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EPW Committee Hearings Expose Costs of Cap-and-Trade Legislation
August 6, 2009

EPW Committee Hearings Expose Costs of Cap-and-Trade Legislation

Inhofe Aug. 6, 2009 Hearing Statement: What We Have Learned from EPW Global Warming Hearings:  Madame Chairman, thank you for holding this hearing today. This is the last hearing on climate change before the August recess, so I think it's appropriate to take stock of what we've learned. Madame Chairman, since you assumed the gavel, this committee has held over thirty hearings on climate change. With testimony from numerous experts and officials from all over the country, these hearings explored various issues associated with cap-and-trade-and I'm sure my colleagues learned a great deal from them. But over the last two years, it was not from these, at times, arcane and abstract policy discussions that we got to the essence of cap-and-trade. No, it was the Democrats who cut right to the chase; it was the Democrats over the last two years who exposed what cap-and-trade really means for the American public. We learned, for example, from President Obama that under his cap-and-trade plan, "electricity prices would necessarily skyrocket."

Boxer Says Goal is to "Soften the Blow" from Cap-and-Trade - Admits That Cap-and-Trade Will Hurt Jobs, Families, Consumers - During a hearing on July 16, 2009, in the Senate Environment and Public Works Committee, Sen. Barbara Boxer (D-CA.), chairman of the committee, said that her goal is to "soften the blow" of cap-and-trade legislation, implicitly acknowledging that cap-and-trade will harm the economy. "The biggest priority is softening the blow on our trade sensitive industries and our consumers. I just want you to know that, that's the goal," Sen. Boxer said.  In response, Harry Alford, president of the National Black Chamber of Commerce, dismissed claims that the government could redistribute revenues from cap-and-trade to "soften the blow" on the poor, the elderly, those on fixed incomes, and consumers.  "Madam Chair, I will do that, I have been around the block a few times.  People are not going to get that refund, it's not going to hit them, people are going to be unemployed, and they are not gonna have any recourse whatsoever, the government will have failed them again."

WATCH - EPA's Jackson Confirms EPA Chart Showing No Effect on Climate Without China, India: During a hearing on July 7, 2009 in the Senate Environment and Public Works Committee, EPA Administrator Jackson confirmed an EPA analysis showing that unilateral U.S. action to reduce greenhouse gas emissions would have no effect on climate.  Moreover, when presented with an EPA chart depicting that outcome, Energy Secretary Steven Chu said he disagreed with EPA's analysis. "I believe the central parts of the [EPA] chart are that U.S. action alone will not impact world CO2 levels," Administrator Jackson said.  Sen. James Inhofe (R-Okla.) presented the chart to both Jackson and Secretary Chu, which shows that meaningful emissions reductions cannot occur without aggressive action by China, India, and other developing countries.  "I am encouraged that Administrator Jackson agrees that unilateral action by the U.S. will be all cost for no climate gain," Sen. Inhofe said.  "With China and India recently issuing statements of defiant opposition to mandatory emissions controls, acting alone through the job-killing Waxman-Markey bill would impose severe economic burdens on American consumers, businesses, and families, all without any impact on climate." 

Inhofe Hearing Statement on Climate Change and National Security: What I am going to focus on is the link between developing American resources and America’s national security.  And I’m going to explain why passing cap-and-trade won’t solve any of the legitimate issues you identify in your reports. Let’s be clear from the outset: even if we experience catastrophic changes in climate, the Waxman-Markey cap-and-trade bill, and its soon-to-be Senate variant, will do nothing to stop them.  EPA Administrator Lisa Jackson said as much before this committee a few weeks ago.  She agreed that unilateral action to address global warming is futile without meaningful participation from China, India, and other developing countries. 

Testimony on Climate and National Security  -David B. Rivkin: The most basic problem is that enactment of Waxman-Markey represents unilateral emissions disarmament. In negotiations with other emitting countries, our most obvious bargaining chip is the ability to promise to reduce our emissions if they reduce theirs. A desirable emissions treaty would try to spread the pain of emissions reductions across the world's economies, so that no individual country would have to accept too great a relative disadvantage vis-à-vis its economic competitors. By committing the U.S. to reductions - and drastic reductions - regardless of what other countries do, Waxman-Markey makes such a grand bargain on emissions impossible. The U.S. would consign itself, by statute, to the worst of all possible bargaining positions.

