Italy’s Senate has overturned a 1987 ban on nuclear power, passed in panic after Chernobyl. This is good news for Italians, as they face some of the highest electricity rates in Europe. Of course, this being Europe, the plants will probably be built with significant government subsidy, so there won’t be much we can learn from it about the viability of nuclear power built without government assistance. Nevertheless, if European countries are going to meet the ambitious emissions targets they have adopted, nuclear power is going to have to play a large part in doing so.
July 2009
Earlier this week the House Appropriations Committee passed a $27 billion budget for the Department of Energy. You might think that the DOE already has enough trouble trying to spend the $39 billion it received in the federal stimulus act enacted earlier this year (that’s almost twice the DOE’s entire budget for 2007), but you’d be wrong-when it comes to taxpayer dollars, the money pit otherwise known as the DOE can’t get enough.
There are many problems with the DOE’s bloated budget, but I’m only going to address the most egregious: The Congress’s support for no-strings-attached “clean energy” loans.
As I’ve noted elsewhere, in 2005, the Congress created a Loan Guarantee Program for “innovative” energy production that reduces greenhouse gas emissions responsible for so-called “global warming” (it hasn’t warmed in a decade, but that’s a different story). With the LGP, the federal government promises to cover the loan in case of default, which makes credit cheaper for borrowers.
The Congress put the DOE in charge of the LGP, despite the fact that the Department has no expertise disbursing loans and its woeful history of picking energy technologies to support. The decision to put the DOE in charge is all the more suspect given that these are risky loans to unproven technologies (according to federal estimates, the default rate is expected to be 50%).
At the time, the Congress seemed to protect the American taxpayer from bad loans by stipulating that the borrower pay a “credit subsidy cost,” a fee equivalent to the value of the risk that the government takes by facilitating cheap credit, unless funds are otherwise appropriated. To date, the Appropriations Committee has yet to allocate funds to pay for the credit subsidy cost, although in the stimulus act passed earlier this year, “Hollywood” Henry Waxman (D-Beverly Hills), inserted language appropriating $6 billion to subsidize the credit subsidy cost for a subset of ultra-green projects.
Assuming that the credit subsidy cost is 10% of the loan, the $6 billion LGP subsidy in the stimulus act puts the taxpayer fully on the hook for $60 billion. But that’s not enough for the Obama administration, which asked for more than $900 million in 2009 and $3.5 billion in 2010 to cover the credit subsidy cost (page 436 of the White House’s proposed budget).
Last month, the Energy and Water Subcommittee of the Appropriations Committee seemed to balk at the President’s request. The Subcommittee report stated,
“This Subcommittee has long pushed the Department of Energy on management and cost issues. The bill before us today continues to stress that point to the new Administration and directs the Department to continue to work with the Government Accountability Office (the GAO) to implement its recommendations. The Department continues its 18 year membership in the GAO’s annual list of programs that are at high-risk for fraud, waste, abuse, and mismanagement. While the Department has made progress, recent history has shown that there is substantial room for improvements.”
Clearly, the Sub Committee recognizes that the DOE has problems spending taxpayer money. Yet the Sub Committee only recommended a decrease of the President’s proposed subsidy (-$465 million in 2009 and -$1.5 billion in 2010), rather than an outright rejection, and the full Committee agreed.
So the Appropriations Committee believes that the DOE is a “high-risk for fraud, waste, abuse, and mismanagement” but then it chose to remove a major taxpayer protection from “fraud, waste, abuse, and mismanagement” by allocating more than $2 billion to cover the credit subsidy cost of risky green energy loans. F. Scott Fitzgerald famously said that first-rate intelligence is the ability to hold two entirely opposite thoughts in one’s head at the same time. By this reasoning, Members of the Appropriations Committee are a bunch of whiz kids.
Leading trade lawyer Gary Horlick testified yesterday on carbon tariffs before the Senate Finance Committee. As the Senate prepares an energy suppression/global warming bill, it is attempting to find ways to soften the “border adjustment” provisions in the House-passed bill (H.R. 2454).
Horlick points out some of the practical problems of setting up a carbon tariff system and cautions about the potential effects of such measures on the international trading system. As he notes, if the production method rather than the end-product is focused on, such processes as agricultural biotechnology may face increased challenges in the World Trade Organization:
It is tempting to say that we can re-interpret existing WTO rules to permit whatever measures are necessary to protect our environment. But do we really want to change those existing rules? The key to the U.S. economy is constant innovation.
