WASHINGTON – U.S. Senator Pete Domenici, ranking member of the Senate Energy and Natural Resources Committee, today warned of “dire consequences” if the proposed Lieberman-Warner cap and trade legislation becomes law.
At an Energy Committee hearing to receive testimony on energy and related economic effects of global climate change legislation, Domenici noted that all eleven economic analyses done on such legislation found that cap and trade would result in higher energy prices for Americans. Of those, seven have been specific to Lieberman-Warner, and all found that the bill will have a negative impact on the economy, ranging from $444 billion to $4.8 trillion by 2030.
“Addressing global climate change is one of the great challenges of our time, and I have the greatest respect for the goals and efforts of each bill’s authors, and I also appreciate the hard work that has gone into these studies. But a range of more than $4.5 trillion is as massive as it is inconclusive, and has left me concerned about the dire consequences that Lieberman-Warner could have for our nation,” Domenici said.
Today’s hearing featured a review of projections done by government agencies and outside groups on the economic impact of cap and trade legislation. Domenici pointed out that such projections are an inexact science. For example, the Energy Information Administration’s 2005 Annual Energy Outlook projected the price of oil in 2010 as $25 per barrel, a prospect which seems very unlikely now, as oil approaches $129 a barrel today.
Domenici’s concerns with Lieberman-Warner stem not only from the impacts on the economy, but also the overall effectiveness of the proposal. The European Union began operating a cap and trade program in 2005, yet has seen an annual increase in carbon dioxide emissions of about one percent per year.
“Any reasonable amount of time spent looking at cap and trade proposals leads to more questions than answers. While that may be acceptable for scientific endeavors, it is not a very sound footing from which to embark upon policy-making. Assume for a moment that Congress passes, and the President signs, the Lieberman-Warner legislation. What then will we have accomplished for the environment? As it turns out, the answer is next to nothing,” Domenici said.
“This is a global program, but without further international action, the Lieberman-Warner bill would reduce the atmospheric concentration of greenhouse gases by a mere one percent by 2050. To achieve that reduction, we may subject America’s economy, prosperity, and global competitiveness to irreparable harm,” he continued.
Domenici noted that China has already surpassed the United States in greenhouse gas emissions, and that the U.S. has already stood strongly against the idea of unilateral action at a time when the American economy was significantly stronger than it is today. In 1997, the Senate passed a resolution indicating its lack of support for the Kyoto Treaty on a 95-0 vote, in part because the treaty did not include developing nations and because it “could result in serious harm to the United States economy.” In the quarter immediately preceding that vote, the American economy grew 5 percent. Last quarter—as the Senate is poised to vote on Lieberman-Warner—the U.S. economy grew by just 0.6 percent.
“We have already experienced record prices for oil, gasoline, and other commodities this year. To me, it is more than a little ironic that the free market, which so many of my colleagues have criticized as responsible for those high prices, is the very same mechanism they ask us to trust for containing costs associated with a cap and trade regime,” Domenici said.
“We, as a Congress and a nation, must realize that cap and trade is neither our only option nor our best option for addressing global climate change. Rather than choosing among cap and trade proposals, we should look at alternative measures—promoting nuclear power, advancing clean energy tax incentives, and accelerating clean technologies,” he continued.
Although the manager’s amendment, which will contain the final text of Lieberman-Warner, has not yet been made available to Senators by the Environment and Public Works Committee, the Majority is nevertheless expected to bring the bill to the floor immediately following the Memorial Day recess.