PACE in The Hill: ‘Green’ Solution Threatens to put America in the Red

The following piece appeared in The Hill late last week, authored by PACE Executive Director Lance Brown. Read the piece online here.

As more charges of unlawful taxpayer funded lobbying by Environmental Protection Agency (EPA) are levied by lawmakers, it can be difficult to discern where the political campaigning and media spin ends, and the facts begin.  However, if the EPA is indeed working hand-in-hand with special interest groups like the Sierra Club, then their policy agenda and proposed remedies to some of the most drastic environmental threats deserve a closer look.

With federal agencies facing big budget cuts and compensation for federal workers and retirees being slashed, one would hope that government resources would be used for essential services and not on controversial new programs. During these lean times, for example, one wouldn’t expect any group to suggest a new government tax program that requires massive federal resources. However, that’s exactly what the Sierra Cub is doing by pushing for a federal carbon tax. Such a proposal does little to paint the group as a credible messenger for responsible federal policy.

Among its proposed measures, the Sierra Club suggests a tax on using coal for energy production, which it classifies as “dirty and destructive.” Their website even touts European successes implementing such a tax and implicitly criticizes U.S. lawmakers for not already levying new taxes on coal-fired energy. The Sierra Club’s analysis, though, is short on details about the performance of foreign carbon tax programs. The omission of those details is probably not accidental, as carbon tax programs elsewhere have more often backfired than succeeded.

In July of 2012, for example, the Australian government, under then-Prime Minister Julia Gillard, implemented a federal carbon tax. Following its introduction, Australian energy prices spiked to more than three times higher than those in the U.S. To make matters worse, according to Australia’s Department of Environment’s greenhouse gas inventory figures, emissions in Australia fell only 0.3 percent from the tax rollout until September 2013.  As Federal Environment Minister Greg Hunt explained, the meager emissions reduction was caused by a fall in electricity demand and a decline in manufacturing, both resulting from massive energy cost increases. “The carbon tax is still inflicting plenty of pain, with no environmental gain,” Hunt stated.

The United Kingdom offers another example of where a nation’s carbon pricing scheme is disrupting energy supply. In a recent Telegraph article, Tony Lodge of the Centre for Policy Studies suggested Britain’s leaders grossly misjudged the impact of their national carbon tax. Lodge cites the closure of the Ferrybridge Power Station in West Yorkshire – one of the nation’s largest power plants – due to cost increases. This closure occurred just two months after Scotland’s largest generation facility was shuttered for the same reason. Despite coal prices being at an eight-year low, the carbon tax artificially rendered both plants economically unviable due to increases in operational costs.

As a result of a wrong-headed carbon tax policy, energy reserves in Britain have never been tighter and fuel poverty continues to plague consumers. Leaders hoped that natural gas-fired plants and nuclear units would come online to replace coal-fired capacity, but that simply hasn’t happened. The “quick fix” of a carbon tax, which lawmakers hoped would bolster tax revenue while cutting emissions, has decimated the U.K.’s energy generation capacity. Consider that coal provides as much as 40 percent of British power at that nation’s winter peak.

If all of this sounds eerily similar, it should.

In 2011, the Sierra Club told its members that Americans should tax carbon as a way to balance the national budget. Despite the fact that coal-fired power supplies a substantial percentage of power supply during extreme weather – even more than the UK’s portfolio – voices like the Sierra Club hope to make coal-fired power too expensive to use. They know that by making an inexpensive source of power more costly, other fuel sources look better by comparison. That is a scheme that will only spell disaster in the form of higher electricity prices for Americans and diminished access to reliable power when families and businesses need it the most.

One must assume that the carbon tax bargain being peddled by the Sierra Club and the EPA would soon result in a similar impact here at home: little or no climate benefits with a very high price tag.

Leaders in Washington should take note that a carbon tax isn’t just a tax on big, bad utilities; it comes from everyone’s wallets. A better approach is to invest in technology and innovation, rather than simply passing more taxes, to drive us toward a lower carbon future.