June 03, 2008

What Senate Bill 2191 Will Cost Iowans

As I wrote here, Washington has pronounced the climate change debate settled, and it is now time to act before its too late. As Harry Reid so monotonically put it yesterday, "That has caused the earth to have a fever – a fever that is growing worse, not better..." Sometimes the cure is worse than the disease, particularly if you are using chemo for the common cold.

The Heritage Foundation has researched the economic effects of this Cap and Tax system and the charts below show the economic impact on Iowans if this bill becomes law.
Ben Lieberman at Heritage writes that the costs outweigh the benefits that this legislation will incur, he writes;

Lieberman–Warner is expensive, but what are the benefits? This bill is a solution only to the extent that global warming is a problem in the first place and only to the degree to which the bill reduces that problem. There are reasons to question both.

While a full discussion of global warming science is beyond the scope of this analysis, it is worth not­ing that science is now taking a turn away from alarmism. The release of carbon dioxide, a natural constituent of the atmosphere and a byproduct of fossil fuel combustion, has at least some warming effect on the planet, but the reality of global warming falls well short of being a crisis. Both the seriousness and the imminence of the threat have been overstated by environmentalists and politi­cians alike.
In particular, there is a growing realization that the extreme claims popularized in the media— most notably that a rise in sea level will inundate vast coastal areas and that deadly hurricanes like Katrina are linked to global warming and have become more common—are not well supported. The World Meteorological Organization and many scientists dispute such claims, and the United Nations Intergovernmental Panel on Cli­mate Change (IPCC) projects a sea-level rise of approximately seven to 23 inches over the next cen­tury, not the widely publicized 18 to 20 feet in former Vice President Gore's book and documen­tary An Inconvenient Truth...

Furthermore, no matter how great a problem global warming may be, the Lieberman –Warner bill, assuming that it works as intended, would alle­viate only a small fraction of that problem...

Thus, the impact of Lieberman–Warner on over­all emissions trends is modest, given global emis­sions growth. By most accounts, even in the unlikely event that America meets the targets of this bill, worldwide emissions would continue to increase, only at a slightly slower rate...

In sum, America's Climate Security Act of 2007 promises significant economic pain for little envi­ronmental gain. The costs are simply out of line with the benefits. Our analysis puts the cost of preventing carbon dioxide emissions at $49 per ton in 2015 and $68 to $88 by 2030, amounts that are generally in line with five other analyses of this bill. (See Table 1.)

But according to several prominent resource econ­amists, that is more than the dollar value of the harm that each ton does to the environment in the form of increased global warming. One analysis puts the cost of damage at $7.4 per ton of carbon dioxide and rising by about 2.5 percent per year, a fraction of what Lieberman–Warner costs per ton.If true, this bill would prove a textbook example of a solu­tion that is worse than the problem.

It is at this point where I would normally make an impassioned plea to write your senator and tell them that this bill is economic suicide, but our own Senator Harkin is a co-sponsor of this legislation and as Harry Reed declared yesterday, those that disagree are essentially head in the sand naysayers. It is doubtful that you will persuade any of them that this is an act of lunacy now that they have their eyes on the revenue stream this scheme will produce.

Also see: The Five Myths about global warming legislation.

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