Tuesday, June 30, 2009

GUEST COLUMN: "CAP & TRADE: A National Energy Tax" by Rep. Jeean Schmidt

By Rep. Jean Schmidt (R, OH-02)

Last week the House of Representatives voted to pass what was titled the American Clean Energy and Security Act of 2009. You probably know it as the Cap and Trade Bill. The bill deals with how we balance our need for things like electricity with our stewardship of the environment. The centerpiece of this bill is a cap and trade system designed to limit green house gas emissions, particularly carbon dioxide which is an inevitable byproduct of fossil fuel combustion. The bill tries to regulate and tax the emission of carbon dioxide and thus make energy more expensive.

While the bill’s supporters claim that they are simply making polluters pay, the actual victims paying the cost are Ohio families and businesses, to whom the costs of this scheme will be passed. The end result is a devastating tax on carbon dioxide emissions that will lead to increased energy prices and significant job losses, particularly in Ohio, where we rely on coal for 86% of our electricity.

Under the cap and trade system outlined in the bill, the Federal government will set a cap on carbon emissions for electric utilities, oil refiners and natural gas producers who, combined, account for the generation of approximately 85% of all the energy in the United States. Entities that exceed this cap will be required to purchase “credits” – the right to emit more carbon than allowed – on the open market. As utility companies, oil refiners and natural gas producers are forced to purchase credits, their production costs will increase. These cost increases will be passed on to consumers. It has been estimated that the cost of electricity will rise by 90%, gasoline by 58% and natural gas by 55% between 2012, when cap and trade begins to take effect and 2035, when it is completely phased in.

These higher energy costs will cause pain for Ohio families that are, frankly, feeling plenty of pain already. But, cap and trade will also have a devastating ripple effect. Because almost all companies use electricity, the costs of producing goods will increase and those costs will be passed on to consumers. Farming is a petroleum-intensive business. As the costs of gasoline and other petroleum products rise, so, too, will the farmers’ production costs. And, who will pay for these increased costs? Consumers.

The ripple effect will not just stop there. Ohio factories already hanging on by a thread will be placed at a severe competitive disadvantage in the global marketplace. The cost of their products will rise while the costs of competitors in China and India, where the governments have indicated they have no interest in similarly impeding economic growth, remain the same. Many companies will be forced to close while others will move jobs overseas, probably to India or China, to reduce production costs. It has been estimated that the imposition of cap and trade will lead to the loss of millions of American jobs – millions more than the number of so-called “green jobs” that the bill’s supporters project will be created.

We have all just witnessed the demise of the American Auto Industry. It makes absolutely no sense to raise production costs on American jobs to make them even less competitive with China.

I opposed the creation of this new national energy tax because I believe we can do better for the American people. We need a national energy plan that encourages an “all-of-the-above” approach. We should be working to increase U.S. energy production, encouraging the development of alternative and renewable energy sources and promoting greater fuel efficiency.
I truly believe we all want to live on a cleaner planet. But, the American Clean Energy and Security Act simply goes too far. The bill’s real purpose is to increase electricity rates to make wind and solar power more competitive while ignoring the damage this will cause to our families, workers, and economy. It sacrifices economic growth and opportunity for dubious claims of a cleaner global environment. The American people deserve better.