Cap-and-trade could kill more than 20,000 Arkansas jobs

Arkansas could lose more than 20,000 jobs by 2030 and the average disposable income of an Arkansan could drop almost $800 a year by 2030 if the federal cap-and-trade bill is passed.

The American Clean Energy and Security Act of 2009, commonly referred to the cap-and-trade bill or the Waxman-Markey bill, was approved by the U.S. House of Representatives on June 26 on a 219-212 vote. U.S. Rep. Vic Snyder, D-Little Rock, was the only member of Arkansas’ delegation in the House to vote for the bill. It is now on the Senate calendar.

Among its numerous provisions, the proposed bill establishes a national energy production standard requiring 20% of retail electric sales to come from combined renewable energy and energy efficiency by 2020. The bill also establishes greenhouse cap and trade provisions that cover 85% of the overall economy, including electricity producers, oil refineries, natural gas suppliers, and energy-intensive industries like iron, steel, cement and paper manufacturers, according to the filing by Entergy Arkansas.

The Arkansas Policy Foundation is promoting a report from the American Council for Capital Formation (ACCF) that suggests cap-and-trade would wreck Arkansas’ economy. The report was written by Drs. Margo Thorning and Pinar Wilber.

CAP-AND-TRADE COSTS
Thorning and Wilber conclude in the report: “If federal climate change legislation is enacted, the Arkansas economy is likely to experience slower growth in jobs and income. Arkansas’ gross state product, employment, industrial output, state budget revenues and household income would fall relative to the baseline forecast.”

Key points of the ACCF study as it relates to Arkansas include:
• Gross state product would decline as much as $3.7 billion by 2030;
• Overall manufacturing output dips between 4.6% and 5.4% by 2030;
• Energy intensive manufacturing output dips between 11% and 11.8%; and
• Arkansas tax revenues will decline by up to $370 million a year by 2030.

“Arkansas, a state whose economy is tied to a strong, energy-intensive manufacturing sector, is particularly vulnerable to adverse impacts from federal climate change bills,” noted the Arkansas Policy Foundation in its press report. “Energy prices in Arkansas, a state that depends on coal and natural gas for 70% of electric generation, would rise at a faster rate than in many other states. Compliance with renewable portfolio standards (RPS) would be disproportionately challenging for Arkansas.”

On the national level, cap-and-trade could result in the loss of up to 2.4 million U.S. jobs by 2030, and drive electricity prices up 50% by 2030, according to the ACCF report.

MANUFACTURING NOTE
Michael Barr, president of the Fort Smith Area Manufacturing Executives Association and vice president of operations at Harry G. Barr Co. in Fort Smith, said the MEA has not taken a formal position on the issue but expects to review it in the next few weeks.

However, Barr said, the study clearly points out the “unintended consequences” of cap-and-trade rules.

“The burden these regulations stand to put on industry, particularly in rural states where renewable power is only in its infancy, will have an economic toll. Energy costs will go up significantly,” Barr said. “The question really must be framed in the context of our current economic state: ‘If industry is currently struggling, is now the time to make it more difficult to compete and take money out of consumer’s pockets?’”

As to Barr’s point about energy costs, several utilities based or active in Arkansas filed reports in August with the Arkansas Public Service Commission outlining the average increases in utility bills if cap-and-trade is implemented. One utility suggested the federal legislation would raise some annual bills by as much as $870. The Congressional Budget Office has estimated that the average American utility consumer would see a $175 annual increase in their utility bill by 2020 as a result of the proposed legislation.

(The City Wire has sought input from the Arkansas Economic Development Commission on the legislation. We will update this post when and if such input is received.)

BROAD CONCERNS
The Arkansas Policy Foundation is just the latest organization to recognize and promote the ACCF report. The ACCF and the National Association of Manufacturers presented a report Aug. 12 about the potential economic effects of the proposed cap-and-trade legislation, and Thorning testified Nov. 10 before the U.S. Senate Committee on Finance.

Even a some of those who believe fully that countries must act aggressively to deal with alleged manmade global climate change are opposed to cap-and-trade systems. Link here to a creative 10-minute video presented by a global climate change believer who opposes cap-and-trade.

“This is not a liberal or conservative issue with us,” said Greg Kaza, executive director of the Arkansas Policy Foundation. “This is about manufacturing. This should be a manufacturing issue for all of us in Arkansas.”

The ACCF is by no means a right-wing or Republican-controlled group. In addition to having George Schultz (former Secretary of State under President Reagan) and Bill Archer (former Republican Congressman from Texas and once the chair of the power House Ways and Means Committee), the ACCF board includes James Jones, who served under President Clinton as Ambassador to Mexico, and William H. Gray III, a Democrat Congressman from Philadelphia between 1989 and 1991, and the first black to chair the House Budget Committee.

The stated mission of the ACCF is to ensure that the “nation’s economic strength and stability depend upon well-thought-out economic, regulatory, and environmental policies to promote capital formation, economic growth, and a higher standard of living for all.”