The economic impacts of carbon pricing in the United States

Would Carbon Pricing have a Large Impact on Household Prices? In the previous round, my opponent stated, “The very goal of Carbon Pricing is to increase household prices.” This simply is not true. Effective carbon pricing systems do increase the price of fossil-fuel generated electricity. However, they do not significantly increase overall household costs. This is simply because placing a price on carbon emissions creates a revenue stream. This revenue could be used to weatherize and retrofit homes; provide incentives for the purchase of energy-efficient appliances; provide grants for large-scale energy efficiency projects; etc. All of these initiatives increase energy efficiency and lower household costs. Does the Private Sector Help Americans Significantly Improve Their Energy Efficiency? My opponent claimed that, “The private market place already moves towards increased efficiency. Our entire economy's history is based on the private sector finding new and better ways of doing things. Companies already compete for consumers by trying to offer them cheaper and better projects (i.e. more efficient). New government spending will not magically make energy more efficient.” This argument contains serious flaws. Without governmental assistance, many individuals are unable to obtain energy efficient technologies. For instance, several Americans lack access to the capital they would need in order to purchase these technologies. Hypothetically, the market should provide capital for all investment needs at a risk-adjusted price. However, many potential borrowers, including low-income individuals and small business owners, are frequently unable to borrow at any price as the result of their socioeconomic status or creditworthiness. Once again, this lack of access to capital inhibits investments in energy efficiency by these classes of consumers. In addition, many renters are unable to obtain energy efficient technologies regardless of their creditworthiness. This is simply because most renters are responsible for paying their own energy bills. As a result, there is little or no incentive for the landlord to increase his own expense to acquire energy efficient equipment (e.g., refrigerators, heaters, and light bulbs). Clearly, many small business owners, low-income homeowners, and renters are often unable to obtain energy efficient technologies. The private sector does nothing to help these individuals. Without governmental assistance, they would experience a large increase in utility bills under a carbon pricing system. However, the revenue generated from placing a price on carbon could easily be used to help these individuals. For instance, the revenue could be used to replace inefficient windows, install attic insulation, seal doorways, install programmable thermostats, etc. Clearly, governmental energy efficiency programs are necessary. Real-world examples show that these programs are also highly effective. For example, let’s consider the implications of the Regional Greenhouse Gas Initiative, a cap and trade system in the Northeastern United States. As one study concluded, this initiative reduced the average homeowner's energy bills by 15-30% through improvements in energy efficiency. [1] What Is the Exact Cost of Implementing a Carbon Pricing System per Household? My opponent stated, “A study that found, after taking the entire costs into account, the Cap and Trade Bill would cost each Household $3,900 per year.” This study came from the Heritage Foundation, a conservative American think tank. As extensive research has shown, the conclusions of a study usually support the interests of the study's financial sponsor. [2-3] Therefore, the findings of my opponent’s study should not be weighted heavily. Notably, three of the four studies which I presented in the previous round came from credible, nonpartisan organizations. These studies all found that household costs would rise somewhere in the ballpark of only $100 per year. Would Carbon Pricing Force Companies to Move Overseas? In round two my opponent argued, “The other major problem with Cap and Trade is that it incentivizes companies to move to countries where Carbon Pricing is not a policy, bringing millions of jobs with them. These countries, like China and India, already have lower labor costs than the US. This argument also contains flaws. Notably, most nations are currently moving towards regulating carbon dioxide emissions. Australia is trying to implement an emissions trading system, and China plans to have one in place by 2015. [4] Nevertheless, even if these nations failed to enact carbon pricing systems, American companies would not be compelled to move overseas. As I’ve made clear throughout this debate, placing a price on carbon creates a revenue stream. Part of this revenue would indeed be used to assist businesses. Under one cap and trade proposal, roughly $47 billion would be directed specifically towards U.S. businesses. That amount would include about $14 billion for industries which would be unable to pass their compliance costs on to their customers due to international competition. [5] In addition, most businesses would benefit from the governmental energy efficiency programs under most cap and trade proposals. Companies which take advantage of these programs could see their energy bills drop by as much as one-thrid. [1] Clearly, enacting a cap and trade system in the US will not have a affect on our businesses. As a result, they will be unlikely to move their operations overseas. Does Cap and Trade Significantly Reduce Emissions? In the previous round, my opponent stated, “Since Carbon Pricing has the effect of shipping polluting companies to non Carbon Pricing Countries like China, Carbon Pricing would only reduce emissions if virtually all countries in the world implemented a Carbon Pricing system...” This argument is simply wrong. As I demonstrated above, enacting a cap and trade system in the US will not force business to move to a foreign country. Furthermore, many cap and trade systems have significantly reduced atmospheric pollution. As I stated in round three, “The US enacted a cap and trade system in 1995 to reduce anthropogenic sulfur dioxide and nitrous oxide emissions. By 1996, these emissions had decreased by 3 million metric tons.” My opponent failed to refute this argument. Do Economists Overwhelmingly Support Carbon Pricing? Throughout this debate, I have shown that the overwhelming majority of economists support carbon pricing. In round four, my opponent argued that experts have been wrong many times before. I acknowledge that this is true. The consensus, by itself, does not prove that carbon pricing is economically beneficial. However, when taken collectively, all of the evidence I’ve presented in this debate clearly suggests that the resolution is true. Please vote Pro!References: http://tinyurl.com... http://tinyurl.com... http://tinyurl.com... http://tinyurl.com... http://tinyurl.com...