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OPINION: WSJ Editorial Board: Carbon-Income Inequality

Jun 3, 2014

The Wall Street Journal today editorialized on the EPA’s announced plan to "nationalize U.S. energy" by ramming through a rule on existing power plants that "more or less orders states to adopt cap and trade or a carbon tax." The authors compared EPA’s rule to a "wealth redistribution scheme" and wrote, "The lowest 10% of earners pay three times as much as a share of their income for electricity compared to the middle class. If you want more inequality, this is an ideal way to ensure it." Upon release of the rule yesterday, House Energy and Commerce Committee Chairman Fred Upton (R-MI) stated, "[D]espite the president’s focus on income inequality, this is a plan to make the poor poorer as it is the nation’s most vulnerable who suffer the most from higher energy prices and layoffs." 

June 2, 2014

Editorial: Carbon-Income Inequality

Obama's new energy rule is a huge tax on the poor and middle class.

President Obama vowed last year that he wouldn't wait on Congress to bless his anticarbon agenda, and the rule his Environmental Protection Agency proposed on Monday is equal to that promise. The agency is bidding to transform and nationalize U.S. energy the way ObamaCare is doing to medicine, but in this case without even the pretense of democratic consent.

The EPA's goal is to cut carbon emissions by 30% by 2030 from near-peak 2005 levels, which will inevitably raise the price of electricity and thus all other goods down the energy chain. …

A Democratic Congress debated and rejected this anticarbon program in 2010, and there isn't a chance it could get 50 Senate votes now. But no matter, the EPA claims the authority for this sweeping power grab by pointing to an obscure clause of the 1970 Clean Air Act called Section 111(d) that runs merely a few hundred words and historically has been applied only to minor pollutants, not the entire economy. ….

The EPA claims to be targeting "polluters," but the government is essentially creating an artificial scarcity in carbon energy. Scarcities mean higher prices, which will hit the poor far harder than they will the anticarbon crusaders who live in Pacific Heights. The lowest 10% of earners pay three times as much as a share of their income for electricity compared to the middle class. If you want more inequality, this is an ideal way to ensure it.

The EPA plan will also redistribute income from economically successful states to those that have already needlessly raised their energy costs. …

In eight short years this Administration will have accomplished the largest transformation of the U.S. power system since the 1930s. As recently as 2007, cheap coal accounted for more than half of U.S. net generation but has now plunged to 37% and is trending down. Some of this is due to the natural gas boom, but the EPA rule will finish the job.

Notably, these plant retirements may endanger the reliability of the electrical grid. This winter's cold snap showed that traditional power is essential to keeping the lights and heat on, and the risk of rolling blackouts is real as the EPA re-engineers the system.

The irony is that all the damage will do nothing for climate change. Based on the EPA's own carbon accounting, shutting down every coal-fired power plant tomorrow and replacing them with zero-carbon sources would reduce the Earth's temperature by about one-twentieth of a degree Fahrenheit in a hundred years. …

In the American system, legislative inaction does not create a vacuum that the executive is entitled to fill. Almost all economic and human activity has some carbon cost, and the huge indirect tax and wealth redistribution scheme that the EPA is imposing by fiat will profoundly touch every American. Voters should at least have a say and know the price they will pay before ceding so much power to regulators.

Read the article online HERE