TCS Daily

Confused States

By Roger Bate - May 12, 2003 12:00 AM

Many states want to do their bit to combat climate change. Over two dozen, from Maine to New York to California, are planning to make their residents pay more for energy, subsidise energy conservation practices, and even push nuclear power. It's all an attempt, say State Legislatures, to try and reduce the emission of gases into the atmosphere.

But according to a new report from the Chicago-based independent Heartland Institute, existing measures adopted in the greenest states like California are already costing taxpayers millions of dollars and new proposed measures could bankrupt states. Furthermore, the authors of the report say that the evidence for man-made climate change is too flimsy to warrant even current programs, let alone those planned.

Joseph Bast, the Heartland Institute report's lead author, says that "our study is the first to estimate the cost to state governments and to individual households of this 'back door implementation' of the Kyoto Protocol."

Their research shows that the average state would have to spend $530 million a year to implement a comprehensive greenhouse gas program and would lose $2.6 billion a year in revenues due to higher energy costs and lower economic growth, for a total annual cost of $3.2 billion. This is 29 percent of an average state government's total annual revenues.

That would be bad enough in a boom, but America, still the world's engine for economic growth, is struggling after three years of stock market dips. The Washington Post reported that California's budget deficit this year is a record $35 billion. Add to that the projected 21% increase in budget of implementing the comprehensive plan in California and the deficit will widen even further.

And California comes off better than some in the report projections. Consumers and businesses in an average state would have to pay $21.8 billion a year through higher prices for goods and services or lost jobs and lower income. This is an average of $10,000 per household.

Bast says that "with states facing major budget deficits, we think it is horrible that legislators are pondering bills that would impose such enormous 'pain' with virtually no 'gain'... you would think state legislators would be more respectful of the people who elect them. They are getting away with it, however, because much of the cost is incurred indirectly, the result of alternative fuel mandates on utilities, for example, and higher energy costs. So greenhouse reduction programs aren't brought up in the context of fixing leaky state budgets."

The report acknowledges that some "no-regrets" policies should be followed. For example, encouraging sequestration of carbon dioxide by improved farming, logging and reforestation, and removing building regulations that hamper energy conservation are worth doing. But most other policies will prove costly to American business and consumers and with no discernible benefit to the climate.

European Governments faced a revolt two years ago when they tried to raise energy taxes from their already high levels. In Britain working men and women staged sit-ins at gas stations across Britain. President Bush watched these actions of the over-taxed Europeans, and partly as a result, made the right decision not to push for ratification of the Kyoto Protocol. The states should not betray him by back-door implementation: the American people don't deserve such back-stabbing.

Dr Roger Bate is a fellow at the International Policy Network and a TCS columnist.

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