Energy Policy - Cap and Trade

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Background

The skyrocketing cost of oil and gas is now impacting every industry sector, large and small businesses, and every American who relies on gasoline or diesel fuel for work and family needs. Increased American-made oil and natural gas production and the adoption of policies that will reduce our dependence on foreign sources of oil must be the driving element of any proposal.

The IFA supports initiatives that encourage conservation and the development of alternative and renewable energy sources. Every option should be on the table for expanded production, including nuclear, clean coal, solar, and wind power. Care should be taken when examining the effects of renewable energy policies, such as biofuels, which can increase the price of food. The diversion of some crops for fuel production can reduce consumer supply and animal feed which contributes to food price inflation. That said, what America needs most is decisive steps to bring long-term supply quickly into balance with long-term demand.

In June, H.R. 2454, the "American Clean Energy and Security Act" was designated as a “Key Vote” for franchising by the IFA. While the IFA was encouraged by the inclusion of policies to support production of renewable resources while responsibly decreasing the impact of greenhouse gases, the bill contains several harmful provisions that attempt to address a global problem with a national solution. The legislation would aim to curb greenhouse gas emissions by placing a cap on carbon emissions and selling carbon producing credits to energy producers. This new system is known as “cap-and-trade”, and would allow energy producers to sell or trade carbon credits in the marketplace. As these companies work to reduce their carbon emissions, industries and consumers that rely on fossil fuels would face increased costs. These costs would likely be passed on to those consumers—including homeowners, automobile owners and franchise businesses. Furthermore, until international partners implement similar emission curbing plans, the U.S. would be at a competitive disadvantage to nations with less stringent standards.

The IFA is a member of the Coalition for Affordable American Energy (CAAE), which in April 2009 released a study of the impact cap-and-trade proposals would have on the U.S. economy. According to that study, 3.2 million jobs would be lost as result of such policies and the average American household will lose $2,127 annually in purchasing power. Furthermore, not only business, but consumers would face electricity costs that are estimated to increase 27 percent by 2020 and natural gas costs that are estimated to increase by 39 percent in the same time. The likely effect of these higher costs will be to significantly slow the pace of U.S. economic growth.

Status

On June 26, 2009, the House of Representatives very narrowly passed H.R. 2454 by a vote of 219-212. IFA designated votes on the legislation as a Key Legislative Vote for franchising. On September 30, 2009, similar legislation was introduced by Sens. Barbara Boxer (D-CA) and John Kerry (D-MA) entitled the "Clean Energy Jobs and American Power Act."

IFA Grassroots Tools

Resources

IFA Key Vote Letter on H.R. 2454, the American Clean Energy and Security Act - June 26, 2009
CAAE Letter on H.R. 2454, the American Clean Energy and Security Act - June 26, 2009
IFA Presentation on Cap and Trade Issues
Chart of New Regulations and Mandates Created by H.R. 2454
Economic Impact Study of Proposed Cap and Trade Policies - April 29, 2009
Summary of Senate Clean Energy Jobs and American Power Act - September 30, 2009