Cap and Trade and its Economic implications in Penn State

Cap-and-trade program as introduced by California Sen. Barbara Boxer and Massachusetts Sen. John Kerry as a 923-page draft of legislation would cap the amount of carbon dioxide businesses could emit, imposing a penalty when they exceed the cap, and would require that carbon emissions be cut by 20 percent of 2005 levels by 2020.

Independent studies have shown that this could cost the country millions of jobs. Industrial states like Pennsylvania would be severely affected. The state's coal, natural gas and manufacturing industries would be especially hard hit.

According to a National Association of Manufacturers' study, coal production would fall by about 85 percent and electricity production by about 21 percent as a result of a similar cap-and-trade bill passed in the House.

Pennsylvania is also home to the Marcellus Shale, one of the largest unconventional natural gas reserves in the world. It has the potential to turn the state into a major producer of clean energy and create thousands of jobs. But the new energy tax could doom this budding industry before it has a chance to develop.

The manufacturers' study finds the House cap-and trade bill would cost Pennsylvania more than 70,000 jobs in the years ahead. But that's not all. In just six years, it would increase gasoline prices by 6 percent to 8 percent, oil prices by 6 percent to 12 percent and natural gas prices by 14 percent to 21 percent.

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