Inhofe Hearing Statement on Costs to American Manufacturing Sector:  In total, Waxman-Markey would cause a net reduction of 2.3 million to 2.7 million jobs. Again, that's a net reduction, including green jobs. This is a fact that cap-and-traders don't want the public to know.  In the final analysis, despite what its supporters say over and over again, Waxman-Markey is not a jobs bill, it's a big government pink slip. 

Testimony - Harry C. Alford, President and CEO National Black Chamber of Commerce The thing that concerns me and many of the 95,000 business members of the National Black Chamber is that any legislation Congress enacts must consider the impact that costs will have on small and minority-owned businesses, their ability to create jobs and the impact on the communities that they serve. Regretfully, the current legislation out of the U.S. House of Representatives will negatively impact the most vulnerable of our society. I'm sure that those who proposed it had the best intentions, but the bill doesn't do what it's supposed to do, and it does so at a very high cost -- especially high for working families and small business owners. I learned a long time ago to beware of any document that has more authors than readers. The fact that so few people have actually read the House bill may explain why the full costs that American businesses and everyday people would shoulder are not readily apparent. Let me quote from a recent study that we did with CRA International:

Inhofe Hearing Statement on Costs to American Transportation Sector: But there's no debate about this: cap-and-trade will make gasoline more expensive for American consumers.  What's more, it will actually increase our dependence on foreign oil. The consumers represented here today are America's truckers.  Trucking is a highly competitive industry with very low profit margins. This explains why, as fuel prices increase, many trucking companies are reporting lower profits, if they are reporting any profits, at all. In 2007 and 2008, for example, over 5,000 trucking companies with at least 5 trucks went out of business and thousands of independent operators, drivers, and employees have lost their jobs.  If we enact cap-and-trade legislation, fuel prices will rise, and more jobs in the trucking sector will be destroyed.

Testimony - Ray Kuntz, Chief Executive Officer Watkins and Shepard Trucking: The trucking industry is concerned that climate change legislation will significantly increase the price of fuel we consume. Numerous experts have indicated that climate change legislation will dramatically increase the price of transportation fuels. One major petroleum supplier to the trucking industry has advised that fuel costs could rise by up to 77 cents per gallon for gasoline and 88 cents for diesel fuel. Fleets are extremely sensitive to rapidly shifting operating costs given thin operating margins of between 2-4 percent. These low profit margins continue to be chipped away given the numerous and unprecedented costs being imposed upon the industry to reduce emissions from trucks. For instance, new diesel engine emission standards imposed by the U.S. Environmental Protection Agency (EPA) in 2002 drove up engine costs on average between $3,000 to $5,000 while decreasing fuel economy between 6-8 percent. EPA diesel engine emission standards in 2007 drove up the cost of engines between $8,000 to $10,000 and decreased fuel economy an additional 2-4 percent. Diesel engine emission standards set to take effect in 2010 could again increase new engine costs up to $10,000. However, we hope to experience a reversal of downward fuel economy trends with the introduction of these new engine technologies.

Inhofe Hearing Statement On Impacts of Waxman Markey on State and Local Governments: The debate over cap-and-trade does is not partisan; it's regional.  And I can tell you, when it comes to energy policy, Democrats in the Midwest and the South think differently than Speaker Pelosi and Henry Waxman.    On the one hand, the policy of the coasts is to ration energy and make it more expensive through regulations and mandates.    On the other hand, the policy of the heartland is to increase domestic energy supplies-including wind, solar, geothermal, as well as oil, gas, nuclear, and coal-to make energy cleaner, more affordable, more abundant, and more reliable.   In our part of the world, we invite new energy development, whatever its form, because we know it creates jobs and expands our economies.  This is the policy of North Dakota, as Gov. Hoeven will describe in his testimony.  North Dakota is finding success in deploying new technologies to burn coal more cleanly and to drill and extract oil and gas with a minimal environmental footprint. 