One of the important fields where we lead the world of innovation is biotechnology, which is revolutionizing medicine, agriculture, and even many of the environmental concerns dealt with in proposed legislation (such as environmental remediation and renewable fuels). So far the United States has resisted efforts in Europe and elsewhere to limit our market access for our products because of how they are produced – from biotech means. But if we re-interpret WTO rules to allow trade barriers based on how things are made, we open up a can of worms – and might permit other countries to block our biotech exports, including major items such as corn, soybeans, and other crops.
Talk about creating chaos in the world trading system!
On both of the most salient issues of the day, health care reform and climate change, proponents of the corresponding legislation are setting their sights on the rich to pay for these expensive measures.
The massive government health care bill in the House involves a very expensive restructuring of the health care system in the United States–so expensive, in fact, that Democrats are proposing a tax increase on the rich, that is, in addition to the one that will occur when the Bush tax cuts expire in 2011. They are calling it a “surtax“–a yet-undetermined slice of the incomes of those earning over $200,000 per year, which would be used to help pay for the implementation of the health care overhaul.
At the same time, a study just released by the National Academy of Sciences calls for governments to target their wealthiest citizens for carbon dioxide-cutting regulations and taxes. As opposed to the Kyoto Protocol, which sets emissions standards for countries, the authors of this new report recommend tracking and restricting emissions on an individual basis. The rationale is that since wealthy people expend more energy and give off more CO2 than the less prosperous, they should be held to an international cap on CO2 emissions and taxed if they exceed it. Surely, this is music to populist politicians’ ears, and it comes just in time for the cap-and-trade bill that faces a tough fight in the Senate.
So the idea, judging by this latest volley against the rich, is to convince people that enjoying a higher standard of living than most others is leading to Armageddon, while simultaneously drawing upon the richest members of society like human ATMs to pay everyone else’s medical bills. The classic political formula–providing benefits to the many at the expense of a few–is in full employment, which is much more than one can say of either the American or European economies in the foreseeable future. The realization of today’s dominant political agendas will see to that.
Apologies for the late notice, but I had an article on the potential of solar power in last Friday’s Washington Examiner:
If the American Clean Energy and Security Act, which passed narrowly in the House of Representatives this week, also passes the Senate, does this mean that we’ll soon replace coal-derived electricity with clean and green solar power? Don’t count on it. Solar has a lot of problems, and those relying on it for the promised “green jobs” will probably be let down.
You might also be interested in the levelized cost-comparisons for building new power plants in 2016 from the Energy Information Administration, helpfully compiled by the Institute for Energy Research. The cheapest form of energy (assuming a cost of carbon at $15 a ton)? Nuclear. The most expensive? Solar thermal and solar photovoltaic.
Announcements
The Science & Environmental Policy Project this week sent an open letter from seven prominent scientists to Members of Congress warning them that they are being “deceived” by global warming alarmism. The authors of the letter note that, “the Earth has been cooling for ten years,” and that “the present cooling was NOT predicted by the alarmists’ computer models.” Read the full letter at www.climatedepot.com.
In the News
Fuel Standards Are Killing GM
Alan Reynolds, Wall Street Journal, 2 July 2009
Cap-and-Trade Can’t Deliver Jobs
Detroit News editorial, 2 July 2009
The Enron Revitalization Act of 2009
Robert Bradley, MasterResource.org, 1 July 2009
Facts, Costs, Consequences: Who Cares?
