The Light Switch Tax (Rep. John Culberson)

President Barack Obama and liberals in Congress support federal regulation of carbon dioxide (CO2).  Proponents of CO2 regulation claim that taxing polluters is an effective way to reduce carbon emissions, but the staggering costs of a cap and trade program will stifle our domestic energy and manufacturing sectors and result in major rate increases for consumers.  The cap and trade plan should really be called “the light switch tax,” because if this bill becomes law, you will pay a tax every time you flip your light switch.

Representatives Henry Waxman (D-CA) and Edward Markey (D-MA) recently introduced the American Clean Energy and Security (ACES) Act of 2009, which would create a cap and trade program requiring CO2 emissions to be reduced 17 percent below 2005 levels by 2020 and 83 percent below 2005 levels by 2050.  The bill would set up a cap and trade system that sets a limit (or cap) on total CO2 emissions from fossil fuels and establish a yet to be defined carbon allowance on each utility or company.  Details such as cap levels and which companies are subject to allowances are still being finalized by Democrats, but the outcome looks grim for consumers.

Since fossil fuels supply 85% of US energy demand, taxing one of the most vital and productive sectors of our economy will only prolong and deepen the current recession.  The Heritage Foundation’s Center for Data Analysis’ study of the Lieberman–Warner cap and trade bill (a bill rejected by the Senate last year) found that the legislation would result in total GDP losses of nearly $5 trillion and job losses of 400,000 – 800,000 per year.  The ACES Act is more restrictive and would cause even greater economic damage.  The cost to Texas ratepayers alone could reach $20 billion in added electricity costs, which is an increase of over $600 per year in utility bills, according to a study commissioned by the Electric Reliability Council of Texas.

The non-partisan Congressional Budget Office (CBO) reports that under a cap and trade program, companies would ultimately pass these costs along to their customers in the form of higher rates.  CBO notes, “Regardless of how the allowances were distributed, most of the cost of meeting a cap on CO2 emissions would be borne by consumers who would face persistently higher prices for products such as electricity and gasoline.”

The reason for these dramatic cost increases is simple:  The technology to comply with the steep renewable requirements in this bill does not exist today.  The Waxman-Markey bill requires that 20 percent of electricity production comes from renewable sources (wind, solar, geothermal, etc.) by 2020.  Today Americans get less than 10 percent of their electricity from renewable sources and the technological advancements, transmission capability, and commercial availability needed to meet these lofty standards are years, even decades away.

Economists estimate that consumer spending accounts for 70 percent of our economy.  While our economy is struggling to recover from recession, the last thing we should do is raise taxes on American consumers, which is why I am a co-sponsor of the American Energy Innovation Act. This fiscally responsible approach encourages innovation by investing in renewable energy technology, promotes conservation by providing incentives for reducing energy demand, and increases production of American energy by utilizing available resources and streamlining burdensome regulations.  These steps will make America energy self-sufficient and improve our environment in the process.