Supporters of the Waxman-Markey climate bill have not seriously disputed the extreme costs and the negligible benefits estimated by critics of the cap-and-trade proposal. I must confess that I was expecting a real fight, but some very important markers seem to have been laid down in this legislative debate. Waxman-Markey supporters are going beyond the math to dispute the conclusion being drawn from the math. And that conclusion, which logically follows, is that cap-and-trade for carbon dioxide is a very bad deal.
Costs: Congressional Republicans claimed that the Waxman-Markey cap & trade bill would push up prices for the typical U.S. household more than $3,100 annually. As I explain here, the MIT economist who thinks the $3,100 figure is bogus concedes that consumers will ultimately pay (in the form of higher prices) for any auction revenues collected by the government. He just refuses to call that a net cost since the government can do something useful with the revenue (such as cut income taxes, fill potholes, etc.).
Benefits: The climate scientists at RealClimate have not challenged Chip Knappenberger’s calculation that Waxman-Markey would alter the global temperature by 9/100ths of a degree F in 2050, the year when the full 83 percent cutback in greenhouse-gas emissions is in force. (This avoided warming leaves 97% of the anthrogopenic warming, hardly a start under any activist’s math.) No one is disputing Knappenberger’s figure–I encourage the reader to skim the discussion at RealClimate–they are merely saying that the U.S. needs to show leadership in order to prod other countries to cap their own emissions.
All Pain/No Gain: So we see that some of the most vehement supporters of cap-and-trade–and the most critical comments on Knappenberger’s analysis at MasterResource–agree that the Waxman-Markey bill would raise prices for households by some $3,100 per year, and would at best avert 9/100ths of a degree in global warming. (Joe Romm’s assertion that cap-and-trade has huge benefits and negligible costs will be the subject of my next post.)
To repeat, this was a surprising, unexpected turn of events in the cap-and-trade debate. I fully expected proponents of Waxman-Markey to claim that households would see only modest increases in energy prices, and that faithful adherence to the emissions reductions mandated by the proposed legislation would avert serious climate change.
But some of the most credentialed and respected supporters of cap & trade are not saying this at all. They agree with the numbers: Waxman-Markey would cost households $3,100 in higher prices per year (possibly offset through truly productive government spending and/or tax relief), in exchange for a world which warms 9/100ths of a degree less by 2050 than it otherwise would.