The U.S. Environmental Protection Agency (EPA) will hold public hearings in Atlanta and four other cities to hear from those interested in the proposed Clean Power Plan, which includes new rules regarding carbon emissions from power generating facilities. Of great concern is that the plan, which is on track to be finalized next year, relies on taxes and penalties rather than incentives – a method that has proved to be detrimental and that would likely jeopardize the stability of our economy.
To understand the inherent flaws with the current proposal, we need only look at what happened in Australia, where they opted to introduce what was recognized as the highest carbon tax in the world as a way to address emissions challenges.
The tax resulted in Australian companies facing costs much higher than their global competitors, undermining their international competitiveness, while consumers experienced significant and regressive hikes in power prices and their daily cost of living.
By Australian standards, the political folly surrounding the introduction of this tax was unprecedented. After two Prime Ministers were ousted from power, the current leader was elected with a mandate to abolish the carbon tax and other associated programs.
Recently, the Australian Senate delivered the last rites to carbon tax, making it the first tax of its kind to be repealed and saving families an estimated $550 per year as electricity bills are forecast to be around 9 percent lower with the repeal.
The sum total of the two-year life of this tax can be summarized as an estimated $15.4 billion hit to the Australian economy for the delivery of minuscule reductions in global emissions. So what lessons can we learn?
Reflecting on what Georgia has already achieved in emissions reduction, it can be argued that significant and ongoing change can be achieved without driving the national economy into a ditch, or forcing consumers to bear the burden of inevitable price increases not only in power price but all manner of goods and services.
Data in the 2014 Georgia Energy Report reveals that Georgia has significantly changed its energy generation mix and reduced its carbon emissions by fuel switching, utility investments, and consumption efficiencies. That’s a pretty impressive outcome that can be attributed to a combination of market forces, regulatory stimulation and consumer behavior. All achieved during a protracted period of slow national economic recovery and without a debilitating carbon tax.
The United States can learn a cheap lesson from the Australian experience. Taxation and heavy-handed regulation are not the panacea to achieving meaningful reductions in carbon emissions.
This pathway delivered at best symbolic emission reductions, placed an undue burden on Australian consumers, and clearly illustrates the economic uncertainty that faces the U.S. economy if the Clean Power Plan is implemented as proposed.
As has been demonstrated here in Georgia, it is indeed possible to achieve meaningful environmental outcomes without subjecting the economy to draconian measures that will hit business and consumer confidence, stall business investment and hinder employment growth.
