To solve the global warming crisis — to the extent that such crisis is real — alarmists often propose a cap-and-trade scheme. It seems like a reasonable solution, using the power of markets to let carbon emitters decide their preference between emitting carbon vs. reducing emissions.
But it’s not so simple. As George Will has written: “Speaking of endless troubles, ‘cap-and-trade’ comes cloaked in reassuring rhetoric about the government merely creating a market, but government actually would create a scarcity so that government could sell what it had made scarce. The Wall Street Journal underestimates cap-and-trade’s perniciousness when it says the scheme would create a new right (‘allowances’) to produce carbon dioxide and would put a price on the right. Actually, because freedom is the silence of the law, that right has always existed in the absence of prohibitions. With cap-and-trade, government would create a right for itself — an extraordinarily lucrative right to ration Americans’ exercise of their traditional rights.”
This benefit to government comes at a price to consumers. The George C. Marshall Institute has just released a study that estimates some of the increased costs that consumers will pay under likely cap-and-trade plans. It’s a lot. “Put another way, the cap-and-trade approach is the equivalent of a permanent tax increase for the average American household, which was estimated to be $1,100 in 2008, would rise to $1,437 by 2015, to $1,979 in 2030, and $2,979 in 2050.”
To place these increased costs in perspective, last year the electric utility Westar proposed a rate increase of $10 per month for the average household in Kansas. That was met with strong resistance from consumer groups. When the City of Wichita proposed a $1 per month extra fee on water bills, one city council member worried about its effect on her constituents. These increases are far, far less than the extra costs cap-and-trade will impose.
Read the short introduction to the Marshall Institute study by clicking on The Cost of Climate Regulation for American Households. A link to the entire study is there.