The economic impacts of carbon pricing in the United States

Would Carbon Pricing have a Large Impact on Household Prices? Yes. In fact, the very goal of Carbon Pricing is to increase household prices. You see, the reason that people do not already use "green" energy sources is that they are too expensive. Carbon, on the other hand, is relatively inexpensive. The goal of proposals like the Carbon Tax is to make Carbon more expensive than green energy sources so consumers will choose green energy. Cap and Trade does the same thing as the Carbon Tax, except in a different way. It basically sets a cap on the total amount of carbon allowed to be emitted in an entire economy. It then gives out, or auctions off, permits to pollute, that can be traded among companies. This basically gives companies a reason to switch to more expensive, but greener, energy. Or, they can pay a lot more for Carbon. This will lead to more companies using green energy, but these higher costs will be passed onto consumers. My opponent claims that a large amount of these costs will be offset by increases in "energy efficiency" from Carbon Pricing. I don't understand exactly how this happens. If I understand my opponents argument correctly, he is saying that the government should force companies to pay for their pollution, and then the government will spend this money on "efficiency" enhancing programs that will then lower costs. This entire line of thought ignores the fact 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. In my last post, I cited a study that found, after taking the entire costs into account, the Cap and Trade Bill would cost each Household $3,900 per year [1]. This is after taking into account the output losses that accompany carbon pricing (companies moving away and lost output from manufacturing). My opponent countered by offering a couple studies that found much smaller impacts from Carbon Pricing. I'm having trouble reading these studies, but I have a couple of problems with them. First, do they take into account, fully, the lost long term output from Cap and Trade? Even one of the studies my opponents offers finds significant output losses from Cap and Trade [2]. Second, do these studies rely on the unexplained premise that Government Spending will magically increase energy efficiency? Would Carbon Pricing Force Companies to Move Overseas? Again, the answer is yes. Consider the following example. Country A switches to a Carbon Pricing System and Country B does not. A company in Country A uses a large amount of Carbon. This company can either choose to pay a lot more for Carbon, pay a lot more greener energy, or move to Country B. Some companies will pay the higher costs. This is not such a great thing as this will result in higher prices for consumers, lower wages, and less jobs. This is because this company will have less to reinvest in other things. However, a lot of companies would simply move overseas, ending millions of jobs. Now, this also applies in the real world. Except, countries like China already have much lower labor costs than America [3]. My opponent response seems to, once again, rely on this odd idea that new government spending will magically do much more for energy efficiency than private competition. This is an idea that my opponent will likely defend next round, and I will then respond to that. Of course, the blow to businesses could be softened if the money from Cap and Trade were to be funneled into new business incentives or a lower Corporate Tax rate. However, this has not been the case in any of the bills put forward. Most of the revenue goes towards welfare like "low income energy tax rebates" and so-called "green investments" [4]. Does Cap and Trade Significantly Reduce Emissions? I think my opponent missed the point of my argument here. I was arguing that, 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 and enforced it well (enforced is a key), a highly unlikely prospect. Carbon Emissions only matter on a global scale. As I mentioned in my last argument, emissions from China are no better than emissions from America. Do Economists Overwhelmingly Support Carbon Pricing? This argument is about the economic impacts of Carbon Pricing. Therefore, I hold that a survey of all economists would be much more meaningful. I have not been able to find such a survey. Even if economists do support Carbon Pricing, this does not prove it is right. This is an example of an appeal to authority argument, which can be fallacious [5]. And, of course, experts have been wrong before, many times [6]. ConclusionI contend that a Carbon Pricing System will lead to lost jobs, lost output, and higher energy prices without doing much to lower global emissions. Sources:[1] . http://www.heritage.org...[2] . http://www.accf.org...[3] . http://www.businessweek.com... [4] . http://en.wikipedia.org...[5] . http://en.wikipedia.org... [6] . http://factoidz.com...