The junior Senator from California has now claimed on several occasions that it would be cheaper in the long run to immediately enact regulatory policies aimed at controlling the Earth's global temperatures. The claim is clearly wrong. Of the half dozen major bills introduced in the Senate, all will harm the economy, yet none will put a dent in global warming, even if the worst fears were well-founded. Earlier this month, the Environmental Protection Agency concluded that over the long run, each bill before Congress -- including those that would reduce U.S. emissions by 70 percent -- will only reduce global concentrations of greenhouse gases by about 4 percent. That's right, four percent.
Now most people getting their news from the mainstream media are likely shocked by this fact. They have heard over and over for years that the U.S. is the cause of global warming because it has the world's biggest economy and emits the most carbon dioxide. And this used to be true -- our nation stood alone among nations -- consuming vast energy resources relative to other countries and, and as a result, emitting more greenhouse gases. But it is no longer true.
In June of this year, China became the world's biggest emitter of greenhouse gases. That's right, the biggest emitter on the planet. It is building a coal plant every three days. India, Brazil and others are not far behind. Does anyone honestly believe that if the U.S. reduces its emissions and these countries' emissions continue to explode upward that it will make any difference?
Of course, I can hear the rebuttal now. We will hear that if only the U.S. takes leadership in crippling its economy, other nations will follow. Just last Friday, I quoted the Chinese Deputy Director General of Global Environmental Affairs, who said "You cannot tell people who are struggling to earn enough to eat that they need to reduce their emissions." Now that isn't an official for Trade or Finance, but Environment! When a high-ranking environment official tells us his country has absolutely no intention of adopting ruinous economic policies, its time for even the elitists in the developed world to stand up and take notice.

Now, I never thought I would utter these words, but for all of their failed communist ideology, many Chinese leaders seem to understand the importance economic growth and capital formation better than many our political leaders. Wealth equals health! And the emerging economies also understand that. Our leaders used to understand that as well.

When Time magazine named the Model T the 20th Century's worst environmental product because it brought mobility and prosperity, it was clear that commonsense has been turned on its head in this country. Almost a century ago, when the first Model T was rolling off the assembly line, the average American could expect a lifespan of only 53 years, and an inflation-adjusted income of only $5,300 per year. The automobile changed all that, allowing people to drive to hospitals 25 miles away in time to save people's lives, allowing companies to use nationwide distribution systems to both make and deliver medicines, fresh produce, clothing and materials for homes and other products. Now the average lifespan is 78 years and annual income has risen to $32,000.

Yet despite this, some still make the claim that it won't be all that harmful to our economy to take drastic action, or still more unbelievable, that it will be good for the economy. They doggedly insist that China will mimic us in limiting growth. But I think it is pretty reasonable that when China's Deputy Director General for Environmental Affairs makes such uncompromising, clear statements of China's policies to pursue an economic growth agenda first and foremost, we would be wise to take him at his word. Adopting policies that will cost the economy trillions of dollars over time on the naive belief that if China sees how serious our country is, it will decide that being a good global citizen is better than prosperity, is -- to be kind -- foolhardy.
In fact, if the Unites States and the rest of the developed world were to completely eliminate our emissions over the next few decades, global greenhouse gas concentrations would still be higher than they are today because of the expected growth in the emerging economies.
Of course, it would be impossible to eliminate emissions in the developed world. In fact, attempts to merely cut them under the Kyoto Protocol have proven elusive. Despite national pride being at stake, Japan's emissions have grown, so too have Canada's. And of the EU-15 countries, only 2 of the 15 are expected to make their targets.
So if the emerging economies don't want to limit carbon emissions, and the developed world has only paid lip service to efforts to cap them, how can we expect that putting ourselves on a self-imposed energy diet will lead to reductions in global greenhouse gas concentrations? In fact, even if the United States cut emissions by 70 percent, and the rest of the world cut emissions 10 times more than us, global concentrations would still exceed 450 parts per million, well in excess of today's level - about 20 percent higher.
The facts above may be what prompted the journal Nature to publish an article declaring that Kyoto is dead, and that we need a new approach -- one remarkably similar to the Bush approach -- to dealing with the issue.
Of course, all these facts are routinely ignored by the chorus of people desperate to push global warming legislation. In claiming it is cheaper to act now, the Senator from California relied on the 2006 Stern Report from Britain to bolster her claim. 
"This is a very important moment in time. The cost of doing nothing, according to the leading economist on this topic in the world, Nicholas Stern, is five times what the cost will be to address this issue now. So let's be wise about what we do," Senator Boxer stated on the Senate floor on October 18.

