The Waxman Markey Climate Change Bill (Part 4)…… The Potential Impact

In the final installment of this series, I will pull together the factors of this bill that will ultimately impact all Americans if signed into law. A bill like this comes with a price tag that is not inconsequential. 

“The answer to global warming is in the abolition of private property and production for human need. A socialist world would place an enormous priority on alternative energy sources. This is what ecologically-minded socialists have been exploring for quite some time now.” – Louis Proyect, Columbia University 

So here is a list highlighting a number of things that will be impacted. 

The Economy at Large:  

Job Loss: There will be fall out in the form of lost jobs as a result of this bill being passed into law. American companies will be faced with significantly higher energy costs as a result of the cap-and-tax plan and other provisions in the bill. This will put U.S. based manufacturing facilities at a competitive disadvantage with plants in other parts of the world not forced to play on the same field of “environmental stewardship”. 

This could result in millions of American jobs going overseas. The bill also mandates conceptual, unproven technologies for coal-fired plants which could result in plant closings if they are not able to comply with the new federal regulations. This could increase dependence on natural gas causing an increase in prices. 

Proponents of the bill claim the opposite; this will result in millions of new “green” jobs. Reality check – the new industries and jobs will require significant capital investment, research and can not be launched quickly enough to offset the losses. In other words, the ramp up is longer than the ramp down. Considering the current state of our national economy the timing of such an initiative seems potentially disastrous. 

Higher Energy Costs: The proposed regulations in the bill require a new Federal Renewable Energy Standard. The standard starts at a minimum of 6% in 2012 and escalates to 25% by 2025. The Department of Energy will issue utilities “credits” for renewable energy they generate which can be sold, transferred, or exchanged.  If a utility cannot meet the RES it would be required to purchase credits to make up the difference. In effect this becomes a hidden tax and a new source of revenue for the government. To offset these costs the utility companies will pass them on to their customers, ultimately resulting in higher energy prices for everyone. The problem here is that currently renewable energy technology is neither efficient nor cost competitive which is why it is not being implemented in a wide spread manner yet. Forcing the market to adopt this technology before it is ready will cause prices to increase rapidly. This mandate in effect put the Dept. of Energy in charge of the energy market. There are also concerns that a RES would impose a uniform federal standard on States despite varying sources of renewable resources.  Southeastern states would be especially hard hit.  

There are many other requirements that also will drive up energy costs up in this bill. Here are a few examples:

Cap and Tax – This issue requires a blog of its’ own. Please see my April 25th blog titled “Cap and Trade” or “Bait and Switch”  

Carbon capture and sequestration – This is the term used to describe a technology that captures carbon at its source and stores it before it is released into the atmosphere.  Carbon capture and sequestration (CCS) is designed to be a method of reducing the amount of carbon dioxide (CO2) emitted into the atmosphere.  In general, any CCS system would have the following components: (1) capturing and separating CO2 from other byproducts; (2) compressing and transporting the captured CO2 to the sequestration site; and (3) sequestering CO2 in geological reservoirs or in the oceans. This is not only as ridiculous as it sounds but it creates yet another expense that will need to be passed on to the end user. How much do you suppose it will cost to “dispose” of carbon dioxide? We better hope they never apply this logic to methane or nobody will be able to afford hamburger! 

Smart Grid – This is a distribution system that allows information to flow from a customer’s electric meter in two directions: both inside the house to thermostats, appliances and other devices then back to the utility. The bill facilitates the deployment of a Smart Grid, including measures to use it to reduce utility peak loads and promote capabilities in new home appliances.  States and utilities would determine and publish peak demand reduction goals. The goals would specify a reduction to a lower peak demand by 2012.  The bill also directs the Federal Energy Regulatory Commission (FERC) to reform the regional planning process to modernize the electric grid plus provide new transmission lines to carry electricity generated from renewable sources. 

New Transmission Lines – The bill does not adequately address the need for new transmission lines the RES will require. These transmission lines would likely be subject to not-in-my-backyard opposition that impedes permitting. How the states and utilities will work through these issues remains to be seen but it will likely be expensive and challenging. Also additional costs for renewable energy transmitted from far away resources across longer transmission lines to states without such resources could further impact prices. 

Nationalizing the Grid – Under this bill the Federal Power Act is amended to require the FERC to adopt grid planning principles to achieve national policy goals. These goals include energy efficiency, a Smart Grid, and underground transmission technologies. Although better transmission infrastructure is the key to reliability, nationalizing the development of the grid might nationalize costs and raise questions on eminent domain. Again any program that the government is in charge of planning is going to drive up costs not efficiencies. 

Industrial Energy Efficiency – Under this plan the Dept. of Energy would develop industrial energy efficiency certification standards.  It also establishes a financial award program for electric or thermal energy generation facilities, which currently use fossil or nuclear fuel. Theoretically, this would encourage additional types of thermal energy production.  The legislation authorizes “such sums” for these awards. 

