The Taxing Carbon Fallacy - Part 2

Yesterday we touched on the first aspect of the fallacy of Obama's cap and trade program for carbon emissions and how dangerous and costly such a large program would be on America, based on some highly debatable assumptions about global warming. Today, we extend the argument of stupidity of this program by looking at some facts, not a strong point of the current political class:

• According to an article by Newsweek columnist Fareed Zakara on April 16, 2007, China and India will build about eight hundred new coal-based and carbon spewing electric generation plants by 2012. Mr. Zakara wrote that these incremental plants will burn nine hundred million tons of coal every year and dump 2.5 billion tons of carbon dioxide into the atmosphere annually. If all of the countries who signed the Kyoto Accord had fully implemented their commitments (which they have not done), their actions would have reduced their carbon dioxide emissions by 483 million tons, less than 20% of what just these new Indian and Chinese power plants will generate.
• According to an article in The Week Magazine on June 19, 2009, the IMF estimates by year 2050 there will be 3 billion cars on the road around the world compared to 700 million today. The Tata Group, India's largest corporation, has introduced an inexpensive ($2,500) subcompact car, the Nano, to take advantage of this growth in automobile ownership. The Nano will allow untold millions of people in the emerging middle classes of China and India to possess a car for the first time in their life. According to the Briefing section in The Week magazine's February 27, 2009 edition, the Nano's catalytic converters will only scrub 80 percent of its pollutants and will do absolutely nothing to reduce/eliminate carbon dioxide emissions. The article quotes figures from the Asian Development Bank that estimated that India's carbon dioxide emissions would increase from 219 million tons per year to 1.5 billion tons per year by 2035, largely as a result of these type of Nano vehicles.
• According to the Population Reference Bureau, the world's population will grow from 6 billion people in 1999 to over 7 billion in 2011. The US Census bureaus extends these population estimates, saying that the world's population will grow 50% from 6 billion in 199 to 9 billion in 2043. The vast majority of this growth will come from developing countries, led by growth in China and India. In other words, there will be a lot more people looking for a set of wheels in the coming decades.
• At a recent international economic summit, most of the developing world rejected Obama's call for coordinated efforts to reduce emissions, saying that it was their turn for cheap energy and economic growth.

Bottom line is that regardless of what Obama and the political class do relative to cap and trade, emission reduction, taxing usage by American consumers and businesses, etc., it will likely have exactly no discernible impact on the environment, given the simple population, economic, and industrialization trends in the rest of the world. Thus, if global warming is indeed a reality, America acting alone will 1) not be able to overcome the increased emissions from around the world, 2) will unnecessarily penalize American businesses with burdensome fines, taxes and regulations, hurting American competitiveness and increasing unemployment and 3) the increased taxes Americans will pay under cap and trade will reduce any kind of economic recovery and growth. Does not sound like a winning formula to me. Untold pain on America but no halt to global warming.

Simple solution: develop and pass a reasonable and fair cap and trade program and PUT IT ON THE SHELF until the rest of the world agrees to similar constraints, i.e. use it as a club/enticement to get the rest of the world on board. Forcing Americans to reduce their energy usage while the rest of the world continues on their energy and carbon dioxide spree is just plan stupid and illogical.

Tomorrow: Part Three