The Senate Environment and Public Works Committee today held its second of three hearings on S. 1733, the Clean Energy Jobs and American Power Act, i.e., the Kerry-Boxer bill to restructure the U.S. economy through regulation, subsidy, taxation and more expensive energy.
Twenty-seven witnesses were scheduled to testify on four separate panels, which seems like too many really to pay close attention to.
Let us then highlight the testimony of Brett A. Vassey, President & CEO of the Virginia Manufacturers Association, an active member of the National Association of Manufacturers. We appreciated Vassey’s emphasis on Virginia in a global economic climate:
Federal Government Credit Allocation. This system allows elected political leaders to choose “winners and losers” in the economy. Waxman-Markey directs that every commercial user of energy would be given a certain number of carbon credits, permitting it to emit a specific amount of carbon each year. If a manufacturer exceeds its credits, it has to purchase extra credits from others who do not reach their cap. This system has too much risk for global manufacturers who are making decisions about their future capital investments today. Congress allocating credits is a critical decision because Virginia and other states will lose opportunities to compete and create jobs in the future as long as the threat of this allocation system exists in the public debate.
Leakage. Proponents of “cap & trade” believe immediate regulation will force industry to stop using traditional sources of energy. Unfortunately, this position demonstrates a fundamental misunderstanding of global manufacturing today. The truth is “cap & trade” is just another tax on businesses and consumers – regressively so on manufacturing – and it does nothing to stop “leakage” to nations with more favorable conditions. For example, even if Virginia limited all of its CO2 emissions, China’s CO2 emissions growth alone would replace all of Virginia’s CO2 emissions in only 77 days. Virginia is .44% of the global GHG emissions.
See also Vassey’s Townhall column, “‘Cap’ Industrial Competitiveness and ‘Trade’ Domestic Manufacturing Jobs Abroad.”