Building Energy Efficiency – The bill also contains several “energy efficiency programs” for commercial and residential buildings.  The legislation sets targets for national building codes to make a 30 percent improvement in energy efficiency within three years, and a 50 percent improvement starting with building codes released in 2016 and beyond using 2004 or 2006 codes as a baseline.  The Federal government will provide funding to States to implement these requirements. 

Lighting and Appliance Energy Efficiency – There will be several new federal standards for lighting and household appliances.  The bill would create a new standard for outdoor lighting fixtures effective in 2011, with progressively tougher standards by 2015.  The legislation would place new energy standards on appliances and would even make it a federal offense to sell appliances that do not meet the new requirements. 

International Reserve Allowance Program – Border tax adjustments or border tax assessments, are import fees levied by carbon-capping countries on goods manufactured in non-carbon-capping countries. We used to call these tariffs. The bill establishes a program to set up binding agreements committing all major greenhouse gas emitting nations to contribute equitably to the reduction of global GHG emissions.  Since we can not require foreign nations to cap their own emissions, the bill establishes a border adjustment program to require foreign manufacturers and importers to purchase emission allowances to “cover” the carbon emitted in the production of products being sold in the United States. The idea is to provide U.S. manufacturers competitive relief against their foreign counterparts. Any cost to foreign producers will be passed on to U.S. consumers.  Not only will domestic products be more expensive, but so will foreign goods. This will likely have devastating effects on free trade and foreign relationships.  

We, as Americans, have a duty to be good stewards of the planet. We have a responsibility to improve the way we generate energy and manage the earth’s resources. However, living up to these responsibilities does not require us to abandon the principles of government that made our nation strong and powerful. We have a responsibility to future generations of Americans which in addition to a healthy environment includes leaving them a free, sovereign and prosperous nation like the one our parents and grandparents left us. We do not have to choose between the American Dream and a healthy planet – we can have both. We certainly do not need a bunch of politicians and left wing scientists with an agenda manufacturing a crisis to do their own experiment in social re-engineering. 

“I think if we don’t overthrow capitalism, we don’t have a chance of saving the world ecologically. I think it is possible to have an ecological society under socialism. I don’t think it’s possible under capitalism.” – Judi Barri, Earth First

General Electric (NYSE:GE) is the parent company of the major media conglomerate NBC Universal, which owns media outlets NBC, MSNBC and CNBC. At times that has led to the lines between corporate advocacy and journalism being blurred. GE C.E.O. Immelt used his platform at CNBC to make the case for a cap-and-trade program to curb emissions – something Obama has called for and one Congressional committee is debating this week. “There’s going to have to be a price for carbon,” Immelt said. “In some way, shape of form, you’re going to have to create some certainty. You have to make technology your friend in this debate. ….. I think about things like global warming. We’ve been on this for four or five years.” Immelt contended he wasn’t an environmentalist, despite criticism that his networks’ have patterns of promoting the green agenda. Immelt told “Squawk Box” the science surrounding man-caused global warming was “compelling” and that it was only a matter of time before something will be done about carbon emissions. The General Electric CEO said he favored a cap-and-trade system to regulate carbon emissions versus a carbon tax. – source: Business and Media Institute 5/20/09

More government intervention is not the answer to improving the environment. Besides, the science does not support the claims the U.N., Al Gore, the media and other fear mongers are making. We do not need to redistribute our wealth as the socialist environmentalists are demanding. We also do not need to make elite multi-national corporations any richer. GE is an example of just such a company. They have used their media empire (NBC, CNBC & MSNBC) to promote fear with heavy handed marketing of the “green” agenda and climate change issues. Meanwhile, they have heavily invested in alternative energy establishing a huge footprint in wind power, solar power as well as smart grids and those high efficiency appliances I mentioned earlier. GE also spent an estimated $20 million on lobbying efforts in support of their “green” business plan. Also just for good measure, GE recently announced the launch of a new subsidiary called Greenhouse Gas Services, which will facilitate the trading of carbon tax credits. There is your answer on why Mr. Immelt prefers carbon credits to carbon taxes! Do you suppose they have a motive that goes beyond their corporate concern for a healthy planet? 

The net result of this unfathomable bill will be higher energy prices, reduced global competitiveness, continued job loss, more government regulation, a stifling of free markets and a reduction of the standard of living for all Americans. This bill has the potential to effectively kill what remains of capitalism in our country. We must block this legislation. We can improve our environmental stewardship without killing our economic system. Write your Congressional and Senatorial representatives and tell them to vote for America by voting against this bill. Our country’s future as a sovereign world leader depends on it. 

“The only hope for the world is to make sure there is not another United States: We can’t let other countries have the same number of cars, the amount of industrialization, we have in the U.S. We have to stop these Third World countries right where they are. And it is important to the rest of the world to make sure that they don’t suffer economically by virtue of our stopping them.”—Michael Oppenheimer, Environmental Defense Fund

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