Energy & Environment

Energy Tax Prevention Act: The Only End to Cap and Trade

The evidence is in:  The Obama Environmental Protection Agency’s cap-and-trade agenda is destroying jobs and decreasing domestic energy supplies.  That agenda is slowing our economic recovery.  It will mean higher gas and electricity bills for consumers. 

Congress can stop this attack on jobs and affordable energy by passing the Energy Tax Prevention Act of 2011.  The bill would stop EPA’s cap-and-trade regulations, which are designed to make the energy we use more expensive. 

They will also strangle economic growth.  As the National Association of Manufacturers wrote, “At a time when our economy is attempting to recover from the most severe recession since the 1930s, [EPA] regulations, with no guidance from Congress, will establish disincentives for the long-term investments necessary to grow jobs and expedite economic recovery.”

Workers and consumers will feel the pain.  A study by CRA International estimates that the EPA’s cap-and-trade regulations could increase wholesale electricity costs by 35% to 45% and reduce average worker compensation by $700 a year.  What would they get in return?  EPA itself has conceded that its unilateral actions will be overwhelmed and rendered meaningless due to ever-increasing emissions from China and India.

I introduced the Energy Tax Prevention Act (S 482) with House Energy and Commerce Committee Chairman Fred Upton (R.-Mich.) on March 3.  The House is expected to vote on the bill soon, and it has bipartisan support.  The Senate could vote on the bill, in the form of an amendement sponsored by Minority Leader Mitch McConnell, as early as this week.  

There is a bipartisan majority in the Senate that favors blocking or restricting the EPA’s cap-and-trade agenda in some way.  The vote on the McConnell amendment comes down to a simple choice:  Are you for jobs and affordable energy or President Obama’s energy taxes and bureaucratic regulations? 

Of course, some want to avoid this stark choice, so they have devised “alternatives,” which amount to, as the newspaper Politico put it, “political cover”—they provide convenient talking points but keep the EPA’s cap-and-trade agenda largely in place.  One example comes from Sen. Jay Rockefeller (D.-W.Va.), who has proposed a narrow two-year delay of the EPA’s global warming regulations. 

I agree with Sen. Rockefeller that, as he put it last year, “Congress—not the unelected EPA—must decide major economic and energy policy.”  But make no mistake:  A vote for the Rockefeller bill is a vote for higher energy taxes and more regulations.  That’s because a two-year delay provides no certainty for businesses of all sizes planning for new, long-term investment.  That lack of certainty is already having a deleterious effect on jobs and economic growth. 

Consider Nucor Steel.  The company planned a $2 billion investment that would have created 2,000 construction and 500 permanent jobs.  But the project was curtailed—by more than 50%—largely because of the EPA’s regulations.  Lion Oil, a refinery based in El Dorado, Ark., faced a similar fate:  The EPA’s cap-and-trade agenda was, according to the company, a “critical factor” that delayed a “several hundred million” dollar refinery expansion, slated to create 2,000 jobs.

And under the Rockefeller bill, EPA and the states would have every incentive to stall new construction permits.  The EPA could even move forward—as it is now—with plans to regulate power plants and refineries, actions that will assuredly raise gas and electricity prices.  In short, the Rockefeller bill is not a solution.

The same applies to an amendment sponsored by Sen. Max Baucus (D.-Mont.).  The amendment is modeled on the EPA’s “tailoring rule,” which temporarily exempts smaller sources—schools, hospitals, farms, restaurants—from the EPA’s cap-and-trade regulations.  That sounds good, but the rule blatantly violates the law, as the EPA changed the emissions thresholds established by Congress.

Hence the Baucus amendment:  It would codify the EPA’s permitting exemptions for stationary sources that emit fewer than 75,000 tons a year of greenhouse gases.  This exemption, which is actually more stringent than the EPA’s, purportedly is designed to help farmers and small businesses.  But as with the Rockefeller bill, it allows the rest of the EPA’s cap-and-trade agenda to move forward.  So businesses and farmers would still face higher costs for diesel and fertilizer, while small businesses would face higher electricity costs. 

The American Farm Bureau is wise to the false charm of the Baucus amendment.  It testified recently that, even with limited permiting exemptions, “Farmers and ranchers would still incur the higher costs of compliance passed down from utilities, refiners, and fertilizer manufacturers that are directly regulated as of January 2, 2011.” 

Manufacturers feel the same way.  The Industrial Energy Consumers of America wrote that the Baucus approach “does not solve the underlying problem that regulating [greenhouse gases] under the Clean Air Act is very costly for manufacturing, will impact global competitiveness, and encourage capital investment outside the United States .”

The only way to stop the “higher costs of compliance” the Farm Bureau rightly fears is to pass the Energy Tax Prevention Act.  It is the only legislation that puts an end to the EPA’s cap-and-trade agenda, once and for all. 

It’s also important to note that the Energy Tax Prevention Act does not affect, in any way, the EPA’s authority to regulate pollution, including toxins, which can have public health impacts.  The Natural Resources Defense Council (NRDC) is running ads shamelessly portraying children with breathing apparatuses, suggesting that passing the bill would increase or exacerbate asthma.  The NRDC is lying.  There are no direct health impacts from carbon dioxide emissions.  And notably, carbon emissions have slightly declined in the U.S., while cases of asthma in children have increased

The contrast couldn’t be starker:  The Energy Tax Prevention Act stops the EPA’s energy taxes and costly regulations, freeing up job creation and economic growth.  The Rockefeller and Baucus bills free up the EPA to tax energy and stop new jobs, new construction, and America’s economic recovery.

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