Can it be that if the U.S. takes action -- the policy equivalent of spitting into the wind -- it would not be economically detrimental, but earn every $5 for every one spent, as Nicholas Stern would have us believe? Not according to the world's leading experts on the subject. Few major economic studies have been subjected to such an devastating assault from other leading economists. Few have been so thoroughly and publicly discredited.
So what do the experts have to say about the 2006 Stern report?
1) Economist Dr. Richard Tol of Hamburg University, one of the world's leading environmental economists, tore apart the Stern Report on January 26. "If a student of mine were to hand in this report as a Masters thesis... [it is] likely I would give him an "F" for fail. There is a whole range of very basic economics mistakes that somebody who claims to be a Professor of Economics simply should not make," Tol said according to the BBC.  "Stern consistently picks the most pessimistic for every choice that one can make. He overestimates through cherry-picking, he double counts particularly the risks and he underestimates what development and adaptation will do to impacts," Tol added. Tol wrote this critique despite the fact that his work was cited by the Stern Report no less than 63 times.

2) Danish statistician Bjorn Lomborg critiqued the Stern report in a November 2, 2006 Wall Street Journal op-ed. "The report seems hastily put-together, with many sloppy errors. As an example, the cost of hurricanes in the U.S. is said to be both 0.13% of U.S. GDP and 10 times that figure," Lomborg wrote. "It seems naive to believe that the world's 192 nations can flawlessly implement Mr. Stern's multi-trillion-dollar, century-long policy proposal. Will nobody try to avoid its obligations? Why would China and India even participate?" Lomborg added. "We all want a better world. But we must not let ourselves be swept up in making a bad investment simply because we have been scared by sensationalist headlines," Lomborg concluded.

3) Roger Pielke Jr., the director of the University of Colorado's Center for Science and Technology Policy Research, also chided the Stern Report for "cherry picking" data on October 30, 2006. "The Stern Report's selective fishing out of a convenient statement from one of the background papers prepared for our workshop is a classic example of cherry picking a result from a diversity of perspectives, rather than focusing on the consensus of the entire spectrum of experts that participated in our meeting," Pielke wrote. "To support its argument the Stern Report further relies on a significantly flawed report from the Association of British Insurers, which we critiqued here. Its presentation of the future costs of disasters and climate change is highly selective to put it mildly," he added.

4) Australian Paleoclimate scientist Dr. Bob Carter ridiculed the Stern Report in a November 3, 2006 article. "The Stern warning could join Paul Ehrlich's "The Population Bomb" and the "Club of Rome's Limits to Growth" in the pantheon of big banana scares that proved to be unfounded," Carter wrote. "The Stern review is not about climate change but about economic, technological and trade advantage. Its perpetrators seek power through climate scaremongering," Carter concluded.

5) Yale University's Sterling Professor of Economics William Nordhaus recently authored a study on the economic effects of climate change titled "The Challenge of Global Warming: Economic Models and Environmental Policy."  The study revealed that so-called global warming "solutions" would cost two or even three times the benefits they would theoretically achieve. Nordhaus was specifically critical Stern's use of a novel methodology in which he assumes a near-zero discount rate which dramatically inflates the benefits of addressing global warming.  

6) The New York Times captured the views of mainstream economists in its February 21, 2007 article by David Leonhardt when he cited Nordhaus's concerns, adding: "This was fairly tame compared with the comments of another Yale economist Robert O. Mendelsohn. ‘I was awestruck,' he said, comparing Sir Nicholas to ‘The Wizard of Oz.' But ‘my job is to be Toto.'" 
Against the clear international trend toward putting growth first, against the failure of cap and trade schemes attempted so far, against the consensus that unilateral actions by the U.S. will be futile, against federal agency reports from EPA and the Department of Energy, and against a multitude of experts that concluded the Stern report was flawed not only in its design, but its execution, yet another proposal has been introduced to unilaterally cap U.S. emissions. The Lieberman-Warner bill, S. 1291, like its cousins, is flawed. And for the same reasons.

In his new book, The Age of Turbulence Alan Greenspan wrote:

"There is no effective way to meaningfully reduce emissions without negatively impacting a large part of an economy," Greenspan wrote. "Net, it is a tax. If the cap is low enough to make a meaningful inroad into CO2 emissions, permits will become expensive and large numbers of companies will experience cost increases that make them less competitive. Jobs will be lost and real incomes of workers constrained."

