Excuses, Excuses

Ten Industry Arguments Against Action on Global Warming ... and Why They Are Wrong

Dan Weiss presents 10 industry arguments against action on global warming ... and why they are wrong.

Coal cars surround the Xcel Energy conventional power plant near Denver. The Climate Security Act would create a cap-and-trade program to reduce greenhouse gas emissions from plants like this. (AP/Ed Andrieski)
Coal cars surround the Xcel Energy conventional power plant near Denver. The Climate Security Act would create a cap-and-trade program to reduce greenhouse gas emissions from plants like this. (AP/Ed Andrieski)

1. Binding emissions reductions before 2020 are too swift, and should not be imposed until the technology to remove carbon dioxide from coal-fired power plants is commercially available.

Global warming is underway. Severe swings in regional climates are already causing natural disasters to sweep the globe, and have had grim effects on food and national security worldwide. Global warming poses a major threat to international stability. The Intergovernmental Panel on Climate Change says we must begin reductions by 2015 to have any realistic chance to prevent the worst effects of global warming.

There is no need to postpone greenhouse gas emissions reductions. The technology exists to reduce them through comprehensive application of energy efficiency, wind power, and solar power. For instance, McKinsey & Company, a global management consulting firm, concluded in a recent study that the “United States could reduce its greenhouse gas emissions in 2030 by 3.0-4.5 gigatons of CO2 emissions using tested approaches and high-potential emerging technologies.” This would equal a 40 percent to 64 percent reduction in carbon dioxide emissions from today.

New coal-fired power plants should also prepare to make CO2 reductions right away. Carbon capture and sequestration technology will be commercially available between 2015 and 2020. In testifying before Congress on the state of CCS technology, CEO John A. Fees of Babcock & Wilcox stated “[t]he first wave of near-zero emission coal plants are expected to start operation around 2012-2013 … After this, around 2015, commercial availability of CCS technologies should be available for new plants and retrofit of some existing plants. These will take four to five years to build before the plants come online and begin storing CO2 in the 2020 timeframe.”

2. Global warming reductions will drive oil and gasoline prices even higher.

High energy prices are the result of status quo energy policies that heavily rely on a single fuel—oil—for a single use—transportation. Oil companies have seen record profits under the current approach—more than $650 billion from 2001 to first quarter of 2008. This year alone, oil prices have so far increased by 44 percent.

The Environmental Defense Fund conducted an assessment of various government and independent studies of the earlier version of the Climate Security Act and found that the median increase in gasoline price hikes would be 13 percent by the year 2030. This is an increase of slightly more than one half of 1 percent per year. To put that increase in perspective, gasoline prices rose 22 percent between January 7 and May 26, 2008 alone.

Reduction requirements for greenhouse gases would create economic incentives to dramatically increase motor vehicle efficiency, produce sustainable non-corn based biofuels, and reduce vehicle miles traveled. All would reduce consumption of gasoline and oil, which would reduce costs.

3. Global warming reductions will decimate families’ budgets.

Americans’ budgets are already under siege from higher food and fuel costs, and stagnant wages. The decrease in median family income in real terms puts working families into even more of a bind. Meanwhile, their hard-earned dollars help oil companies make record-setting profits.

A global warming bill would have only a minimal effect on their budgets. An Environmental Defense Fund overview of analyses of the Senate Environment Committee-passed version of the Climate Security Act found that, “For the average American family, the cost of capping greenhouse gases will amount to less than 1 percent of household budgets over the next two decades.”

To protect moderate- and low-income households, the bill would provide $900 billion to load-bearing utilities for ratepayer relief should higher electricity prices occur. It also includes an $800 billion tax cut to offset the strain from any other higher prices.

4. Global warming reductions will send American jobs overseas to countries that do not reduce their emissions.

Investments in clean energy, boosted by binding reductions in global warming pollution, would generate millions of new jobs. For instance, annual investments in energy-efficiency technologies currently support 1.6 million U.S. jobs. Renewable energy, such as wind and solar power, created 450,000 jobs in 2006 alone. Since a cap on greenhouse gas pollution will make efficiency and renewables much more economically attractive, there will be greater investments in this field. And these clean-energy jobs, such as home weatherization technicians, solar panel installers, and concentrated solar thermal plant operators, cannot be easily sent abroad.

The Climate Security Act would create tens of thousands of new clean-energy jobs. In addition to making clean energy more economically attractive, the bill would invest billions of dollars in efficiency and renewables. The bill includes $150 billion for renewable energy investments alone. If this sum were equally divided into $50 billion each for investments in wind, concentrated solar, and geothermal, we estimate that by 2050 it would generate a total of 81 billion kilowatt-hours of wind-powered electricity, which could power approximately 7.7 million homes and create 42,000 jobs; 52 billion kWh of concentrated solar electricity, which could power about 5 million homes and create 5,600 jobs; and 131 billion kWh of geothermal electricity, which could power about 12.4 million homes and create 71,000 jobs.

The bill would also protect workers in high carbon-emitting fields from losing their jobs overseas to nations that do not reduce their global warming pollution. The Climate Security Act includes a provision that would require imports from nations that do not have a comparable system of greenhouse gas reductions to pay an excess emissions penalty after 2015.

5. The Climate Security Act will wreck the economy.

The Climate Security Act would have almost no negative effect on long-term economic growth, according to a number of economic models. The Environmental Defense Fund analyzed the EPA’s evaluation of the Senate Environment Committee version of the bill, and concluded that, “under business as usual, the total output of the U.S. economy is projected to reach $26 trillion in January 2030. With a cap on greenhouse gases, the economy will get there by April.”

