Impact of the Waxman–Markey Climate Change Legislation on Virginia

This paper, in its entirety, can be found at:
www.heritage.org/Research/EnergyandEnvironment/wm2585-VA.cfm


On June 26, a 1,427-page climate change bill introduced by Representatives Henry Waxman (D–CA) and Edward Markey (D–MA) passed the House by a narrow margin. The bill, also known as Waxman–Markey, includes a number of alarming provisions, chief among them a cap-and-trade program that would attempt to curb global warming by imposing strict upper limits on the emission of six greenhouse gases, with the primary emphasis on carbon dioxide (CO2).

The mechanism for capping these emissions requires emitters to acquire federally created permits (or “allowances”) for each ton of greenhouse gas emitted. Because these allowances carry a price—and because 85 percent of the United States’ energy needs come from carbon-emitting fossil fuels—Waxman–Markey is best described as a significant tax on energy use. Since everything Americans use and produce requires energy, the tax hits U.S. pocketbooks again and again. The Heritage Foundation’s Center for Data Analysis forecasts severe consequences, including skyrocketing energy costs, millions of jobs lost, and falling household income and economic activity—all for negligible changes in the global temperature.

Workers and families in Virginia may be wondering how cap-and-trade legislation would affect their income, their jobs, and the cost of energy. Implementing Waxman–Markey would put a chokehold on Virginia’s economic potential, reducing gross state product by $14.75 billion in 2035.

Consumers would be hit hard. Between 2012 (when the restrictions first apply) and 2035 (the last year of this analysis), the prices of electricity and gasoline will rise sharply when compared to prices in a world without cap and trade. By 2035, Americans living in the state of Virginia will see their electricity prices rise by $1,031.73 and their gasoline prices rise by $1.31 per gallon solely because of Waxman–Markey.

The Waxman–Markey Effect
For the state of Virginia, over the 2012–2035 timeframe, on average the Waxman–Markey bill would:
• Lower gross state product by $8,762 million
• Reduce personal income by $3,247 million
• Destroy 26,604 jobs
• Raise electricity prices by $532.18 per household,
• Raise gasoline prices by $0.64 cents per gallon
Source: Heritage Foundation calculations based on the IHS/Global Insight U.S. Macroeconomic and Energy models.