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Commentary: Taxing carbon: Are the benefits worth the costs?

This article first appeared in the St. Louis Beacon, April 13, 2009 - An enormous balancing act is rapidly unfolding in our nation, with the very real possibility of bankrupting us all. We need an immediate and active debate about proposals to tax carbon, recognizing the costs involved and recent findings that significant reductions in carbon emissions will not dramatically impact global temperatures. Indeed, there are renewed concerns that the science of global warming has yet to be settled.

The Obama administration's budget proposal includes nearly $650 billion in new "climate-related" revenues through 2019. These revenues would be collected as taxes, primarily from energy producers, manufacturers. According to our review, the proposal would result in nearly $577.3 billion in additional costs on the electric industry alone. The huge impact of such a tax most certainly guarantees much higher electricity costs for all consumers.

Not surprisingly, the regions with the least amount of coal-fired generation (New England and Pacific) would be the least affected by the proposed carbon taxes.

Environmentally conscious consumers might be willing to pay $50 to $300 more on their bills to combat what they perceive to be a serious problem. However, carbon taxes will dramatically increase electricity costs paid by businesses and manufacturers, which are the "engine" of our economy. They are the ones that provide jobs, create disposable income and generate tax revenues to fund local, state and federal governments.

According to the National Association of Manufacturers, about one-third of the energy consumed in the United States, including 40 percent of the natural gas and 30 percent of the electricity, is consumed by manufacturers. Electricity is also a significant operating cost in the manufacture of a wide range of consumer and durable goods made from metals, plastics and/or chemicals. Economic reality dictates that these businesses will be forced to pass the higher costs on to consumers, cease domestic operations or relocate to nations that do not levy a carbon tax. Ultimately, American citizens could suffer due to higher costs for goods and services and higher unemployment.

We should be asking whether the anticipated benefits derived from the proposed carbon taxes (i.e., lower greenhouse gas emissions) are likely to outweigh the huge costs.

It's easy to find articles and statements by numerous researchers and scientists with dissenting opinions about manmade global warming concerns. The dissenters include scientists from a wide range of disciplines from all over the globe. One recent study revealed no significant change in global temperatures as a result of reducing carbon emissions. While common thinking is to adopt prevailing views as truth, this is the exact juncture to become educated about opposing opinions. History demonstrates that, once established, it is highly unlikely that a carbon tax (like the personal income tax) would ever be repealed. Hence, the time for questioning is now.

We believe that the costs of the Obama Administration's climate policies on the electric industry and its consumers are many, while the benefits are questionable. The stakes are too high to dismiss the skepticism within the science community. Our political leaders and the public must insist upon a continued open and vigorous public debate about these global issues to identify the most effective and efficient strategies and to address unintended consequences.

Jeff Pollock, president of J.Pollock Inc., has been an energy adviser since 1975. He says that his firm is "not representing any entity that may be lobbying for/against carbon legislation in Congress. We do have business relationships with large energy users who will be the ones most impacted by carbon legislation." 

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