Opinion
CEI Expert Warns Against Central Planning In Testimony Against Cap and Trade
By: Kevin Mooney
Commentary Staff Writer
04/23/09 10:16 AM EDT
Europe’s failed experiment with cap and trade policies should give pause to U.S. congressional figures who are now considering a draft version of the “American Clean Energy and Security Act of 2009.” Rep. Henry Waxman (D-Calif.), chairman of the House Energy and Commerce Committee, and Rep. Edward Markey (D-Mass.), chairman of the Energy and Environment Subcommittee introduced the bill in March.
Myron Ebell, director of Energy and Global Warming Policy, at the Competitive Enterprise Institute (CEI), cautioned against embracing “cap and trade” policies that have not worked as advertised in the European Union in testimony earlier this week before the House Energy and Commerce Committee. Ebell also said the “Waxman-Markey” bill would open the way to even greater government intrusion into the economy at the expense of the private sector and consumers.
“Cap-and-trade has been widely sold as a market-based approach to reducing emissions, he argued. “This is terribly misleading. Cap-and-trade subordinates markets to central planning. It takes the most important economic decisions out of the hands of private individuals acting in the market and puts them in the hands of government. The record of central planning in the twentieth century has not been judged a success, and most centrally-planned economies collapsed towards the end of the last century. Perhaps the advocates of cap-and-trade can find some glimmer of hope in the persistence of Cuba and North Korea, which are both models of economies that have commendably low, indeed negligible, greenhouse gas emissions.”
Special interest groups and U.S. companies active with the U.S. Climate Action Partnership (USCAP) are supportive of cap and trade policies because they expect to reap substantial profits at the expense of consumers who will be forced to absorb higher energy costs, Ebell suggested .
It should be noted that most of the environmental organizations that belong to USCAP largely serve as front groups for big business interests,” Ebell said. “Thus, the authors of the draft bill have invited the beneficiaries of what could turn out to be the biggest transfer of wealth from consumers to special interests in American history to write the rules for this legalized plunder. This is outrageous. It is like asking the foxes to design the chicken coop.”
Although proponents of “cap and trade” claim that the costs associated with the new regulatory regime would be much lower than what has been described in various economic reports, there is tangible data within the EU that suggests otherwise, Ebell pointed out.
“The initial evidence from the countries that ratified the Kyoto Protocol and thereby undertook solemn, binding (but unenforceable) commitments to reduce their emissions suggests that the costs are going to be extremely high,” he said. “For example, gasoline taxes in major European Union member nations are now three to four dollars a gallon. This translates roughly into three to four hundred dollars per ton of carbon dioxide. Yet according to the European Environment Agency, greenhouse gas emissions in the transportation sector increased 26% in the EU-15 between the Kyoto baseline year of1990 and 2006.”
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