President Obama Clearing Way for California to Institute a Stealth Carbon Tax

President Obama has ordered the Environmental Protection Agencyto swiftly decide whether or not it will waive federal law and allowCalifornia to regulate greenhouse gas emissions from automobiles. EPAis very likely to grant the waiver enabling California to institute newand costly regulations. The regulations amount to a stealth carbon taxof at least $1,000 on average per car or truck.

While the costs for this action are substantial, the benefits willbe miniscule. These regulations will only reduce carbon dioxideemissions by a tiny amount. In fact, if every car in the US met thesestandards, the amount of carbon dioxide reduced would be overcome bythe increase in other parts of the world within 134 days.[1]American jobs, American workers and American family budgets willsuffer. Meanwhile carbon dioxide emissions savings will essentially be“background noise.”

According to the rosy and dated estimates from California’s regulators,granting the waiver and allowing California to further regulateautomobiles will increase the average price of a car by over $1,000. Inaddition to California, 13 other states have indicated that they plan to implement California’s costly regulations.If California and other states choose to deliberately increase the costof automobiles for their citizens, their voters can express theirdiscontent to their government. However, since California and the 13other states’ citizens make up over 40 percent of the nation’spopulation, in order to make car cost-effectively, automakers willlikely be forced to implement California’s regulations on all cars, notjust ones for California. This means that California will become the defacto national regulator and all Americans will pay a hidden $1,000+tax per car.

Worse, there are infinitesimally small benefits generated from theplanned regulations. In fact, if every car and truck complied withCalifornia’s regulation today (in reality, California’s regulation willlikely only apply to new cars and trucks) U.S. emissions of greenhousegases would decrease by 5 percent overnight.[2]But emissions from the rest of the world are increasing so dramaticallythat by mid-June, emissions increases from the rest of the world makeour decrease moot.[3] This small and costly policy would have no noticeable impact on carbon dioxide emissions.

This program hurts family budgets and transportation affordabilityand provides no real benefits. It is a luxury that our nation shouldnot be subjected to when economic times were good and we certainlycannot afford it now.

President Obama should ensure that Detroit builds cars Americanswant to buy, not to satisfy California’s regulators. After all, shouldthe U.S. be forced to follow the policies of a state nearing bankruptcy and losing massive numbers of jobs?

[1]Calculated using the emissions data from the Global Carbon Project.According to EIA (see footnote 1), the GHG emissions from thetransportation sector total 28% of total U.S. emissions in 2007.Twenty-eight percent of the U.S.’s 2007 carbon dioxide emissions are444,139 GgC. The burning of motor gasoline accounts for 59% of thetotal transportation emissions. Fifty-nine percent of 444,139 GgC is262,042 GgC. California’s regulations would reduce this amount by 30%or 78,612 GgC. From 2006 to 2007, the world’s carbon dioxide emissions(excluding the United States) increased by 213,436 GgC. At this rate ofchange, the reductions brought about by applying California’sregulation to the entire transportation system today would be replacedin 134 days.

[2] According to the Energy Information Administration report Emissions of Greenhouse Gases in the United States 2007,http://www.eia.doe.gov/oiaf/1605/ggrpt/pdf/0573(2007).pdf p. 5, U.S.transportation emissions account for 28% of total U.S. carbon dioxideemissions. According to p. 19 of the same report, motor gasolineaccounts for 59% of the total U.S. transportation emissions. TheCalifornia regulations will reduction greenhouse gas emissions by 30%http://www.arb.ca.gov/newsrel/nr092404.htm.

[3] See Footnote 1.