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Carbon Taxation: Just Say No (NAM-led letter represents a broad business front)

“A carbon tax would have a net negative effect on consumption, investment and jobs, resulting in lower federal revenues from taxes on capital and labor. Any revenue raised by a carbon tax would be far outweighed by the negative impacts to the overall economy.”

Pricing carbon dioxide (CO2) to wring competitive advantage and to appease environmental pressure groups once drew notable business support from the big players, such as Ken Lay’s Enron and John Browne’s BP. But not from Lee Raymond’s Exxon Mobil, although Rex Tillerson’s Exxon Mobil supports a carbon tax as an alternative to cap-and-trade.

But presumably, as a key member of the National Association of Manufacturers (NAM), Exxon Mobil is opposed to a carbon tax in the current political environment. Another big energy and political player, Dow Chemical, which dropped out of NAM on the gas export issue, is against a carbon tax judging from its Australian experience.

Where are other big companies, or small-business groups, when it comes to a carbon tax? No doubt their math shows that such a tax would hurt the bottom line given that a tax on energy is a tax on just about everything. And little doubt that the idea of a “revenue neutral” tax swap is rejected as other worldly (as something from the academic world, not the real world).

Carbon Tax Center: Business Shutout?

The The Carbon Tax Center (CTC), for example, lists various groups of tax supporters–editorialists, scientists, economists, opinion leaders, writers, pundits, and conservatives–but has no category for business groups. The Center’s arguments for a carbon tax–better weather and job creation–are about as weak as they come. Here is the pitch:

A string of extreme weather events, topped recently by Superstorm Sandy, bring the message home: Earth’s climate is changing in costly and painful ways. And yet we’ve barely started transitioning from fossil fuels to renewable energy and efficiency. Why not? Because price signals are too weak. The prices of fossil fuels don’t come close to reflecting their true costs. A permanent and increasing U.S. carbon tax will reduce the emissions that are driving global warming and generate revenue to pay for cutting regressive taxes that thwart job-creation.

In fact, the carbon tax is a fringe proposal that even President Obama is scared to front. And without business cover, or any Republican interest, money spent on promoting such a tax is money wasted, period.

Forty-Nine-Trade-Association Letter

On May 2, the National Association of Manufacturers and dozens of other trade associations sent a letter to the leadership of several congressional committees including the Senate Finance, Senate Environment & Public Works, House Ways & Means and House Energy & Commerce Committees expressing concerns with continued support by some in Washington for a carbon tax.

The letter follows:

Dear Chairmen Baucus and Camp and Ranking Members Hatch and Levin:

The undersigned organizations, working together in support of manufacturing in the United States, are writing to express our concern with a carbon tax.

Manufacturers use one third of all energy consumed in the U.S. and depend on reliable, low-cost energy sources to compete in a global marketplace. A carbon tax would increase the costs of natural gas, coal, and petroleum products, resulting in higher production costs, less spending on non-energy goods, fewer jobs and slower economic growth.

A study recently commissioned by the National Association of Manufacturers found that under the two scenarios they modeled a carbon tax was bad for the economy and would have a negative effect on jobs, energy costs and industrial output. A copy of the study is enclosed.

Nationally, a carbon tax designed to reduce CO2 levels by 80 percent could place tens of millions of jobs at risk and raise gasoline prices by over $10 a gallon, natural gas prices by almost $60 per MMBtu, and residential electricity prices by over 40 percent.

The study also found that a carbon tax would have a negative impact on manufacturing output. In energy-intensive sectors manufacturing output could drop by as much as 15.0 percent and in non-energy-intensive sectors by as much as 7.7 percent. The overall impact on jobs would be substantial, with a loss of worker income equivalent to between 1.3 million and 1.5 million jobs in 2013 and between 3.8 million and 21 million by 2053.

Meanwhile, U.S. manufacturers continue to develop and implement measures that use energy more efficiently, utilize alternative sources of energy, and develop new technologies leading to fewer GHG emissions–all this without artificially increasing the cost of energy with a carbon tax. Through innovation, manufacturers have led a quantum shift in energy production in this country that, along with the potential to create millions of new jobs, will help lead to a sustainable future for generations to come.

We need policies that help foster continued innovation and growth, not stifle progress by adding crippling costs to energy use.

As the enclosed study concludes, a carbon tax would have a net negative effect on consumption, investment and jobs, resulting in lower federal revenues from taxes on capital and labor. Any revenue raised by a carbon tax would be far outweighed by the negative impacts to the overall economy.

With the right policies, manufacturers and their suppliers will lead the economic recovery, create millions of jobs and develop the technologies that will lead to a sustainable future.

We thank you for your attention to this important manufacturing issue.

Sincerely,

American Fuel & Petrochemical Manufacturers

American Coke & Coal Chemicals Institute

American Composites Manufacturers Association

American Forest & Paper Association

American Foundry Society

American Institute for International Steel

American Iron and Steel Institute

American Loggers Council

American Petroleum Institute

AMT – The Association For Manufacturing Technology

APA – The Engineered Wood Association

Appalachian Hardwood Manufacturers Inc.

Architectural Woodwork Institute (AWI)

Brick Industry Association

Can Manufacturers Institute

Composite Panel Association

Fabricators and Manufacturers Association, International

Farm Equipment Manufacturers Association

Fontana Wood Preserving, Inc.

Forging Industry Association

Glass Packaging Institute (GPI)

INDA, The Association of the Nonwoven Fabrics Industry

Independent Lubricant Manufacturers Association

Industrial Energy Consumers of America

Industrial Fasteners Institute

Interlocking Concrete Pavement Institute

Kitchen Cabinet Manufacturers Association

Lignite Energy Council

Metal Powder Industries Federation

Metals Service Center Institute

Mississippi Forestry Association

Montana Wood Products Association

National Association of Manufacturers

National Automatic Merchandising Association

National Council of Textile Organizations

National Marine Manufacturers Association

National Mining Association

National Oilseed Processors Association

National Wood Flooring Association

National Wooden Pallet and Container Association

Non-Ferrous Founders’ Society

North American Die Casting Association

Oregon Women In Timber

Paperboard Packaging Council

Plastics Pipe Institute

Portland Cement Association

Precision Machined Products Association

Railway Tie Association

Society of Chemical Manufacturers and Affiliates

2 comments

1 Ed Reid { 05.26.13 at 9:12 am }

There was no mention of “monetizing environmental externalities costs” by the Carbon Tax Center, though they do state that: ” The prices of fossil fuels don’t come close to reflecting their true costs.” They don’t identify the “true costs”, probably because CTC has no idea what the “true costs” are. However, their advocacy for “A permanent and increasing U.S. carbon tax” suggests that the “true costs” are not really important to CTC; only the steadily mounting pressure of an increasing tax matters.

I chuckled at Rob’s description of a “revenue neutral tax swap” as “other worldly”. The rapaciousness of our congresscritters would obviate any possibility of such a tax swap, even if the intent were to redistribute the proceeds for political gain or to promote “social justice”.

I would suggest that the absence of business groups among tax supporters might have something to do with the predictable impact of such taxes to “thwart job-creation”; or, more likely, to accelerate job destruction.

2 Weekly Climate and Energy News Roundup | Watts Up With That? { 05.27.13 at 2:34 am }

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