Montanans Are the Losers Under Cap-and-Trade

We’re hearing a lot about jobs lately and how important it is to “save or create” them. That’s all well and good, but many of those who on one hand wax eloquent about ways to reward businesses for hiring people are on the other hand feverishly pressing for programs that will make hiring more difficult and expensive. The “cap-and-trade” measures currently rattling around in Washington are great cases in point.

Congress is now debating far-reaching energy legislation that would impose an aggressive cap-and-trade system on greenhouse gas emissions (GHG) and mandate high levels of energy efficiency and renewable energy production. You might be hearing that this legislation is dead in the Senate, but nothing could be further from the truth. Big banks, big business, and other special interests have too much riding on this new financial scheme for it to go quietly into the night. And as usual, the rest of us would foot the bill.

As an example, a study released on February 11th by the Montana Policy Institute (MPI) and the American Council for Capital Formation (ACCF) shows that Montana would stand to lose between 4,964 and 6,761 jobs by 2030 under cap-and-trade. And that’s just the start.

Most jobs would be lost due to lower industrial output because of higher energy prices, the high cost of complying with emissions cuts required by the legislation, and greater competition from overseas manufacturers without the same pressures. Among the hardest hit would be manufacturing jobs—the heart of our state’s economy – and those at the lower end of the wage spectrum.

As Congress debates our energy future, we need to understand what Washington special interests are trying to do to our economy, our jobs and our future. It’s clear from these findings that Montana has nothing to gain—in fact, too much to lose—from cap-and-trade legislation, and that the economic impact of this legislation on Montana is enormous and not isolated to lost jobs.

• By 2030, the average Montana family can expect the price of electricity to increase by up to 61 percent, gasoline 27 percent and natural gas 78 percent. Low income families and the elderly, who spend a disproportionate amount of their income on energy, will be especially hurt.

• Montana would experience a sharp decrease in manufacturing output. The higher energy prices, fewer jobs and loss of industrial output under this legislation are estimated to reduce Montana’s gross state product (GSP) by between $900 million and $1.2 billion in 2030. Coal production alone could decrease by 96 percent. The impacts of artificially higher fuel, feed, and chemical prices on our farming families will force hard choices for them as well.

• State tax revenues would be reduced by as much as $65 million by 2030, forcing Montana policymakers to make hard choices about how to fund basic services, such as law enforcement, hospitals and schools, even as their costs increase with higher energy prices.

Despite the current recession, recent employment figures demonstrate a promising trend. In 2008, while the U.S. unemployment rate rose, Montana’s employment actually grew at a rate of 1.7 percent, and our state’s economy grew at a rate of 1.8 percent.

But much of this growth is tied to mining and the development of our natural resources, areas hard hit by cap-and-trade legislation. In the past ten years, employment in the Montana mining industry has grown 68.4 percent and is now responsible for 16,220 Montana jobs. A recent study by Pricewaterhouse Coopers credited the oil and natural gas industry for 34,210 jobs and a $3.3 billion contribution to the state’s economy. If cap-and-trade legislation is enacted, this growth would be reversed as jobs and production move overseas.

We all want a clean environment. Most of us live in Montana because we love our Big Sky and the beautiful land beneath it. But those shrill voices demanding that we trade our economic well being for a clean environment are trying to drive us into a false choice. Exporting our jobs to cheap overseas labor and our energy production to dirty overseas power plants will not help the environment or reduce greenhouse gases. There are alternatives to cap-and-trade, and a politician’s willingness to look at them can be a litmus test indicating whose interests he or she is really serving.


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Carl Graham is president of the Montana Policy Institute, a nonpartisan policy research organization that equips Montana citizens and decision makers to better evaluate state public policy options from the perspective of free markets, limited government, individual rights and individual responsibility.


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