AEI Reaction to Boxer-Kerry Climate Bill

SOURCE: American Enterprise Institute

AEI'S STEVE HAYWARD FINDS THAT THE 20 PERCENT REDUCTION IN GREENHOUSE GASES REQUIRED IN 2020 BY THE BOXER-KERRY CLIMATE BILL WOULD REDUCE EMISSIONS TO 1977 LEVELS EVEN THOUGH, 32 YEARS AGO, THE U.S. HAD ALMOST HALF OF TODAY'S VEHICLES, 100 MILLION LESS PEOPLE, AND AN ECONOMY HALF THE SIZE OF WHAT IT IS TODAY.

At more than 800 pages, it will take a while to digest fully the actual workings of the Boxer-Kerry climate bill, but on the surface one should examine what is meant in practical terms by the claim that it is a tougher bill than Waxman-Markey because it calls for a 20 percent reduction in greenhouse gas (GHG) emissions from the 2005 level by the year 2020--barely a decade away--instead of the 17 percent reduction in Waxman-Markey.

A 20 percent reduction, meant literally, would reduce U.S. GHG emissions to a level last seen in the year 1977, when the U.S. had a population of 220 million people (as opposed to 305 million today), and when its economy was only half the size it is today ($7.2 trillion in 1977 versus $14.2 trillion today, in constant 2008 dollars). In 1977, the United States had 145 million vehicles on the road; today, it has 251 million vehicles on the road.
To meet this target will require substantial cutbacks in the use of fossil fuels, and their replacement by low-carbon or non-carbon energy sources that are often three to five times more expensive than fossil fuels. If the transportation sector is going to cut its share of emissions back to the 1977 level, cars and trucks will need to reduce their total miles traveled at least by one-third, or achieve a fleet-wide one-third improvement in fuel efficiency, which is a difficult and expensive proposition to achieve in ten years' time, given the length of time consumers and businesses keep their cars and trucks today.

The amount of coal burned for electricity would have to be cut by more than half to return coal-related GHG emissions to their 1977 level, requiring the closing of more than 200 coal-fired power plants, reducing electricity supply by more than 800 million megawatts. (In 1977, the electric utility sector burned 477 million tons of coal. In 2005, the utilities burned just over 1 billion tons of coal.) Wind and solar power are three to four times as expensive as coal-fired electricity, and moreover the total amount of electricity currently generated by non-hydro renewables (solar, wind, geothermal, etc) is only about 130,000 megawatts. We hear that renewables are a fast-growing source of power, but at its "rapid" growth rate of the last five years it will take 97 years for renewable sources to make up the amount of coal-fired electricity that must be taken offline over the next decade. In other words, the deployment of costly wind and solar and other renewable sources will have to increase by an order of magnitude. This is not a credible scenario by 2020. This is especially not credible if the bill caps the price of emissions allowances at $28 a ton as the bill proposes.

The industrial and manufacturing sectors, by the way, have lower greenhouse gas emissions today than they did in 1977--a testament to the substantial progress in energy efficiency in that sector over the last 30 years. All of the growth in GHG emissions over the last 30 years has come from increased transportation and electricity consumption by households.
Boxer-Kerry will surely follow Waxman-Markey in making heavy use of "offsets" that will mean, in practice, that there will be very little GHG emissions reductions at all by 2020. Rather than inconvenience American households and industry, we shall "offset" emissions by counting tree-planting and regular agriculture activities on our carbon balance sheet in a way that would make Enron or Bernie Madoff proud. If there were truth-in-advertising for climate legislation, the Boxer-Kerry bill would have to strike the "20 percent reduction by 2020" claim.