New study on the CIS anti-carbon tax

The IEC this week released a new study titled “Why Carbon Taxes Are Anti-growth, Anti-Consumer, and Politically Dangerous for Conservatives.” He develops the following points.

Contrary to what its supporters claim, a tax on carbon dioxide (CO2) emissions is a policy of market rigging, not a free market policy. Its objective is to stimulate investments in renewable energies not by lowering their cost or improving their performance, but by handicapping competing technologies.

Carbon taxes would inflict substantial losses on GDP, job creation and household incomes. Even the most aggressive CO2 tax would have negligible effects on the climate, and the costs would far outweigh the benefits.

A realistic assessment of potential economic damage must also take into account the costs of adding CO2 taxes to a host of other policies targeting the fossil fuel industry. Any carbon tax adopted would not be an alternative, but would be part of the broader agenda to reduce US greenhouse gas emissions by 50 to 52% from 2005 levels by 2030, eliminating emissions from the U.S. electricity sector by 2035, rapidly phasing out gasoline vehicle sales, and achieving net zero emissions by 2050.

This program is a recipe for epic political failure. The global mining and processing infrastructure needed to replace a predominantly fuel-dependent energy system with one reliant on wind turbines, solar panels and electric vehicles – which require much more mineral inputs than power generation and conventional vehicles – do not yet exist.

Accelerated by aggressive mandates and subsidies, the demand for “energy transition minerals” would likely grow faster than supply, causing commodity prices to rise sharply. The International Monetary Fund forecasts a decade-long rise of “several hundred percent” in real prices for nickel, cobalt and lithium, and a 60 percent rise in the price of copper.

In addition, the federal licensing system is too slow and contentious to allow the completion of all the renewable energy projects needed to replace more than 1,800 coal and gas-fired power plants within 15 years and sustain the massive electrification of vehicles. The so-called clean energy transition could become a transition from abundant and affordable fossil fuels to scarce and unaffordable fossil fuels.

A related potential drawback is a growing dependence on Russia and OPEC for hydrocarbons and China for energy transition minerals, as a carbon tax and other climate policies hamper domestic production. fossil fuels while mandating and subsidizing dependence on wind, solar and electric vehicles.

Neither the “social cost” of carbon (CCS) nor the so-called “climate crisis” justifies the imposition of new taxes on the fuels that provide 79% of America’s energy.

The SCC – an estimate of the cumulative climate damage of an extra ton of CO2 – is too speculative and easily manipulated for political gain to justify taxes or regulations that would impose hundreds of billions of dollars in costs on the entire world. ‘economy. To name just one of many methodological biases, the Obama and Biden administrations calculate the SCC using hugely inflated benchmark emissions scenarios that implausibly assume that the global economy is “going back to coal” on the century, with coal remaining the world’s low-cost energy source for the next two centuries.

The climate crisis is a political narrative drawn from unrealistic emission models and scenarios, unreasonable pessimism about human adaptive capacities and genuine political hype.

No CO2 tax would be significantly deregulated. The Clean Air Act (CAA) exemptions in a handful of CO2 tax bills are minor, revocable, or ineffective. For example, no carbon tax bill introduced during the 116e and 117e Congresses would ban the regulation of CO2 from stationary sources such as power plants and factories. Five CO2 tax bills would bar the Environmental Protection Agency (EPA) from regulating CO2 emissions from motor vehicles, but simultaneously restore stolen power from California to regulate and ban such emissions. No CO2 tax bill would prevent greenhouse gas regulation at the state level. States would be free to reimpose any regulations the EPA might repeal.

On the contrary, a carbon tax would increase red tape and bureaucratic interference. The carbon tariffs (“border taxes”) that US companies would demand as protection against cheaper untaxed foreign imports would require a new or expanded IRS to develop, audit and enforce the rules for such a system. A carbon tax would likely expand, not reduce administrative state.

Some CO2 tax proposals claim to be “income neutral” because they include “fee and dividend” programs that return income to households. This is the wrong direction. Fee-and-dividend is a tax and expense program. It does not repeal existing taxes or lower existing tax rates. On the contrary, royalties and dividends impose new taxes and redistribute the loot to households, whether or not they pay taxes. A “green” regime of wealth sharing, it would increase dependence on welfare rather than stimulate economic growth.

Also note that “income neutral” does not mean economically harmless. The smaller the base from which a tax is levied, the more destructive its effects. The base for a CO2 tax (specific companies and products) is much narrower than the base for personal income tax, sales taxes or social charges. Carbon dividends distributed equally to all American households would not begin to offset the economic damage to industries and communities directly affected by a carbon tax.

The title of the CEI study denounces the conservatives because they are the main target of groups defending the carbon tax. Progressives know they have virtually no chance of enacting a carbon tax unless the Conservatives give them bipartisan coverage.

Even though progressives are more zealous than ever to rig energy markets through warrants and subsidies, some Republicans still profess that carbon taxation could be a politically viable alternative climate policy. This view is wrong. Conservative advocacy on the carbon tax would be widely seen – and relayed by politicians, activists and progressive media – as validating the climate crisis narrative. This would reinforce rather than curb demands for more radical policies.

More importantly, the advocacy for the carbon tax is politically toxic to conservatives. The struggle of hearts and minds in American politics is largely a struggle between a pro-energy and anti-tax conservative movement and a progressive pro-tax and anti-energy movement. This clear product differentiation is a political asset that the Conservatives are wasting at their peril. This allows them to offer voters, who generally dislike high taxes and high energy prices, a “choice, not an echo”.

Conservative leaders cannot approve a carbon tax – a new energy tax – without destroying their good faith as champions of pro-energy, low-tax policies supported by millions of Americans.

About Myra R.

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