10 Nov 2007 Senate Hears Testimony on the “Hurt America’s Poor Act”

From Peyton Knight:

The Senate Committee on Environment and Public Works heard testimony Thursday regarding the “America’s Climate Security Act of 2007” (S. 2191) sponsored by Senators Joe Lieberman (I-CT) and John Warner (R-VA). The bill would be better named the “Hurt America’s Poor Act,” as it would mandate drastic caps on and reductions of greenhouse gas emissions in the electric power, transportation and manufacturing sectors, thus making energy more expensive and disproportionately harming the poorest Americans.

Just how drastic are the reductions?

As Dr. Margo Thorning, Senior Vice President and Chief Economist for the American Council for Capital Formation, pointed out in her testimony, the Act “requires reducing emissions to 2005 levels by 2012 and then lowers emissions at a constant rate, reaching 1990 levels by 2020 and then a target of 65 percent below 1990 levels by 2050.” Dr. Thorning notes that the gap between what the U.S. Department of Energy’s Energy Information Administration forecasts emission levels in the U.S. to be in 2030 and the emissions level S. 2191 mandates for the same year is a whopping 55 percent.

According to Dr. Thorning, “most of the cost of meeting a cap on CO2 emissions would be borne by consumers, who would face persistently higher prices for products such as electricity and gasoline. Those price increases would be regressive in that poorer households would bear a larger burden relative to their income than wealthier households would.”

Dr. Thorning also dispels the notion that mandatory emissions caps will spur technological innovation.

“Caps on emissions are not likely to promote new technology development because caps will force industry to divert resources to near term, ‘end of pipe’ solutions rather than promote spending for long-term technology innovations that will enable us to reduce GHGs [greenhouse gasses] and increase energy efficiency,” reads her testimony. “An emission trading system will send exactly the wrong signals to investors because it will create uncertainty about the return on new investment.”

Emissions trading hasn’t exactly been a screaming success in reducing emissions in Europe. Dr. Thorning points out that emissions in the 15 major industrial countries in the European Union are projected to be 7.4 percent above 1990 levels in 2010, according to the European Environmental Agency. Which means these countries will almost certainly miss their Kyoto Protocol target of 8 percent below 1990 emissions levels by 2010-2012.