Exactly one year after angering conservatives with an amnesty bill for illegal aliens, Sen. John McCain managed to fire up the right again last week—only this time he’s proposing a massive plan to combat global warming that would have severe consequences for the U.S. economy.

During a West Coast trip to Oregon and Washington state, McCain outlined his global warming strategy, which in many ways resembles legislation offered by Senators Joe Lieberman (I-Conn.) and John Warner (R-Va.). Their plan will be debated on Capitol Hill next month.

Although he’s spent the past several months trying to mend his rocky relationship with conservatives by putting forward a market-based health care plan and vowing to appoint conservative judges to the Supreme Court, critics wasted little time going after McCain’s global warming proposal.

It’s not that conservatives don’t care about the environment—they do. But in the case of McCain’s proposal, the benefits—lowering Earth’s temperature by no more than the Kyoto projection of 0.007 degrees Celsius—would come at a great cost to America’s economy.

What’s in McCain’s Plan?

McCain, who previously teamed with Lieberman to draft global warming legislation, supports a cap-and-trade proposal designed to reduce U.S. carbon emissions by 60% from 1990 levels by 2050. He argued that such a system “harnesses human ingenuity in the pursuit of alternatives to carbon-based fuels.”

McCain’s two Democratic rivals, Senators Hillary Clinton and Barack Obama, support an 80% reduction by mid-century, a recommendation in line with the U.N. Intergovernmental Panel on Climate Change. The Lieberman-Warner bill supposedly would cut emissions by 70% by 2050.

A closer examination of cap and trade reveals the pitfalls of such a system. Even if it works perfectly, which is unlikely, it essentially amounts to a new tax on energy. In its analysis of the Lieberman-Warner bill, the Congressional Budget Office said the legislation would increase federal revenue by $1.21 trillion from 2009 to 2018—money that can best be described as a tax increase.

Several studies of the cap-and-trade proposal reveal its high costs. The Heritage Foundation last week released its analysis of Lieberman-Warner, showing skyrocketing energy costs, millions of jobs lost and falling middle-class income.

“The burden would be shouldered by the average American,” the study’s authors conclude. “The bill would have the same effect as a major new energy tax—only worse. Increases are set by forces beyond legislative control.”

The resulting higher prices for electricity, natural gas and home heating oil would send a typical consumer’s total annual energy bill through the roof—$938.63 more in 2030 than 2012 after adjusting for inflation, according to the Heritage study. Based on Department of Labor data, that equals about six weeks’ worth of groceries for a family of four.

The impact on the overall the economy is even more alarming. The current U.S. economic output of $14 trillion would sharply decline by 2018 because of higher energy prices. Even under the most generous assumptions, the Heritage study estimates cumulative losses to gross domestic product (GDP) would be $1.7 trillion by 2030 after adjusting for inflation. The total could be as high as $4.8 trillion.

Europe’s experience with cap and trade offers the clearest example that it can have a harmful impact on the economy while offering little benefit to the environment. Emissions are growing at a faster rate on the continent since the European Union implemented its program in 2005 to comply with the Kyoto Protocol.

Technology Doesn’t Exist

McCain cites the success of the 1990 sulfur dioxide cap-and-trade system as evidence that his plan would work. “The key feature of this mechanism is that it allows the market to decide and encourage the lowest-cost compliance options,” McCain said. However, there are important distinctions between combating acid rain though cap and trade vs. carbon dioxide.

When the acid rain cap-and-trade system was added to the Clean Air Act, the technology to reduce sulfur dioxide was already in commercial use.

There’s nothing comparable for carbon dioxide. The method, known as carbon capture and sequestration, is still in development. Carbon storage, as it’s also called, “requires capturing carbon dioxide from power plants and other industrial facilities, transporting it to suitable locations, injecting it into deep underground geological formations, and monitoring its behavior,” according to the World Resources Institute. Continued...