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Upton: Energy Policies Must Preserve the Economy

Energy and Environment Policy Briefing

What are the prospects for passing comprehensive energy legislation in Congress this year and what will the bill likely contain?

Is it possible to reconcile the need for economic development in industrial areas with the need to protect the planet?

What is the state of our national parks and how do the health of our national parks affect the climate change debate?

What do your experiences working in the energy industry tell you about where the debate on energy policy should be headed?

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 on a costly cap-and-tax scheme to address climate change, and it is the nation’s working families who are in the cross hairs.

The statistics are startling. According to a Massachusetts Institute of Technology 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 more than 6 million. Increased energy costs would near $1 trillion in 2030. Increases in electricity costs could be more than 100 percent.

A family of four could expect to pay as much as $4,560 in additional costs in 2015. In written testimony, Office of Management and Budget 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.

Cap-and-tax is not our only option. It is possible to pursue policies that will help the environment and the economy. By design, cap-and-tax can only hurt the economy while providing a questionable environmental benefit. Additionally, the U.S. cannot 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 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 makes up 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. I favor putting wind turbines in Lake Michigan to harness the power of the wind, but it is irresponsible to turn our back on coal and nuclear power.

Nuclear power accounts for an extraordinary 70 percent of our nation’s emissions-free electricity. It defies common sense to ignore nuclear power as a reliable solution to address climate change, as it already plays a commanding role in cutting greenhouse gases. Don’t forget that expanding nuclear power will also revitalize an entire manufacturing sector, creating hundreds of thousands of jobs.

We must also promote clean-coal technologies that will not only keep costs down for consumers, but also foster new jobs and a strong economy. I recently teamed with Rep. Rick Boucher (D-Va.) in authoring breakthrough, bipartisan legislation to reduce harmful greenhouse gas emissions through the early development and deployment of carbon capture and storage technologies.

These technologies exhibit great promise, and in encouraging advancements in carbon capture, we will be able to responsibly fortify our nation’s energy supply with American-made energy and protect the pocketbooks of our nation’s working families. 

At a recent hearing, Treasury Secretary Timothy Geithner said, “Cap-and-trade will increase the cost of energy on those fuels that are high in carbon. For people whose behavior in energy use doesn't change, their costs will go up.” Translation: Coal has a big target on its back, and America’s working families — already struggling — will get stuck with the bill. Now is not the time to send costs higher.

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 — what about reducing global temperatures?

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 U.S. cannot emit more in the year 2050 than we emitted in 1910. This is a daunting task considering that in 1910 the U.S. had only 92 million people — compared with 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.

Rep. Fred Upton (R-Mich.) is ranking member of the Energy and Commerce Subcommittee on Energy and Environment.

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