A CARBON TO STABILIZE The Economic Sacri?ce Would Damage The U.S. Economy With Little Or No Impact on Climate Change reflecting on the Earth Summit, [Stephan Schmiclheiny, chairman of the Business Council on Sustainable Development. has suggested that the real Impact of last year's Earth Summit lies in the fact that it marks the ?end of the beginning? of a new way policymakers view economic growth and environmen- tal policy. Mr. Schmidheiny's comments indicate that, after two decades of discus- sion from Stockholm to Rio the message is ?nally getting through that strong economic growth is a prerequisite for continued environmental protection. This point has been made by the Global Climate Coalition and its members both at Rio and during the discussions leading up to Rio, and has been echoed by other envrronmental and business groups. However, even as more policymakers, both at home and abroad, understand this, others are pushing for drastic carbon taxes that could damage, if not destroy, our long-term ability to adapt to or miti- gate potential global Climate change. As the new administration sets its policy objectives, it is crucial that the severe impacts of a carbon tax are understood and weighed fully. For Americans, 3 carbon tax is essential- ly a surcharge on fossil fuel use, which would mean higher costs for oil, coal and natural gas. The rising cost ofthse fuels results in price increases in everything from home heating oil to gasoline to elec- tricity. Because the U.S. economy is more heavily depended on fossil fuel energy to produce goods and deliver ser- graphical reasons such a tax would set U.S. business at a disadvantage with its world competitors, leading to a decline in economic growth and loss of jobs. Astudyby Hillforthe Department of Cornmeroe pairs on jun who kind of impact such a unll?ral car- bon tax would have on the U.S. eoorromy from the yes 2000 thrudt 2020. The study found that a carbon Ix In the Unl- ed Sm and! U.S.COicnisiorlatwpuoeMOflm levels by the year wodd man an eight-fold increase in the pnce of coal and a two-fold jump In ml and natural gas prices. It also would result in a loss of about of 600,000 U.S. jobs. Most of these jobs would be lost in high-wage indus- tries where unemployment is already a problem, Including steel, mining, energy and automotive. Moreover, actual Gross National Product ICNP) would fall by 4.6 percent by 2010. Furthemtore, shifts in trade patterns, as U.S. producers struggle under tax burdens much heavier than those of their international competitors. would be devastating to the United States position in world markets. A recent study by the Brookings Institu- tion (see related story on the next page) confirms the negative economic impact a carbon tax would have on the U.S. econ- omy, whether imposed unilaterally or across the OECD. One significant conse- intensive activities to countries without a carbon tax, thereby limiting or negating thedesiredel?fectolsucha policy. Clearly, these forecasts should give pause to any policymaker considering a carbon tax. In addition. a potentially tax is the loss of the ec onomic resources needed to address the problems ol growth and devel- By John Shlaes opment in the developing world. These are problems whic will be left unsolved by a carbon tax. Stabilization efforts in developed nations alone are not enough to signi?. cantly reduce global greenhouse gas emissions. All predictions show that the majority of future greenhouse gas emis- sions will come from developing coun- tries as economies and populations grow. Developing countries, therefore, will need the technologies and the assistance of industrialized nations to ensure their economies grow in an environmentally sound manner. The United States and other developed nations must be in a position economi- cally and strategically to offer developi nations the asistance and technology they will require. A carbon tax seriously jeopardizes our economic health, and thereby our ability to follow the best path to adapt to and mitigate potential global climate change. 0 more serious con? sequence of a car- ONGRESSIONAL OMMITTEE STAFF DISCUSS ENERGY PRIORITIES a lanuary 13 meeting of the ANational Energy Resource Organi- zation (NERO), Senate and House Committee stall offered their views of energy priorities for the 103rd Congress. Ben Cooper, majority staff director for the Senate Energy and Natural Resources Corn- mittee, said that in developing the National Energy Strategy, that ?we addressed a pro- gram for renewable and energy efficiency.? He downplayed the potential for global cli- mate legislation, saying ?We already have a program to address Global Climate Change --theNatlonal EnergyPolicyAct?which was passed last session of Congress.? Cooper added tha the committee has and the ministration to mate the Naional Energy PolicyActafocal polntoftheirclirnatepro- gram. He also was quick to point out that, 'other outlines don't have any program [to .drus climate charge), unlike the Cooper said that the committee's priorities will be alternative fuels, Clem-up of nuclear weapons plat! facilities, of strategic petroleun reserves. and conversion of labo- ratory technologies to civilian uses. Mike Woo, profasional stdi member of BROOKINGS INSTITUTION STUDY FINDS CARBON TAX COSTS OVERSHADOW LIMITED BENEFITS al Costs of Policies to Reduce Greenhouse Gas Emissions,? the Brookings Institution found that a car- bon tax to stabilize greenhouse gas emissions ?would impose costs that would be much higher than the bone. ?ts produced by the policy for a long time to come.? According to one of the study's co- authors, Peter Wilcoxen, a carbon tax would haveasevereimpactonthe coal and electricity sectors. In the Unit- ed States, a tax large enough to stabi- lize emissions would reduce coal use In a recent study entitled ?The Glob- value by the year 2020. Electric ties, the largest consumers of coal in the United States, would suffer a 6 per- cent increase in costs and 5 percent drop in output. The authors also warn that a carbon tax imposed unilaterally or in a limit- ed number ol countries could disrupt trade patterns by encouraging car- bon-intensive industries to migrate to countries where they are not taxed. In this scenario, the tax fails to control emissions and harms the U.S. balance of trade. . [73 mm Aw ?Man (X Jilin WORLD BANK EXPERTS FIND REMOVAL OF ENERGY SUBSIDIES REDUCES GLOBAL CO2 EMISSIONS Bank's ?World Development Report 1992,? expertsestimated that removing global energy subsidies would achieve a greater reduction in lnastudypreparedfortheWorld (about 75 percent) comes from the countries of the former Soviet Union, with China and Poland ranking second and third. Other major subsidizers of energy include the former Czechoslo- . vakia, Venezuela, Mexico, Saudi Ara- bia, Brazil and India. willbeonl ll ofdretll PollcyAct,butthatthe I ill ?mama? i? Woo growthandtheuncertatnty surrounding . 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