All the world mourned the human toll taken by the Japanese earthquake and tsunami. Thousands of lives were lost; hundreds of thousands more shattered. Of course, natural disasters inflict economic destruction as well, and estimates of the recent disasters’ cost to Japan are now coming in.
Catastrophe modeler Risk Management Solutions Inc. (RMS) puts economic losses from the earthquake and tsunami between $200 billion and $300 billion. That estimate, RMS says, “reflects not only property damage but secondary consequences, such as disruption to power supplies, evacuations and decommissioning of several nuclear power stations.”
It’s a horrendous price tag. Yet man-made disasters can be even more expensive. Consider this: The Waxman–Markey cap-and-trade proposal advanced last year would wreak just as much economic destruction as Japan’s earthquake and tsunami. One critical difference: The Japanese losses resulted from a once-in-a-millennium natural disaster. Waxman–Markey would inflict the same level of economic damage year after year after year.
A rigorous analysis of Waxman–Markey by The Heritage Foundation’s Center for Data Analysis (CDA) found that the proposal would cost, on average, $300 billion in lost economic activity annually throughout the 24-year period (2012–2035) for which CDA modeled the bill. In some years, the tally was more than twice that amount. (It should be noted that, while the Heritage analysis extended only out to 2035, Waxman–Markey’s emissions reduction standards would have tightened through 2050. Analyses by other groups whose models extend beyond 2035 showed increasing harm to the U.S. economy throughout that extended period.)
The goal of cap-and-trade is to drive energy prices so high that people will use less energy. It’s the same reason Department of Energy Secretary Steven Chu wants U.S. gasoline prices to rise to European levels: to make us use less.
But even after reduced consumption, people still need to drive their cars and turn on lights at home. The impact of cap-and-trade is straightforward: It forces people to spend more and get less. The trade-off for reduced carbon dioxide (CO2) emissions, then, is reduced economic activity—or an economy operating well under its potential. We’ve seen this during the current economic downturn. People are driving less, people are flying less, and companies are pumping out less carbon dioxide because people are simply buying less.
Fortunately, enough of our elected representatives realized the costs of instituting a massive CO2 regulatory regime and stopped cap-and-trade legislation from becoming law in the last Congress. But their job is not complete. Now unelected bureaucrats at the Environmental Protection Agency (EPA) are attempting to bypass the legislative process by using the Clean Air Act to regulate CO2.
Last week, the House Energy and Commerce Committee took the first step toward stopping the EPA by passing a bill barring them from imposing a regulatory regime governing CO2. The full House is expected to vote on the measure before Easter recess, and the Senate could vote on such an amendment today.
Congress should use all means possible to stop the EPA. Then, lawmakers should launch a transparent and honest debate on the EPA’s endangerment finding that claims CO2 is a threat to human health and public safety.