David Harsanyi, Denver Post, 1 July 2009
Global Warming Debate Isn’t Close to Settled
Jeff Jacoby, Boston Globe, 1 July 2009
Americans Will Suffer So Dems Can “Save the Planet”
Jay Ambrose, Orange County Register, 1 July 2009
Democrats Vulnerable after Climate Vote
Jonathan Martin & Alex Isenstadt, Politico, 30 June 2009
Waxman-Markey Flunks Math
Rich Karlgaard, Forbes, 30 June 2009
Climate Bill Hurts the Least among Us
Kenneth W. Chilton, Detroit News, 30 June 2009
Waxman-Markey Is Hilarious, But the Joke’s on Us
Myron Ebell, Townhall, 29 June 2009
ACES Up Her Sleeve
Jeremy Lott & William Yeatman, American Spectator, 29 June 2009
EPA Quashes Dissent on Climate Change
John Hinderaker, PowerLine, 28 June 2009
Creating Green Jobs Means Destroying Other Jobs
Boston Herald editorial, 28 June 2009
The Utterly Misbegotten Climate Bill
John Steele Gordon, Commentary, 27 June 2009
Carbon-gate
Investor’s Business Daily editorial, 26 June 2009
News You Can Use
Waxman-Markey: Big Brother
There are more than 1400 new regulations and mandates in the 1,500 page American Clean Energy and Security Act, according to the U.S. Chamber of Commerce.
Inside the Beltway
Myron Ebell
The Senate
The Senate Environment and Public Works Committee has scheduled a hearing for Tuesday, 7th July, on energy-rationing legislation. Energy Secretary Steven Chu, EPA Administrator Lisa Jackson, and Agriculture Secretary Tom Vilsack are the lead witnesses. Also testifying will be two witnesses representing the U. S. Climate Action Partnership-one from Dow Chemical and the other from Natural Resources Defense Council. The Republican minority have invited Mississippi Governor Haley Barbour to testify. He knows a lot about energy.
Committee Chairman Barbara Boxer (D-Calif.) has announced that she hopes to begin marking up the Senate’s version of an energy-rationing bill on 22nd July and finish before the August recess begins on the 7th or 8th. There is a rumor that Boxer intends to use the 946-page version of the Waxman-Markey bill that passed out of the House Energy and Commerce Committee in May as her starting point, rather than the 1501-page version passed by the House on 26th July. One possible reason is that agricultural special interests are not particularly happy with the deal negotiated by House Agriculture Committee Chairman Collin Peterson (D-Minn.) and Energy and Commerce Chairman Henry Waxman (D-Beverly Hills) and want more from the Senate.
The House of Representatives
The House of Representatives voted 219 to 212 on final passage of H. R. 2454, the American Clean Energy and Security Act or Waxman-Markey bill, on Friday, 26th July. The events last week that led to the narrow victory for proponents of energy rationing were extraordinary. On Monday night, House Energy and Commerce Committee Chairman Henry Waxman (D-Beverly Hills) sent a new 1201-page version of the 946-page bill his committee had passed on 21st May to the Rules Committee. The Democratic leadership worked all week to round up votes. On Thursday night the Rules Committee met and at 3:09 AM an additional 309 page amendment was released.
The House began considering the 1510-page bill at 9 AM last Friday morning. The rule provided for one-hour of debate on the rule and then three hours of debate on the bill. Of the two-hundred some amendments that had been filed, the Rules Committee allowed only one to be offered. Calling this a travesty of the legislative process is like calling D-Day a skirmish.
Debate ended around 7 PM with final passage. Eight Republicans voted Yes. Forty-four Democrats voted No. (To see all the votes, click here). Three Members missed the vote: Alcee Hastings (D-Fla.), John Sullivan (R-Okla.), and Jeff Flake (R-Az.). Rep. Flake had announced earlier that he would miss the vote if it were on Friday because he would be attending a Junior Miss competition in which his daughter was participating. The Republican leadership must have already decided that they were going to lose the vote because they apparently accepted Flake’s (to me lame) reason and apparently didn’t put heavy pressure on the eight who voted Yes.
Among the many amusing or riveting incidents during the course of the debate, I only have room to mention a couple. Rep. Tom Price (D-Ga.) asking for a moment of silence for those who would lose their jobs if Waxman-Markey were enacted can be seen here. A Democrat objected, so there was no moment of silence.
Two Texas Representatives did a great routine. Rep. Louie Gohmert (R-Tex.) made a parliamentary enquiry about where he could find a copy of the 309 pages that were added to the bill at 3:09 AM. The chairman hemmed and hawed and finally said that she didn’t know. Then Rep. Joe Barton (R-Tex.), ranking Republican on the Energy and Commerce Committee, made a parliamentary enquiry about whether there was a rule of the House that a copy of the bill on the floor had to be available. The chairman said that she was not aware of such a rule. Then after some more attempts to make enquiries about where a copy of the 309 pages could be consulted, Rep. Edward Markey (D-Mass.) disdainfully explained to his inferiors that a copy was in plain sight at the Clerk’s desk and was available on the web site. Then Rep. Barton pointed out that the copy available at the desk was the 1201 pages and a separate pile of the 309 pages, the pieces of which the clerk was trying to insert into their correct places in the 1201 pages. He enquired whether this was an official copy. The chair said that yes “in effect” it was.
