AMERICAN INSTITUTE for ECONOMIC RESEARCH
Obama's Carbon Cap and Trade Policy is Costly for Consumers
...Under a cap and trade system, the government would assert ownership of the atmosphere over the United States and set a maximum number of permits that it would sell to private companies for the “right” to discharge carbon dioxide into the air. Over time the government would decrease the number of permits and increase their price to meet the desired reducetion in emission levels. Companies would decide which was cheaper: to buy a permit at the government-set price, or incur the expense to introduce technologies to diminish its carbon dioxide emissionsr.
With the president’s plan, companies would pay $13 to $20 per ton of carbon that it wished to emit into the atmosphere. The Obama administration publicly estimated that selling such “rights” would generate nearly $650 billion in federal revenue between 2012 and 2019. However, Jason Furman, deputy director of the president's National Economic Council, told a bipartian group of Congressional staff members on February 26 that the White House believes that the sale of carbon emission permits, if priced a $20 a ton, will generate between $1.3 trillion and $1.9 trillion in additional government revenue in the period, 2012-2019.
Most of the these higher costs of doing business would be passed on to the consumers. According to current estimates, the price of gasoline will rise at least 12 cents a gallon and the average electricity bill will go up 7 percent once the policy is implemented.
The full magnitude of these costs in the form of higher prices for various commodities and the resulting decline in the standard of living, have not been properly emphasized....