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In the wake of Copenhagen’s spectacular blowup, what will happen to the domestic regulation of carbon? That idea is clearly advancing in one area: The Environmental Protection Agency announced in early December that it will start enforcing strict carbon controls. (See “The EPA’s Carbon Footprint,” page 36.) But what about the carbon rationing proposals advanced by the White House and the Democratic leadership in Congress?
Back in June, the House of Representatives passed the Waxman-Markey Act, which aims by 2020 to reduce U.S. carbon emissions 17 percent below the level emitted in 2005. When House Speaker Nancy Pelosi (D-Calif.) dropped by the Copenhagen conference, she said of Waxman-Markey, “It’s all about the jobs.” To hear Pelosi talk, saving the planet from climate doom is incidental to making sure Americans are employed making solar panels and weatherizing houses. Sen. John Kerry (D-Mass.), a co-sponsor of an energy and climate change bill in the Senate, similarly asserted in Copenhagen, “Our bill is essentially a jobs bill.”
Showering government largess on an industry will certainly increase employment in that industry. It’s much less clear that such subsidies will produce more jobs on balance. Kerry thinks it will, claiming that when Germany enacted “strong policy mechanisms to drive investment in solar power and other renewable energy sources,” the result supposedly was employment growth: “Renewable energy usage has tripled to 16 percent, creating 1.7 million jobs. By 2020, Germany’s clean energy sector will be the biggest contributor to the nation’s economy.”
An October 2009 study by RWI, a nonprofit German economic think tank, however, concluded that policies pushing renewable energy end up producing “job losses from crowding out of cheaper forms of conventional energy generation, indirect impacts on upstream industries, additional job losses from the drain on economic activity precipitated by higher electricity prices, private consumers’ overall loss of purchasing power due to higher electricity prices, and diverting funds from other, possibly more beneficial investment.” The report called Germany’s experience “a cautionary tale of massively expensive environmental and energy policy that is devoid of economic and environmental benefits.”
Perhaps carbon rationing and higher energy prices will help us avoid a climate disaster. But these measures will tend to increase rather than decrease unemployment. The carbon rationing proposals in Congress are not really job bills, a fact that will make them harder to pass. Republicans seem confident that Waxman- Markey, which passed the House in June by a margin of just seven votes, will never make it to the Senate.
Before the Copenhagen conference collapsed, Sen. Kerry declared that getting climate change legislation passed in the U.S. “can be enormously assisted by what happens here.” Once the nondeal was announced, the Massachusetts senator gamely peddled the same line: “With this in hand, we can work to pass domestic legislation early next year to bring us across the finish line.” We’ll all find out this spring who is the better political prognosticator, Kerry or Rep. Fred Upton (R-Mich.), who said, “This Waxman- Markey bill would lose by 50 votes if it were up for a vote now. This bill is dead in the water as it is and that’s why it’s DOA in the Senate.” After the diplomatic debacle in Copenhagen, my bet is on Upton.
And if the U.S., as the world’s second biggest carbon producer, does not adopt some form of rationing, it is highly unlikely that the rest of the world will do so. On the way to his plane, President Obama declared the Copenhagen Accord a “meaningful and unprecedented breakthrough.” It would be more accurate to call it a meaningful and unprecedented breakdown— one that could end up sparing the world from a costly and flawed scheme of global carbon rationing.
Ronald Bailey (firstname.lastname@example.org) is reason's science correspondent.