In fact, it could stimulate the economy via its tax cut, its investments in efficiency and clean-energy technologies, and its creation of clean-energy jobs. Indeed, transformation of our fossil fuel-based energy system toward one that relies on efficiency and renewables to reduce greenhouse gas emissions is perhaps the greatest engine for American innovation, productivity growth, and job creation in the coming decades.

6. Clean energy jobs will cost workers in fossil fuel industries their jobs.

Workers in these industries are already losing their jobs. Over 4,000 coal miners have lost their jobs since 1990, with 95 percent of these loses due to mechanization.

The Climate Security Act provides $307 billion to assist workers in fossil fuel-dependent industries with transition assistance, should job losses occur. In addition, it includes $68 billion to help the auto industry retool so that it can produce the hyper-efficient cars of the future, such as plug-in hybrids.

7. Global warming solutions will hurt the poor.

Low-income households are already harmed by high energy prices. More of the same energy policies will only compound these problems.

A cap-and-trade system can use revenues from the auction of allowances to provide the resources required to offset any potential energy price increases for middle- and low-income families. The Center on Budget and Policy Priorities estimates that it would only require a modest 14 percent of the total value of emissions permits to completely offset any increased energy costs for the bottom fifth of the income spectrum.

The Climate Security Act would provide over a trillion dollars to assist such families via a tax cut, clean-energy job training, and rate relief to protect consumers from higher electricity prices.

The Nobel Prize-winning Intergovernmental Panel on Climate Change determined that low-income people in the developing world are most at risk from the impacts of global warming, including drought, famine, tropical diseases, and sea level rise. Throughout Asia, freshwater shortages could harm over one billion people by 2050. African droughts could cause rain-fed agriculture crop yields to fall by up to 50 percent by 2020. Central and South Asia could see up to a 30 percent decrease by the 2050s. Climate change-induced famine may displace more than 250 million people worldwide by then. Mosquito-borne diseases will expand their reach into new territory, exhausting already deficient health care services. These circumstances are likely to unleash rampant food insecurity, malnutrition, and health challenges, plus exacerbate existing conflicts and fatefully test government and infrastructure capacity.

To prevent these catastrophic occurrences, the Climate Security Act would provide $342 billion between 2012 and 2050 for international adaptation to provide these people with the opportunity to adapt their communities to minimize the effects of global warming.

8. The Climate Security Act will bankrupt American industry unless we hand out lots of free pollution permits.

Giving away emission allowances for free to large emitters was tried in Europe, and it failed. In Phase I of the Emissions Trading Scheme, the European Union distributed nearly all emission permits for free. A few European companies reaped billions of dollars in windfall profits by using the allowances for themselves while passing on the clean-up costs to consumers. They did not use the allowances to keep prices low. The European Union is now seeking to correct these design flaws in the next stage of its cap-and-trade system by substantially increasing the number of permits that are auctioned, rather given away for free.

The Northeast Regional Greenhouse Gas Initiative has learned from the EU’s mistake, and will be auctioning nearly all of its allowances.

It is not necessary to give emissions permits away for free in order to protect jobs and businesses—a common misconception. A Resources for the Future report has shown that energy-intensive companies would only need about 10 percent of the total auction revenue to protect their shareholder value and ensure that the company does not suffer. Any handouts above this amount would simply result in windfall profits. Companies can instead be protected by directing a small portion of auction revenues to those businesses operating in energy-intensive areas of the economy to compensate shareholders, employees, and communities in those sectors. The Climate Security Act follows this approach.

9. Steep reductions in greenhouse gases cannot occur without a significant increase in subsidies for nuclear power.

Nuclear power is probably the most expensive form of low-carbon power. New plants are projected to deliver electricity for $.15 a kilowatt hour, whereas the national average retail rate is about nine cents a kilowatt hour. Energy efficiency, wind power, solar photovoltaics, and concentrated solar thermal electric can achieve all the reductions that we need in the utility sector for the foreseeable future, and at a lower price. As a mature technology with 20 percent market share and the beneficiary of nearly $100 billion in subsidies since 1948, further government pork for nuclear is unjustified.

10. Economic analyses by industry groups show that the Climate Security Act is unaffordable, will lead to huge electricity rate hikes, and cost jobs.

The National Association of Manufacturers and other industry groups likely spent several hundred thousand dollars to produce seemingly credible economic analyses that enumerate with great specificity the great economic havoc that will occur should the United States reduce global warming pollution under the Climate Security Act. These reports lack credibility for a number of reasons:

  • They do not account for the costs of inaction. A University of Maryland study found that “Climate change impacts will place immense strains on public sector budgets.”
  • They often make inaccurate assumptions about business and consumer behavior.
  • They base their cost assumptions on existing technologies and practices, which means that they do not account for the vast potential for innovation once binding reductions and deadlines are set.

Twenty years ago, these companies and trade associations hired some of the same consultants to produce analogous studies to “prove” that reductions in acid rain pollutants from coal-fired power plants would be too expensive, hike utility costs, and cost jobs. Wrong, wrong, and wrong. Clean-up costs were three-quarters lower than projected. Electricity rates went down in most states after the passage of the program. Mine worker job losses, though unfortunate, were one-quarter the prediction. These current studies will prove equally inaccurate.

Thanks to the Center for American Progress Energy Opportunity Team.

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Daniel J. Weiss

Senior Fellow