On June 2, the United States Senate will begin debate on
America's Climate Security Act (S. 2191), sponsored by Senators
Joseph Lieberman (I-CT) and John Warner (R-VA). The
Lieberman-Warner bill (LW) would restrict energy use to combat
global warming. Like global warming itself, the bill has been the
subject of considerable hype and little hard-nosed analysis. For
this reason, there are several myths about it that need to be
Myth #1: LW would not be expensive.
Fact: Simply put, LW works like a massive energy tax. By
restricting carbon dioxide emissions from coal, oil, and natural
gas--with a freeze at 2005 levels beginning in 2012, to a 70
percent reduction in 2050--the bill forces down supply and thus
boosts the price of energy. In fact, if energy prices did not go
up, then the targets in the bill would not be met. As energy is the
economy's lifeblood, and 85 percent of it comes from these fossil
fuels, the impact will be substantial. Cumulative gross domestic
product (GDP) losses could reach $4.8 trillion by 2030, according
to an analysis conducted by the Heritage Foundation. The
Massachusetts Institute of Technology, the Environmental Protection
Agency, Charles River Associates, and the National Association of
Manufacturers have all conducted studies predicting significant
economic burdens on consumers should the bill be enacted.
Myth #2: The costs fall on industry, not consumers.
Fact: Virtually all the burden imposed by LW falls upon
consumers. The bill will spur net job losses well into the hundreds
of thousands, and possibly nearing one million. Particularly hard
hit is the manufacturing sector where over one million jobs will be
lost by 2022 and two million by 2027. The losses in household
incomes could reach $1,026 per year by 2015. Annual household
energy-price increases could hit $1,000 by 2030, including a 29
percent increase in the price of gasoline from 2008 levels.
Myth #3: Global warming is a crisis that must be
addressed at all costs.
Fact: Global warming is a concern, not a crisis. Both the
seriousness and the imminence of the threat are overstated. For
example, the recent United Nations Intergovernmental Panel on
Climate Change report estimates 7 to 23 inches of sea level rise by
the end of the century--far less than the widely popularized claims
of 18 to 20 feet and little more than ongoing trends over the past
several centuries. The attempt to link Hurricane Katrina with
climate change is directly contradicted by the World Meteorological
Organization and many scientists. Overall, current and expected
future temperatures are far from unprecedented, and are highly
unlikely to lead to catastrophes.
Myth #4: LW effectively addresses the threat of climate
Fact: Even assuming the worst of global warming, LW
reduces the threat by a minuscule amount. The bill reduces
emissions of carbon dioxide and other greenhouse gases in the
United States only. China has overtaken America as the world's
largest emitter, and its emissions growth is several times greater
than that of the U.S. India and other fast-developing nations are
on a similar trajectory. Thus, the unilateral impact of the bill on
global emissions would be inconsequential. At most, it would reduce
the earth's future temperature by one or two tenths of a degree
Celsius--too small to even verify. In other words, LW is all
economic pain for no environmental gain.
Myth #5: LW's cap-and-trade approach is a proven
Fact: Critics of the cap-and-trade approach in LW, in
which emissions are capped and regulated entities may trade their
rights to emit, point to the European Union's substantial
difficulties since initiating its own cap-and-trade program in
2005. Most E.U. nations are not on track to meet their targets, and
many are seeing their emissions rise faster than those in the U.S.
The program is furthermore plagued by accusations of fraud and
unfairness. LW essentially adopts the European approach
Overall, the Lieberman-Warner bill promises substantial hardship
for the economy overall, for jobs, and for energy costs. Given
current economic concerns and energy prices, this is the last thing
the American people need. At the same time, the environmental
benefits would likely be small to nonexistent. The Lieberman-Warner
bill fails any reasonable cost-benefit test.
Lieberman is Senior Policy Analyst for Energy and
Environment in the Thomas A. Roe Institute for Economic Policy
Studies at The Heritage Foundation.