Climate Policies Would Impose a High Cost on FloridaBy Dr. Margo ThorningAs our nation’s federal and state governments rush to enact far-reaching legislation on climate change, there has been far too little discussion of the economic costs such policies would impose. Make no mistake: The financial burdens on individuals would be heavy -- especially in Florida, where the summer heat and humidity keep energy usage high. In addition, Florida has lots of senior citizens, some in frail health and temperature-sensitive and on a fixed income. So the potential economic impact of the climate-change policies being advanced in Washington and Tallahassee makes it clear that it’s time to have a frank discussion of the issue and how these policies might affect families, businesses, and various levels of government. The primary federal legislation, the Climate Security Act of 2007, is co-sponsored by U.S. Senators Joseph Lieberman (I-CT) and John Warner (R-VA). It would establish a cap on greenhouse gas emissions caused by economic activity. The cap’s goal is to stabilize these gases’ concentration by achieving a 63 percent reduction in the 2005 emissions levels by 2050. No doubt most advocates of these policies sincerely desire to pass on a cleaner environment to future generations. However, their efforts overlook critical economic realities that are likely to undermine an already sluggish U.S. economy. One inevitable consequence of the bill would be a dramatic reduction in the burning of fossil fuels, which are used in 86 percent of primary energy production nationally. The effect of such stringent caps would be to raise energy prices, thereby discouraging its use. In that sense, the cap on emissions serves indirectly as a sizable tax on energy use. Let’s consider the potential costs to Florida’s economy from just this federal bill, leaving aside the potential for added problems from similar state efforts. A recent study funded by the American Council for Capital Formation and the National Association of Manufacturers -- and conducted by the independent Science Applications International Corporation -- projected the bill’s potential economic impact in Florida: Up 117,593 jobs lost in 2020 and 293,632 jobs lost in 2030;Moreover, the federal legislation places a disproportionate share of the burden on low-income earners and fixed income seniors. That’s because these groups spend a greater percentage of their income meeting energy-intensive basic needs such as home heating, cooling, and transportation. By 2020, the higher energy prices resulting from these new federal regulations and taxes will mean that Florida’s low-income families could be spending upwards of 18 to 20 percent of their total income on energy costs alone. We must also consider what’s in store for state and local governments and those who rely on their services. The taxpayers pay for the electricity used in government buildings, including public schools. Florida’s schools and hospitals would experience a 28 to 35 percent increase in energy expenditures by 2020 and as much as 123 percent increase by 2030. Large new energy expenses e for state and local governments will require higher taxes or steep cuts in other spending categories. Remember also that governments must fuel their police cars, fire trucks, school buses, and transit vehicles. Under the new emissions caps, fuel prices will climb even faster than today, further straining government budgets. What’s more, by raising energy costs, a key input into local economies, the federal legislation will kill jobs – especially travel-related jobs that are an important factor in Florida’s tourism-dependent economy. Less employment means a shrinking tax base, adversely impacting government budgets and ultimately fueling demands for more spending on welfare and other forms of assistance. What is most worrisome about many of the policies being proposed at the federal and state levels is not merely that the high costs are known well enough to be credibly projected, but also that the environmental benefits are negligible unless China, India and other major emitters reduce their GHG growth sharply.. Meanwhile, China recently surpassed the United State as the world’s largest emitter of greenhouse gases, and China is not engaged in any serious emissions-reduction effort. Neither is India or most of the world’s other fast-developing economies. The net effect is that Americans’ sacrifices will be overwhelmed by emissions increases in other countries. Therefore, as lawmakers ponder policies proposed in the name of curbing climate change, they need to decide whether these measures’ benefits are worth the high costs they’d impose at the national, state, local, and household level.
|