The People of America's Oil and Natural Gas Indusry

Waxman-Markey: More Harm Than Good

Jane Van Ryan

Jane Van Ryan
Posted July 13, 2009

More evidence has surfaced indicating that the U.S. House of Representatives cap-and-trade legislation could do more harm than good.

On July 8, U.S. Government Accountability Office (GAO) released a report warning that the bill could lead to an international trade war. The study points out that the bill's provisions designed to protect particularly energy-intensive industries from overseas competition could "motivate retaliatory actions, undermine efforts to secure multilateral consensus, and...could lead [other countries] to implement restrictions against U.S. exports."

That same day, at the Senate Committee on Foreign Relations hearing, Ben Lieberman, senior policy analyst for energy and environment at The Heritage Foundation, testified that the European Union's enactment of a cap-and-trade scheme to reduce greenhouse gas emissions has been a costly failure.

"The reason for the failure of carbon cap and trade is simple," he said, "reducing carbon dioxide from the existing installed base of energy-producing and -using equipment and vehicles is prohibitively expensive, and that isn't likely to change any time soon. Many nations committed to emissions reductions under the Kyoto Protocol are going to miss the targets (unless the recession lingers) and any talk of tougher targets is empty rhetoric." Lieberman also stated that the bill could be quite costly for an average American household.

Nearby, GAO Director of International Affairs and Trade Loren Yager testified before the Senate Committee on Finance about the potential effects of cap-and-trade on various industries.

Yager said, "If the United States were to regulate greenhouse gas emissions, production costs would rise for many industries and could cause output, profits, or employment to fall." He added, "Some domestic production could shift abroad, through changes in consumption or investment patterns, to countries where greenhouse gas emissions are less stringently regulated...Through this mechanism, some of the expected benefits of reducing emissions domestically could be offset by faster growth in emissions elsewhere...."

In other words, it's hard to find anything beneficial in the House bill. It could touch off a trade war, similar to the one that contributed to the Great Depression. It could cost an average American family of four nearly $3,000 annually by 2035, while doing little or nothing to help the environment. And it could ship jobs--and pollution--overseas to the detriment of the U.S. economy and everyone on the planet.

The U.S. Senate has indicated that it will continue to hold hearings on the cap-and-trade bill, but it has delayed mark up on a bill until after the August recess. Let's hope the Senate rejects the House bill and develops a proposal that will help the economy rather than harm it, be environmentally effective, and keep American jobs in America.


Update on July 13, 2009: Read this guest blog post in Politico about the bill by William Kovacs, senior vice president for the Environment, Technology & Regulatory Affairs Division at the U.S. Chamber of Commerce.