21 Jun 2005 Cap-and-Trade is More Pain Than Gain; Early Credit Proposal to Stem Climate Change Would Create Special Interest Lobby While Doing Little for the Environment

Efforts to encourage corporations to curb “greenhouse gas” emissions through a mandatory “cap-and-trade” scheme imposes a hidden tax on small businesses and amounts to a Kyoto-style rationing of energy use, says the National Center for Public Policy Research.

Early crediting legislation proposed by Senator Jeff Bingaman to encourage U.S. utility companies to slow the intensity of “greenhouse emissions” by 2.4 percent starting in 2010 would hurt small business while aiding a select few corporations.

However, small businesses and family farms lack the political contacts and financial resources to negotiate credit deals with the mammoth bureaucracy of regulators, inspectors and lawyers needed to administer the regulations. As a result, large utilities would likely get the biggest share of early credits while small businesses would be saddled with a disproportionate share of the regulatory burden.

“Forcing a Kyoto-style energy rationing on the American people would result in more pain than gain,” said Amy Ridenour, president of the National Center for Public Policy Research. “The economic costs – estimated at $331 billion between 2010 and 2025 by the Department of Energy – are staggering and will only increase as companies make the cheapest cuts now and develop clever attempts to game the system.”

Ridenour also warned that once a rationing regime is in place, special interests will be encouraged to push for steeper energy caps. “As more money can be made from the limits and high energy prices, well placed special-interest groups and corporations will pressure Congress to lower the caps further, thus limiting energy consumption and leading to higher energy prices for consumers.”

For more information, contact Ryan Balis at (202) 507-6398 or [email protected], or visit the National Center’s website at www.nationalcenter.org. The National Center for Public Policy Research is a non-profit 501(c)(3) communications and research foundation dedicated to providing free market solutions to today’s public policy problems.