We Are Paying For Carbon Emissions Already

The Wall Street Journal’s editorial page accuses a cap and trade system of creating regional and class warfare. Their logic: Carbon credits increase costs for energy companies, who pass along those increases to consumers who pay a higher price for energy. The Midwest and South in particular get hurt more than most as they are more reliant on coal.

Here’s their scary numbers that tell how much it will cost:

The Congressional Budget Office — Mr. Orszag’s former roost — estimates that the price hikes from a 15% cut in emissions would cost the average household in the bottom-income quintile about 3.3% of its after-tax income every year. That’s about $680, not including the costs of reduced employment and output. The three middle quintiles would see their paychecks cut between $880 and $1,500, or 2.9% to 2.7% of income. The rich would pay 1.7%. Cap and trade is the ideal policy for every Beltway analyst who thinks the tax code is too progressive (all five of them).

They later claim in the editorial that the tax credits that are funneled to families via cap and trade revenue are not enough to offset the increase in cost.

We agree with the Journal. A carbon tax or a cap and trade system will indeed cost extra money for polluters. On the plus side, though, it’s just money, not an irreversable destruction of the planet.

As it stands right now a coal plant can belch all the crap it wants into the air with out any fear or need to change its ways. It can operate in a wasteful, inefficient way that hurts the entire world. And it has no incentive to improve its performance. The increase in cost for emissions ought to spur industry to create cleaner energy production. Once energy production is cleaner, more efficient, costs reduce and the consumer pays less for energy.

If we opt not to do anything for fear of short term bump in costs for energy, in the long run the planet loses out. If we opt for some short term pain, then in the long run we will be in much better shape.

As for their claim of class and regional warfare, it is pointless, meant simply to scare people and incite resentment. If your next door neighbour raked his leaves every fall into a giant pile then set them on fire, with the smoke and stink blowing into your house, would you feel like you were out of bounds to ask him to stop setting his leaves on fire? Or at least pay a premium to do so?

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