As the World Abandons Carbon Taxes and Regulation, America is Poised to Repeat Mistakes

As the World Abandons Carbon Taxes and Regulation, America is Poised to Repeat Mistakes

July 18, 2014


The progressive movement in the United States is known for condescendingly begging their fellow Americans and the government to be “forward-thinking.” Their cries are no louder than when they insist that the government must act immediately to curb national emissions of carbon. They have been joined in their efforts now by former high-level government officials and are seeing their cause advanced with the force of law by the Obama administration’s Environmental Protection Agency (EPA). Late last month, former Treasury Secretary Hank Paulson, a Bush appointee, openly advocated for a carbon tax in the New York Times while the EPA has proposed a rule that will force an aggregate 30 percent reduction in carbon emissions financed on the backs of electric utilities and their consumers. Yet while the progressive movement continues to ask us to be “forward-thinking” when it comes to these proposals, recent news from abroad suggests that, on carbon taxes and rules, American progressives ought to do a little “fast-forward” observing.

This week the new conservative government of Australia announced that, after a two-year experiment, they would be repealing the nation's carbon tax. Now why would the Australians reverse course on what former Secretary Paulson calls a “fundamentally conservative” policy that “empower[s] the marketplace”? The answer is the tax's predictably deleterious impact on Australia’s burgeoning economy. The short-lived carbon tax program is estimated to have cost the Australian economy a total of at least $15.4 billion while it added an additional $11 million to Australia’s household electricity bills… on a daily basis! With the repeal, Australians will save hundreds of dollars a year on their home electricity bills which can now be more efficiently spent or invested in their economy.

Despite its geography, Australia’s difficulty with onerous climate regulation is not an isolated case. The National Grid of the United Kingdom has recently warned its residents to expect electricity shortages this winter and the government may even impose electricity rationing of the type used during World War II. These shortages are a direct result of British compliance with burdensome European Union (EU) climate regulations. The government is now working to reopen power plants that were shut down in another major course reversal.

Perhaps the most striking example of this global trend is what has been occurring in Germany. Europe’s largest economy led the rest of the continent in a mass transition to green energy under EU climate regulations. Germany now also leads the rest of Europe with the highest consumer electricity prices, which disproportionately impact poor and middle class families. And prices are still rising, leading some observers to declare that electricity has become a “luxury good” in Germany. In response, the first coal plant approved in over eight years by the German government was opened near the end of last year while ten more facilities are scheduled to be open over the next two years.

Despite the mounting examples of industrialized nations rejecting aggressive carbon regulations and the stunted economic growth and electricity scarcity they bring about, progressives and, frighteningly, a number of so-called conservatives are adamant about imposing these restrictions here. The EPA is moving ahead with a carbon rule that a study estimates could force nearly 40 percent of the nation’s coal plants into retirement. In effect, this is a carbon tax as consumers will be faced higher electricity bills resulting from scarcity and the cost of utilizing newer and more expensive resources.

The evidence continues to overwhelm that experiments in aggressive carbon and climate regulation haven’t worked and only serve to slow economic progress. Instead of heeding these warnings however, progressives are poised to force Americans to learn these lessons the hard way. Something about that just doesn’t seem very “progressive” at all.

It's Time for an American Encore