How Washington Is Sneakily Implementing Cap and Trade

Nicolas Loris / June 07, 2014

Critics of President Obama’s climate change regulations are often labeled by proponents as science deniers. While climate realists is a more accurate description, President Obama is clearly using denier math when he says that the Environmental Protection Agency’s carbon rules for existing power plants will drive down electricity prices.

The EPA’s New Source Performance Standards for GHG emissions from existing sources set reduction targets at 25 percent below 2005 levels by 2020 and 30 percent by 2030. This comes after greenhouse gas regulations for new power plants that will essentially ban the construction of new coal-fired power plants.

Promoting the regulations, the president said, “Your electricity bills will shrink as these standards spur investment in energy efficiency, cutting waste, and ultimately, we’re going to be saving money for homes and for businesses.”

But the reality is when you add the two EPA rules together, as well as forthcoming regulations for major industrial sources such as refiners, you effectively have the regulatory equivalent of cap-and-trade legislation. And it was then-candidate Obama who told us in 2008 that electricity prices would “necessarily skyrocket” under his cap-and-trade proposal.

He got it right in 2008. More than 80 percent of America’s energy needs are met through carbon-emitting conventional fuels. Last year, coal and natural gas provided 66 percent of U.S. electricity generation. The EPA’s regulations are a massive backdoor energy tax that will drive up costs for American families and businesses. Families will pay more to buy less. The vice will tighten from both the production and consumption sides of the economy, resulting in lost income, fewer jobs and less economic growth.

Yet, the president is pitching the climate regulations as a money saver, stressing that there will be “huge incentives for states and consumers to become more energy efficient.” But families and businesses don’t need a federal regulation or mandate to save money on energy. The incentive to save money already exists.

Here’s what bureaucrats in Washington fail to understand. Businesses and families make energy-saving investments when it makes sense to do so. Proponents of energy efficiency regulations and mandates believe that efficiency upgrades always make sense if they save money. And that’s not always the case.

Here’s an example. A family buying a car may choose to buy a more fuel-efficient vehicle to save money on gas, but they may have many other preferences as well, including size and safety. Or a family may just decide to pay less up front for a less-efficient vehicle to free up much-needed money for some greater priority such as electric bills, food or saving for a child’s education.

This does not mean that they do not recognize that they will pay a little extra for gasoline over time. It simply gives them additional flexibility to manage a real world family budget, something all too unfamiliar for the federal government. Whatever the case may be, it is the family’s decision.

Don’t be fooled by denier math. The EPA’s backdoor cap-and-trade regulations are going to drive up energy costs and make us all worse off.

Originally appeared in U.S. News and World Report.