Cap & Trade: Europe’s Experience Should Be a Warning

Europe’s recent economic performance shows how “cap and trade” will likely affect the U.S. economy if Congress passes this legislation currently before the body. In 1997, Europe adopted emission reduction goals outlined in the Kyoto carbon targets, termed the Kyoto Protocol. That year, Republican congressional leaders declared the Kyoto Protocol “dead on arrival” in the US Senate. In response, the Clinton administration chose not to defend the Protocol. Instead, the White House announced that, until other key developing countries signed on, the Protocol would not be sent to the Senate. Subsequently, the Bush Administration remained steadfastly opposed to Kyoto for both presidential terms. Now the Obama Administration, in attempt to reduce carbon emissions paralleling that of Kyoto, is backing a cap & trade bill. However, Europe’s economic experience since 1999 provides US Congressional Representatives, Senators and President Obama with real evidence to reject this anti-growth measure.
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From 1999 to 2008, a period marked by Europe’s carbon limitation program, Europe’s inflation adjusted economy grew by 19.0 percent while the US’s GDP expanded by 23.5 percent. In fact if the US grew at the same pace as Europe during this period, US GDP would have been $500 billion less in 2008. In terms of unemployment rates, the comparisons are even more startling. From 1999 to 2008, the average unemployment rates were 8.3 percent in Europe and 5.0 percent in the US. In 2008 if the US jobless rate matched that of Europe, another 4.2 million Americans would be jobless searching for work.

While the gap in US and Europe economic performance since 1999 cannot be pinned solely on carbon emissions programs, Europe’s relative economic lethargy should be a warning to lawmakers considering cap and trade legislation---vote no on this measure. European vacations and wine are just fine, but their carbon emissions sensibilities should not be imported into the US if US economic growth is to be supported.
Ernie Goss.