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Press Release

For Immediate Release
Contact: Sean C. Bonyun
April 22, 2009
(202) 225-3761

The Washington Times - April 22, 2009

Capping Growth and Trading Jobs Will Devastate our Economy

By Rep. Fred Upton

These are very difficult economic times for our nation. Michigan in particular has been hit hard. Despite our dire economic circumstances, Congress is set to embark upon a costly cap and tax scheme to address climate change and it is the nation's working families who are in the crosshairs.

The statistics are startling. According to an MIT model of a 100 percent auction cap and tax, the American people will be taxed $366 billion in 2015 – four times as much as the President's estimate of $80.3 billion for that year. Job losses under such a plan could be greater than 6 million. Increased energy costs would near $1 trillion in 2030. Increases in electricity costs could be greater than 100 percent. A family of four could expect to pay as much as $4,560 in additional costs in 2015. In written testimony, OMB Director Peter Orszag stated that the average household cost would be $1,300 for a 15 percent cut in emissions – this administration is seeking an 80 percent cut. Not quite the prescription our economic maladies desperately require.

Though there are efforts to redistribute some of the revenue to help those in lower income households cope with increasing electricity bills, there is no help for businesses that may move across our borders or permanently shut down operations. Not welcome news, especially with one-third of our jobs dependent on exports. Quite simply, cap and trade caps our growth and trades our jobs.

History has shown that the United States is stronger with a robust manufacturing and industrial base. The jobs and industries that will bear the greatest costs of climate legislation are the same industries we need to keep in America in order to remain a power on the world stage. These are the jobs that built the middle class, but the manufacturing sector has struggled this decade.

From 2000 to 2008, we've lost 3.8 million manufacturing jobs – a decline of 22 percent. At the same time, imports were up 29 percent - a direct correlation. Michigan has been ground zero for these losses. The manufacturing and energy intensive industrial sectors are highly competitive, and more often than not, the cost of energy is the difference between operating in the United States and shutting the doors to move overseas.

Our national security is in jeopardy if we lose our manufacturing base. We cannot be in a position where we must order all of our steel and aluminum from China – yet that is not a too farfetched reality. If we take the wrong legislative path dealing with climate change, we run the real risk of permanently destroying our manufacturing and defense supply chains. In times of crisis, we will be helpless, at the mercy of others.

By design, a cap and tax scheme works by adding to the cost of energy and through that an increase in production costs for energy intensive industries and manufacturing. There are cost containment mechanisms that may help mitigate some of the increases, but at the end of the day, they won't be enough to save these jobs. And when factories move overseas, the environment is worse for it.

Take the steel industry for example – in the United States, steel producers are the most efficient in the world. On average, American steelmakers emit 1.2 tons of greenhouse gases per ton of steel. Compare this to Chinese steel emissions estimated to be in the neighborhood of 4 to 5 tons of greenhouse gases per ton of steel. We're not helping the environment by sending industries that operate cleanly and efficiently in the United States to a regulation free China. China is the number one emitter in the world, with greenhouse gas growth every year that equals the current output of Germany.

Cap and tax is not our only option. It is possible to pursue policies that will both help the environment and the economy. By design, cap and tax can only hurt the economy while providing a questionable environmental benefit. Additionally, the United States can not go it alone in the effort to cut greenhouse gases. Absent a global agreement that includes the heavy emitting developing countries - cap and tax will only send energy costs up while sending employment numbers down.

We are currently at a crossroads as our energy needs are predicted to increase by as much as 50 percent over the next two decades.

As the national dialogue focuses on energy independence and climate change, it is imperative that emissions-free nuclear power and clean coal technologies are part of the conversation. Coal (49 percent) and nuclear power (20 percent) account for nearly 70 percent of our nation's electricity (natural gas supplies 20 percent; hydroelectric, 7 percent; and other renewables such as wind and solar account for just 2.4 percent). There is no question that we must expand renewable energy, particularly wind and solar, but it is irresponsible to turn our back on coal and nuclear power.

In this debate over climate change, it seems we have lost sight of our true goals. We have lost sight of what our policies should achieve. The focus has become a cap and tax scheme as an end in itself – reducing global temperatures no longer seems a priority.

Any climate change legislation must adhere to five basic principles: 1) provide a tangible environmental benefit to the American people; 2) advance technology and provide the opportunity for export; 3) protect American jobs; 4) strengthen U.S. energy security; and 5) require global participation. Everything must be on the table. These principles deal with the issues of cost vs. benefit – the cost of action as well as inaction.

Let's put the scale of the emissions reductions being called for into perspective. Current proposals would mean that the United States cannot emit more in the year 2050 than we emitted in 1910. This is a daunting task considering that in 1910 the United States had only 92 million people—compared to an estimated 420 million in 2050—and a per capita income, in current dollars, of about $6,000. To reach the lofty goal of 80 percent reduction, emissions from the entire transportation sector would have to drop to zero; emissions from all electricity generation would have to drop to zero; and then we'd need to reduce all other remaining sources of emissions by 50 percent.

Climate change is a global problem that requires global solutions. Without international participation, jobs and emissions will simply shift overseas to countries that require few, if any, environmental protections, harming the global environment as well as the U.S. economy.

We have a choice – pursue reckless policies that will bankrupt America's working families and eviscerate our economy – or pursue sound policies that will improve our environment, preserve the integrity of our economy, and keep costs down for working families. Let's hope common sense prevails – our economy hangs in the balance.

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