This midterm election sent a clear message to Washington: “Listen to the people, or you’re out.” While the dire state of the economy and out-of-control public spending were certainly the frontrunners in motivating voters to make their voices heard, the Democrats’ push for “cap-and-trade” legislation followed closely behind.
Voters know that cap-and-trade legislation would lead to increased energy costs, which would negatively affect businesses’ and consumers’ bottom line. Making it harder for consumers and businesses to survive in a tough economy with high unemployment is understandably unpopular.
About two dozen Democrats who had voted in favor of cap-and-trade legislation, or the Waxman-Markey bill as it is officially known, lost their seats in the House of Representatives this midterm election. Compare that to the fate of West Virginia’s Joe Manchin who actually fired a shot through a piece of paper marked “cap-and-trade” during a campaign ad. Manchin wanted to make it perfectly clear that he wouldn’t follow his party leadership in pushing for this job-killing legislation, and he won handily.
Yet, voters should be warned. Although cap-and-trade may be off the table during the next Congress, another costly energy bill is pending, which might be able to garner more bipartisan support. Senators Jeff Bingaman (D.-N.M.) and Sam Brownback (R.-Kan.) introduced the Renewable Electricity Promotion Act of 2010 in the Senate this fall, and several other Republican senators have already expressed their support.
The Act would mandate that 15 percent of the nation’s electricity come from renewable sources by 2021, thereby increasing the cost of electricity for businesses and consumers. Electricity generated from the wind and sun costs more than extracting energy from coal, oil, natural gas, or atoms. Since the broad majority of U.S. utility companies are regulated, the higher costs of renewable energy would be directly passed on to consumers in the form of rate increases.
The Heritage Foundation estimates that renewable energy standards would raise electricity prices by 36% for households and 60% for businesses. Additionally, the standards are expected to reduce our national income by $2,400 per family of four, and add $10,000 per family to the national debt by 2035.
Proponents of the Act argue that it would increase jobs in the green energy sector, which would help get the economy back on its feet. A study by the German Institute of Energy Research refutes that argument, showing that green energy job subsidies by far exceed average wages, at a per-worker cost of $240,000. This is a waste of resources. Those workers would be better off in more productive positions, which actually help the economy grow rather than in jobs that can exist only with massive government support.
Not surprisingly, the biggest winners from the legislation are wind and solar power industries which have been lobbying heavily to use the coercive power of the state to force U.S. businesses and consumers to buy their products. We’ve seen how this works in Germany, where the electricity market is largely deregulated and whose renewable energy consumption was at 16 percent in 2009. In Germany, it took a legislative Act in 2000, obliging electricity companies to buy renewable energy at a government set fixed rate, referred to as feed-in-tariff, to get to those levels. The Act has increased German consumers’ energy bills by close to 10 percent of which only 35 percent are reflected in energy bills and the rest is taken in taxes. The FAZ, a leading German newspaper, paints a glum picture, suggesting that there are no signs that renewable energy will get any cheaper in the foreseeable future.
Most U.S. states have already implemented renewable energy standards, often times in order to prop up green energy businesses in their state. California’s recent ballot decision on Prop 23 is a perfect example of the process that supports these mandates. Venture capitalists invested in green energy technology financed opposition to Prop 23, because a reduction in green energy subsidies and renewable energy standards would hurt their investments. Those in the green energy business won the day in California, and California consumers will be paying the price. The Senate’s new legislation aims to force those 15 states that have so far resisted the push for higher-cost energy to jump on the bandwagon.
Americans know that the term cap-and-trade is synonymous with high energy prices. The term “renewable energy standards” isn’t yet political poison, but it is the same kind of coercive government policy that would force American consumers and businesses to pay higher prices for energy and subsidize less efficient energy sources. Voters are bound to learn the truth, which is something for the new Congress to consider as the new campaign for 2012 gets underway.
Romina Boccia is a Policy Analyst at the Independent Women’s Forum.