A manufacturing trade group has attempted to throw cold water on the Obama administration’s plans to cut U.S. greenhouse gas emissions, warning that goals and methods recommended by the White House will significantly drive up energy costs, retard economic growth, and disproportionately affect manufacturers.
The Manufacturers Alliance/MAPI group, in a recent report, predicts a cap-and-trade program contained in President Obama’s budget blueprint would drive up the cost of gasoline by $1 to $2 per gallon as soon as 2012.
The Obama administration has called for cutting greenhouse gas (GHG) emissions 14% below 2005 levels by 2020 and 83% below 2005 levels by 2050. To get there, one of the methods the administration has proposed is a cap-and-trade program under which GHG emitters using fossil fuels would need to purchase permits. Under the plan, manufacturers and others would be allowed to buy and trade permits in an open market.
But, the MAPI report warns, the administration’s GHG reduction goals are so aggressive that the cost of permits would rise dramatically, increasing energy prices and threatening economic growth.
“A rapidly growing economy increases demand for labor, capital, and energy,” says Garrett Vaughn, a MAPI economist. “The proposed cap-and-trade program would deny the energy needed for rapid economic growth through a series of self-imposed energy embargoes.”
Economic losses in the United States would be even greater if competing manufacturers in countries such as China and India were not required to take similar steps, the MAPI report predicts.
The report also questions whether alternative energy sources could be developed fast enough to offset the regulation-inspired reduction in fossil fuels. If historical economic and energy use growth rates were to be sustained between 2012 and 2050, the MAPI report says, supplies of alternative fuels such as biomass, wind, and solar would need to grow by 24% per year between 2012 and 2020 and by more than 5% per year between 2020 and 2050.
“By eliminating most fossil fuels from the total U.S. energy supply, the administration’s timetable for reducing GHG emissions effectively requires the development of alternative fuels at historically unprecedented rates — rates that cannot possibly be achieved at acceptable costs,” the MAPI report says.