope for winning the presidency support mandatory limits on emissions of greenhouse gases, whether or not the measures offer reasonable prospect for affecting global average temperature. All candidates, in other words, support the imposition of certain cost in pursuit of very uncertain benefit against the crucial metric of measured temperature. They all want the government to set limits on emissions of greenhouse gases, especially carbon dioxide. And they all dodge the core question: Can restriction of the relatively small amount of CO2 subject to human control, which may well represent a minor influence over temperature, meaningfully alter observed warming?
Condescending dismissal
People who would be asked to sacrifice wealth to global-warming fear deserve a better answer to that question than anyone so far has offered. What they hear instead are mourning over the melting of glaciers, meaningless assertions about a consensus of scientists, and stilted hints of doom from a United Nations initiative riveted to climate models with demonstrably limited powers of prediction. Questions, in fact, encounter nothing more than condescending dismissal, such as that delivered by England’s Prince Charles, who recently called skepticism about global warming alarm “sheer madness.”
In the US, if presidential candidacy validly indicates popular mood, intellectual bigotry of that abysmal order has won the day. Come next January, no veto will await legislation enacted in a cost-blind panic. Even worse, the leading proposition of the moment is a bill that camouflages economic consequences behind a “cap-and-trade” smokescreen.
The US can’t cut emissions of CO2 without reducing the combustion of hydrocarbons, which means raising the cost of energy. There must never be any confusion about this. The only political issue that remains after the decision has been made to cut CO2 emissions is the mechanism for the cost hike.
Politicians and business people favor the cap-and-trade mechanism—politicians because it hides the costs and business people because it creates opportunities to make money through the trading of emissions allowances. But cap-and-trade schemes in no way eliminate the costs, which ultimately must be borne by taxpayers and energy consumers.
The alternative is a tax on carbon. Because this option promises no trading opportunities, business people dislike it. Politicians spurn the tax, too, because it would make costs painfully clear to the people who must pay them. That reason alone is enough to make a carbon tax preferable.
Even in the cap-and-trade house of mirrors, though, costs can be analyzed. Two cost estimates recently emerged for the Climate Security Act sponsored by Sens. Joseph Lieberman (I-Conn.) and John Warner (R-Va.). One, by the National Association of Manufacturers and American Council for Capital Formation, said the bill, which would set a declining cap on US CO2 emissions, would lower gross domestic product by $151-210 billion/year by 2020 and $631-669 billion/year by 2030. The reduction in average disposable household income would be $739-2,927/year in 2020 and $4,022-6,752/year by 2030.
Energy costs
The other estimate, by the Environmental Protection Agency, sees reductions in GDP of $238-983 billion in 2030 and $1.012-2.856 trillion in 2050. EPA notes that its analysis makes no attempt to account for economic benefits associated with emissions cuts. In both studies, forced emission cuts inevitably raise energy costs appreciably over projected baselines. Gasoline, for example, would be up 60-144% by 2030, according to the NAM-ACCF study. EPA puts the gasoline price increment attributable to the Lieberman-Warner bill in that year at 53¢/gal. A public antagonized by rising fuel prices should know what its government contemplates for it in this area.
Pampered royals to whom the word “cost” has no meaning can afford to ignore warnings like these. To everyone else, not heeding costs and not addressing doubts about the likely effectiveness of hasty warming remedies are truly what constitute madness.