Here Comes the Carbon Tax!

What Vermonters will pay for electricity, gasoline, and heating fuel over the next thirty years may be decided in Kyoto, Japan in December. Vermonters will of course not have anything to say about it. The deal will be cut at the third conference on the United Nations Framework Convention on Climate Change, and it may be a very expensive deal for all Americans.

The rationale for the conference is global warming. About 18 years ago some scientists announced that because of the sharp increase in the release of "greenhouse gases" (notably carbon dioxide from combustion) into the atmosphere, the earth should start getting steadily warmer. Their computer models showed that this manmade warming effect would have horrendous consequences. Within a hundred years, if uninterrupted, it would disrupt weather patterns, cause floods and droughts, melt the polar ice caps, and make an unpleasant mess of civilization as we know it.

Of course the computer models were later shown to be predictive failures. Dependable satellite infrared monitoring has now shown that over the past 18 years the earth has been getting very slightly cooler (-.09 degrees C). In any case, the amount of temperature change produced by human action is well within natural temperature variations, and if global warming does occur, it is likely to be beneficial to crops and animal life, especially in more northerly latitudes (like Vermont's).

While the science of climate change is still warmly debated and far from conclusive, the enviro-politicians are moving forward rapidly to deal with the global warming threat they have worked so hard to manufacture. In October the Clinton Administration declared the its intention to reduce U.S. greenhouse gas emissions to their 1990 levels by 2012 at the latest. This is to be achieved through compulsory "emissions budgets", which is to say, control of energy consumption enforced through rationing and taxation. Typically, no one would feel the bite of the carbon taxes until 2007, when President Gore has been safely reelected.

If carbon fuel is more expensive, consumers will use less of it. The idea is thus to increase the cost of carbon fuels until Americans aren't willing to buy and burn them above the 1990 levels. To keep U.S. emissions at the 1990 level in 2010, carbon fuel producers would have to buy permits costing $200/metric ton of carbon content. Guess who collects and spends the money from this permit selling.

The effect of such a tax on U.S. Gross Domestic Product would be staggering. DRI/McGraw Hill Economics has calculated that a $200/metric ton tax or permit charge would depress GDP by 4.2%: $350 billion a year in reduced production of goods and services. This translates into the loss of 1.1 million jobs each year over a 15 year period. Vermont's pro-rata share of this annual GDP loss would be about $800 million.

The American Farm Bureau testified before Congress that such a tax would increase agricultural production costs nationwide by as much as 50%. American businesses have pointed out that sharply increasing cost of energy will make them non-competitive in world markets; and worse yet, that the international inspection police needed to enforce the permit system would have to be allowed access to every firm's records, and the power to levy fines on violators.

Consumer Alert testified that meeting the UNFCCC standard would increase gasoline prices by as much as 60 cents a gallon. If households continued their present consumption patterns, they would pay an average of $600 per year in higher energy charges. Since low income households pay disproportionately more of their incomes for energy than the rich, the new energy taxes are also regressive.

The Convention only requires the industrialized nations, and not the developing nations , to reduce their emissions. It's not hard to see that American manufacturing industries with high energy use would wherever possible relocate to countries such as China, Mexico, Brazil, Russia, and India, where carbon fuels will be far cheaper. The AFL CIO has described this exclusion of Third World nations as creating "a powerful incentive for transnational corporations to export jobs, capital, and pollution, [which] will do little or nothing to stabilize atmospheric concentrations of carbon." Even a study financed by the Clinton Administration's own Department of Energy concludes that the proposed carbon taxes will be devastating to U.S. industry. As a result of the concerns the U.S. Senate recently voted 95-0 to advise the President to reject any convention agreement that does not impose emissions reductions on Third World countries.

None of this appears to be slowing down the Clinton Administration. Why? Because the emissions-reduction solution to the government-produced global warming panic is a splendid opportunity to increase taxes on all Americans under the guise of protecting the planet, give the Federal government that much more money to spend, and extend Federal (and UN) regulatory power to levels never before dreamed of.

As Sen. Tim Wirth (D-CO) once put it, "We've got to ride the global-warming issue. Even if the theory of global warming is wrong, we will be doing the right thing anyway in terms of economic policy and environmental policy." The "right thing", of course, is expanding the power of government and the amount of taxes taken from the American people. Sen. Wirth is now President Clinton's Undersecretary of State for Global (i.e., environmental) Affairs.

What can Vermonters do to help call a halt to this dangerous game? With the support of business, farmers, and the labor unions, a resolution of opposition ought to sail through the legislature. But in a state whose legislature and governor can enact a law empowering the attorney general to get an injunction to stop a citizen from using a politically incorrect fluorescent bulb (Act 259 of 1992), even such a no-brainer as an anti-carbon tax resolution will probably have tough sledding - unless ordinary Vermonters are heard from in large numbers.

December 1997