As I reported last week, Minority Leader John Boehner (R-Ohio) used the prerogative reserved to the Speaker and Majority and Minority Leaders to speak as long as he wished. His concluding powerful speech lasted more than an hour. Parts of it can be seen here. About twenty minutes in, Chairman Waxman enquired whether Mr. Boehner was going to be allowed to speak without limit. The chair ruled that it was the custom of the House to listen to the leader. Speaker Nancy Pelosi (D-San Francisco) then spoke only for a few minutes. She told the House to remember that the Waxman-Markey bill was about four words: jobs, jobs, jobs, jobs.
By the way, it was reported earlier this week that Chairman Henry Waxman was hospitalized in Los Angeles after saying that he felt unwell. I hope he’s just tired out from his mighty efforts to get his bill through the House and wish him a speedy recovery. I learned from the news stories that he’s just about to publish a book, The Waxman Report: How Congress Really Works. I bet it’s worth reading.
Across the States
EPA Bites Off More Than It Can Chew
The Environmental Protection Agency this week issued a waiver allowing California to regulate vehicular tailpipe emissions of greenhouse gases. As noted by CEI’s Marlo Lewis, the waiver has far-reaching consequences. It gives environmental lawyers the legal grounds under the Clean Air Act to compel the EPA to regulate hundreds of thousands of small businesses. To read more about this regulatory nightmare, click here.
Around The World
If We Start a Trade War, Will China Still Lend Us $ to Pay for Green Jobs?
The AFP reports today that Chinese officials are “firmly opposed” to provisions in the American Clean Energy and Security act that would force the President to impose “border adjustments” (a.k.a. tariffs) on the carbon content of imports from developing countries that aren’t fighting climate change by rationing energy. Earlier this year, Chinese officials warned that retaliation is likely if the U.S. resorted to carbon tariffs, which could lead to an economically ruinous trade war.
India (Again) Rejects Emissions Reductions
Jairam Ramesh, Indian Environment Minister, this week told Reuters, that India “will not accept any emission-reduction target, period. This is a non-negotiable stand.”
Today in her column, The Wall Street Journal’s Kimberley Strassel explains the Obama EPA’s censoring of an internal study that questioned the scientific foundation for the administration’s climate change policies. The report, written by Alan Carlin, a senior analyst at the EPA’s National Center for Environmental Economics, was released last week by CEI last week.
Mr. Carlin and a colleague presented a 98-page analysis arguing the agency should take another look, as the science behind man-made global warming is inconclusive at best. The analysis noted that global temperatures were on a downward trend. It pointed out problems with climate models. It highlighted new research that contradicts apocalyptic scenarios. “We believe our concerns and reservations are sufficiently important to warrant a serious review of the science by EPA,” the report read.
The response to Mr. Carlin was an email from his boss, Al McGartland, forbidding him from “any direct communication” with anyone outside of his office with regard to his analysis. When Mr. Carlin tried again to disseminate his analysis, Mr. McGartland decreed: “The administrator and the administration have decided to move forward on endangerment, and your comments do not help the legal or policy case for this decision. . . . I can only see one impact of your comments given where we are in the process, and that would be a very negative impact on our office.” (Emphasis added.)
Mr. McGartland blasted yet another email: “With the endangerment finding nearly final, you need to move on to other issues and subjects. I don’t want you to spend any additional EPA time on climate change. No papers, no research etc, at least until we see what EPA is going to do with Climate.” Ideology? Nope, not here. Just us science folk. Honest.
The emails were unearthed by the Competitive Enterprise Institute. Republican officials are calling for an investigation; House Energy Committee ranking member Joe Barton sent a letter with pointed questions to Mrs. Jackson, which she’s yet to answer. The EPA has issued defensive statements, claiming Mr. Carlin wasn’t ignored. But there is no getting around that the Obama administration has flouted its own promises of transparency.
For more on the study the Obama administration did not want you to read, see here and here.
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