Testimony: North Dakota Governor Johnn Hoeven: Our nation is facing the worst economic downturn in decades, and while North Dakota retains a budget surplus, we are not immune to its effects. North Dakota's continued economic health and the recovery of the nation's economy depends on a strong, balanced, and comprehensive energy policy, because energy not only drives North Dakota's economy, it drives our national economy. For that reason, it is extremely important we seriously consider the effects that the Waxman-Markey legislation would have on our nation, in a global, competitive economy.

Testimony: Honorable John Lowery Representative Arkansas House of Representatives:  Chairman Boxer, Ranking Member Inhofe and Members of the Committee, my name is John Lowery. I am a Democrat, serving my third term as Representative of Arkansas House District 6. The population of my district is approximately 27,734. I serve as Chair of Revenue and Tax Committee. I also serve on Agriculture, Forestry, Economic Development, and Natural Resource Committee and Joint Energy Committee. I am also testifying in my role as Chairman of the Committee of Concerned Citizens Against Cap-and-Trade. The Committee was formed in direct response to the threat that the Waxman-Markey bill will be to my district and to the State of Arkansas.

WATCH: COLORADO GOV REFUSES TO ENDORSE WAXMAN-MARKEY: During a hearing today of the Senate Environment and Public Works Committee, Democratic Gov. Bill Ritter (D-CO), when pressed during an exchange with Sen. James Inhofe (R-OK), refused to endorse the Waxman-Markey cap-and-trade legislation.  Ritter's refusal is a retreat from his previous endorsement of cap-and-trade in 2007-and comes in the wake of a voter backlash across the country against the bill.  Along with Ritter, the Governors Gregoire (D-WA) and Corzine (D-NJ) remained silent on Waxman-Markey. 

Climate Wire: Governors still feeling their way through climate bill: Colorado's Democratic governor sidestepped questions from the Senate's leading agitator on climate legislation about the depth of his support for a behemoth energy effort rolling through Congress. It comes days after another Democratic governor, Brian Schweitzer of Montana, called cap and trade the "wrong approach." The hearing yesterday largely reinforced Democratic assertions that the climate bill known by the names of its House authors, Reps. Henry Waxman (D-Calif.) and Edward Markey (D-Mass.), would fuel new-era energy jobs and reduce carbon dioxide emissions. But the response by Colorado Gov. Bill Ritter underscores the complexity -- and cost -- that Democrats face in reshaping the country's economy. The instigator, no less, was opposition enemy No. 1: Republican Sen. James Inhofe of Oklahoma. "I'm kind of wondering why you're here," Inhofe told Ritter, adding that the bill would "kill" future development of Colorado's vast reserves of oil shale and have a financial impact on the state's farmers. "Are you here supporting Waxman-Markey today?"

Inhofe Hearing Statement on Costs to American Agricultural Sector: Let's face it: as anyone familiar with agriculture knows, farming is an energy-intensive business with high-costs and low profit margins. So when the price of diesel, electricity, or natural gas goes up, farmers really feel the pinch. So it's not surprising that a significant portion of the agricultural community opposes cap-and-trade, the purpose of which is to raise prices on the energy that farmers use. 

Farmers Lose Big in Climate Bill, Farm Bureau Warns In testimony before the Senate Environment and Public Works Committee today, (watch) Bob Stallman, President of the American Farm Bureau warned of the devastating costs imposed on farmers if the Waxman global warming bill is signed into law. In his testimony before the committee, Stallman stated, "increased input costs will put our farmers and ranchers at a competitive disadvantage with producers in other countries that do not have similar GHG restrictions. Any loss of international markets or resulting loss of production in the United States will encourage production overseas in countries where production methods may be less efficient than in the United States."

Ag Opposes Cap-and-Trade: EPW Policy Beat decided to highlight the significant, broad-based opposition to cap-and-trade and Waxman-Markey in the agricultural sector. Four themes ring loudly and clearly in the comments below: cap-and-trade is simply bad for business; cap-and-trade won't have any effect on climate without meaningful participation from China and India; cap-and-trade could undermine agriculture's competitiveness in the global marketplace; and any provisions allowing for offsets won't defray the devastating price increases of farm inputs, such as gasoline, diesel, electricity, and natural gas. The following Top Ten is abstracted from comments written by 120 agriculture groups opposed to cap-and-trade and Waxman-Markey





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