The Heritage Foundation is no big fan of central planning or government subsidies. So while we commend John McCain for recognizing that nuclear energy ought to have a role in U.S. energy policy, we do not believe the federal government should be setting arbitrary targets like 45 or 100 nuclear power plants in X number of years. Instead the government should focus on providing the adequate oversight and sound regulatory environment for the private nuclear market to flourish.
That said, the numbers that McCain did throw out, are a good reason to revisit many of the cost-benefit analyses that government agencies produced for the Lieberman-Warner global warming bill. If it works perfectly as designed, the Lieberman-Warner carbon cap approach is nothing more than a tax on producing carbon. Any carbon tax will raise the price Americans pay for energy since so much of America’s energy comes form carbon intensify sources like coal and gasoline. Just as higher energy prices are harming the economy today, a carbon tax would also harm the U.S. economy. However, the more non-carbon sources that America brings online, the less pain consumers will feel at the pump and in their power bills.
Both the Environmental Protection Agency (EPA) and Energy Information Administration (EIA) produced studies estimating the economic harm that Lieberman-Warner would cause. Both EPA and EIA also assumed that, despite the fact that the U.S. has not built a power plant in two decades, many new power plants would come online within the next decades. How many? In order for the EPA to estimate that Lieberman-Warner would only raise U.S. energy prices by 44%, they assumed the U.S. would build 50 new nuclear power plants in the next 25 years. In order for the EIA to estimate that Lieberman-Warner would only raise electricity prices by 64% by 2030, they assumed the U.S would build almost 200 nuclear power plants by 2035.
Whether Barack Obama or McCain win in November, we are bound to see another carbon capping bill like Lieberman-Warner in Congress. The next time around, lawmakers should demand that government agencies provide at least two sets of cost-benefit estimates: one in which the nuclear industry is allowed to build again, and one in which it isn’t. Then we’ll be able to get a much more accurate picture of how much harm carbon capping will really cause.