Renowned economists Arthur Laffer and Wayne Winegarden drove this point home in an October 2 op-ed in the Financial Post when they wrote:

"The costs of reducing [greenhouse gases] through cap-and-trade regulations are not trivial. If implemented, cap-and-trade policies would add significant costs to production and would likely have a severe negative impact on long-term U.S. growth, an amount we estimate at US $10,800 per family."

This bill [S. 2191] is patterned after the Lieberman-McCain bill which according to an EPA analysis, would impose a price increase for oil of 20% and for natural gas of 23%. An MIT study earlier this year found the bill would increase energy costs an amount equivalent to $3500 per family of four. This study demonstrates the enormous wealth transfers involved in cap and trade schemes.

Now, there is apparently some confusion about this study, so let me describe it as best I can. The study calculated the amount of money that would be raised from businesses regulated under the bill if all the allowances under these bills were auctioned and the monies distributed, per family of four. So this figure represents not only the cost to industry, but also theoretical distributions to households. But of course, none of the bills actually distribute the monies raised from auctioning allowances to households, nor has this even been proposed. The cost of buying allowances, however, would be substantial - equal to $3,500 per family of four, and would be passed onto investors as losses and consumers as higher prices, in short, families. So however you want to describe it, at the end of the day, households are left bearing the burden of this legislation.

This will have enormous impacts, especially on the poor. A 2006 survey of Colorado homeless families with children found that high energy bills were cited as one of the two main reasons they became homeless. The Congressional Budget Office found that greenhouse gas cap and trade schemes are highly regressive and put the highest burden on the poor.

This bill apparently is designed to reward some states and penalize others to obtain votes, but is even less workable and more expensive than its predecessor, the Lieberman-McCain bill.

The bill also appears designed to drive up fuel costs in this country as quickly as possible. By setting the first emissions target only four years away, the bill creates a mandate which can only be met through massive fuel switching to natural gas for electric generation -- thus robbing home owners of affordable natural gas home heating, and driving factories overseas that depend on natural gas or low energy prices.  Just last week, we heard testimony from Alcoa that its future growth is not in the U.S., where it doesn't plan to build any more plants, but in countries where energy prices are low.

I agree with Greenspan's assessment, where he states:

"Cap-and-trade systems or carbon taxes are likely to be popular only until real people lose real jobs as their consequence."

But for all its terrible consequences, I prefer a carbon tax because it is more honest. Even the Washington Post editorial board echoed this sentiment in its editorial this morning when it wrote:

A carbon tax would be more straightforward. With cap-and-trade, there's potential for games, fraud, evasion and abuse. Some companies could earn windfall profits, and the price volatility of emissions allowances could be disruptive.

A tax is still preferable to cap and trade schemes because it is transparent and prevents windfall profits to companies that will do nothing to help us achieve emission reductions - profits that grow as family pocketbooks shrink.

Unfortunately, we may not have an opportunity to fully examine the S.1291, as it is being rushed through the Committee process. Neither EPA nor the Energy Information Administration has had an opportunity to review it, not has it been subjected to analysis showing likely future developments in our energy infrastructure.
If we guess wrong about public acceptance of nuclear and wind power, for instance, the consequences could be severe. This was made clear in a new study released this month entitled "Greenhouse Gas Initiatives Analysis using the national Energy Modeling System" conducted by SAIC. In analyzing Lieberman-McCain's impact on the energy sector, it adopted what many believe is the far more likely developments under cap and trade in four key areas -- specifically, likely developments of nuclear power, renewables, carbon capture and storage, and availability of international offsets.
The study's results were startling: relative to the core case, it found that a more constrained supply of energy and carbon allowances results in prices 7 to 8 times higher for wellhead and gas and residential gas. This study underscores the need to thorough analysis of any bill that is introduced that includes not only the best case, but the worst case. 

Mr. President, I have to ask one simple question: Why?

Why is there such a head-long rush to take ineffective action that will cripple our economy and achieve nothing regardless of who is right and who is wrong about the science? I don't think this is about solutions. This is about energy policy, and whether our nation should grow and prosper or whether America's time has passed and we should step aside for the emerging nations. I for one, do not intend to see this nation fade quietly into the sunset and will oppose all measures that would make this nation's greatness a historical footnote for future generations.