Commentary

Cap-and-Trade-War

Despite indications that much of President Obama’s agenda is meeting intra-party skepticism all over Capitol Hill, there is one policy nexus where congressional leaders are still doggedly determined to move the country left: energy and the environment. Speaker Pelosi will reportedly allow a vote on the controversial Waxman-Markey “cap-and-trade” legislation at the end of this week.

And it gets even better. Not content to tempt political fate by imposing huge carbon taxes on the American middle class, Democrats have added a provision which imposes stiff tariffs on our trading partners if they don’t adopt aggressive carbon restrictions of their own.

You heard correctly: progressives have authored a bill that earns the mortal enmity of domestic energy consumers and our most crucial trading partners at the same time. Economy-killing climate policies and a trade war — together at last!

What happened is this: An early draft of Waxman-Markey already contained triggers that gave the president the choice to introduce carbon tariffs if jobs and industry “leak” overseas to countries that don’t constrain emissions so dramatically. (China and India come to mind.) The original version empowered the president to impose the carbon-linked tariffs beginning in 2025.

But though the language is not public yet, the House Ways and Means Committee is reportedly considering provisions that will give extra comfort to protectionists. Leaks from Hill offices indicate that the president would now be forced to impose the carbon tariffs — and could only opt out of doing so with permission from both chambers of Congress. Carbon-intensive imports would be subject to penalties at the border unless the country of origin requires emission reduction measures at least 80 percent as costly as ours. (The original Waxman-Markey bill had a threshold of 60 percent.)

Unfortunately for the amendment’s authors, World Trade Organization rules make fairly clear that trade-limiting measures imposed to protect the environment should have the purpose of protecting the environment, and not to address any adverse competitiveness effects on domestic industry. Break that connection between measure and purpose, and you’ve got yourself a problem. The result could be litigation, retaliatory tariffs, or both. Does anyone really expect China to stand idly by in 2025 as their trade is embargoed?

And just for the sake of discussion, exactly how much global warming will be prevented by this assurance of future trade turmoil? Well, let’s use the federal government’s own model which — we are not making this up — is called MAGGIC (Model for the Assessment of Greenhouse-gas Induced Climate Change). It comes from the National Center for Atmospheric Research in Boulder, Colorado.

Let’s compare the effects of Waxman-Markey to the United Nations’ “business-as-usual” emissions scenario that’s in their big 2007 climate change compendium. If the U.S. only adopts Waxman-Markey, global warming would be reduced by a grand total of 0.2ºF by 2100. This is too small to even detect, because global temperatures bounce around by about this amount every year. For those who like to think more near-term, the amount of warming prevented by 2050 would be 0.07 of a degree.

According to the UN, without Waxman-Markey the warming from 1990 to 2050 would be 2.8ºF, and 5.3º by 2100. (Of course, observed warming since 1990 is running about 40 percent below the expected rate, largely because there hasn’t been any net warming since the very warm year of 1998.)

Now, let’s be completely unrealistic and assume that every nation that has “obligations” under the (failed) Kyoto Protocol cuts emissions as much as we do. Then the saved warming balloons all the way to 0.14ºF by 2050 and 0.4º by 2100, or 5 and 7 percent, respectively, of the “business-as-usual” total.

Let’s add it all up. We don’t do anything measurable to reduce global warming, we alienate some of our biggest trade partners, we risk a trade war, and Americans are allowed to emit the same carbon volumes as the average citizen did in 1867. What’s not to hate?

All of which explains why Waxman-Markey is being rushed to the floor. If people find out what is really in it, how risky it is and how small the purported benefits, it is hard to believe that it will pass.

Patrick J. Michaels is senior fellow in environmental studies at the Cato Institute and the co-author of Climate of Extremes: Global Warming Science They Don’t Want You to Know. Sallie James is a trade policy analyst at Cato and author of the forthcoming A Harsh Climate for Trade: How Climate Change Policies Threaten the Global Trading System.