March 2010

A new Harvard University study (Analysis of Policies to Reduce Oil Consumption and Greenhouse-Gas Emissions from the U.S. Transportation Sector) offers a sobering assessment of what it will take to meet the emission reduction targets proposed by President Obama and the Waxman-Markey cap-and-trade bill.

Saruman’s rebuke to Gandalf — “You have elected the way of pain!” – nicely captures the key policy implication of this study (although the researchers, of course, do not put it that way).

Congressional proponents of cap-and-trade policies typically favor cost-control measures (price collars, safety values, offsets) designed to keep emission permit prices from exceeding $30/ton of CO2 in 2010 and $60/t of CO2 in 2030. Although an economy-wide permit price of $30-$60/t CO2 would significantly reduce GHG emissions from the electric power sector, it would have only a “marginal impact” on transport-sector emissions, which account for about one-third of all U.S. GHG emissions.

As a consequence, by 2020, total annual GHG emissions under Waxman-Markey would be only 7% below 2005 levels — far short of both the Waxman-Markey target (15.4% below 2005 levels) and President Obama’s somewhat less aggressive target (14% below 2005 levels).

To reduce transportation GHG emissions 14% below 2005 levels by 2025 would require gasoline prices “in the range of $7-9/gal,” the researchers estimate. They acknowledge that such prices are ”considerably higher than the American public has been historically willing to tolerate.” Yep, $7-9 a gallon would set a new record for pain at the pump!

By itself, the $30-$60/t CO2 carbon price would increase motor fuel prices by “only” $0.24-0.46/gallon. Not enough pain! To make driving hurt enough to save the planet (okay, hurt enough to produce undetectable effects on global temperatures), policymakers would also have to adopt a $0.50/gal motor fuel tax in 2010 that increases 10% a year until it reaches $3.36/gal in 2030. Even then, it won’t hurt enough unless crude oil prices increase to $124/barrel (in real dollars) by 2030. Crude oil prices as high as $198/barrel would work even better, the researchers opine.

Exactly how would “the way of pain”  produce these transport-sector emission reductions? Some of the reductions would come from consumers buying higher mpg vehicles, and some from technological innovation spurred by market demand for such vehicles. Most of it however, comes from people driving less — i.e., pain avoidance behavior!

A by-the-numbers explanation: In the base case (no carbon price, no new transportation taxes), vehicle-miles traveled (VMT) is projected to grow 39% by 2030. The economy-wide carbon price would reduce VMT by only 1% compared to the base case, and maybe not even that much due to the “rebound effect” of fuel-economy regulation (when the average vehicle gets more miles to the gallon, the average motorist travels more miles). But, add a generous serving of pain at the pump, and Voila – instead of growing 39%, VMT grows 25%. We’re saved!   

A few other tidbits from the Harvard study: 

• Economy-wide CO2 prices must be more than twice as high (250%) as oil price increases to result in the same increase in the price of gasoline. For example, a $50/barrel increase in the price of oil is comparable to a CO2 price of $130/t.
• Tax credits for advanced vehicles (diesels, hybrids), ranging from $3000 to $8000 per vehicle, require excessive government expenditures ($22-38 billion per year, on a par with the 2008 U.S. auto bailout).
• Such subsidies are also counter-productive, because they blunt automakers’ incentive to increase the fuel economy of conventional vehicles, which occupy a larger share of the market.
• If Congress is unwilling to elect the way of pain (impose transportation taxes and steeper CO2 prices), covered entities will increasingly purchase offsets rather than reduce emissions to comply with the Waxman-Markey cap. Specifically, they will purchase an estimated 730-860 tons of CO2-equivalent offsets in 2020 and more than 2 billion tons in 2027 — breaching the proposed statutory limit.
• A $30-$60/t CO2 carbon price combined with $7-$9/gallon gasoline would reduce GDP only 1% in 2030. However, this conclusion depends on the assumption that Congress adopts a textbook perfect revenue-neutral carbon tax, in which all emission permits are auctioned, and all revenues are retured to taxpayers. 
• The actual GDP losses would be higher: ”Given the politics surrounding the debate in Washington, D.C., revenue neutrality is likely to be an elusive goal and thus our analysis may understate the economic impacts, since only a small number of the permits are likely to be auctioned.”

The Harvard study makes even more obvious what should no longer be controversial. Congress has not yet adopted tough controls on GHG emissions not because a “well-funded denial machine” is “confusing the public,” but because Members of Congress seek above all else to get re-elected, and inflicting pain on voters is not a smart way to win their support!

“Is global warming the new apocalypse?” asks The Times of London in an article focusing on children’s fears about global warming in the context of a scare-mongering U.K. government advertising  campaign to promote climate-change awareness.

Recently the Advertising Standards Authority ruled that some of the campaign’s print ads using nursery rhymes overstated the risks of global warming and were to be banned. But it passed on a TV ad that got almost 1000 complaints that it was too scary.

Check out an earlier CEI post on global warming alarmists’ exploitation of children. Look again at CEI’s response to an earlier apocalyptic video shown at the COP15 Copenhagen meeting on climate change.

Why can’t the LA Times be fair about the costs of AB 32, California’s global warming law?

Last week, the non-partisan Legislative Analyst’s Office found that the “net jobs impact” of AB 32 is “likely to be negative.” No surprises there-AB 32 is designed to raise the price of energy, and expensive energy hinders economic growth.

The LA Times, however, was unconvinced. The editorial board juxtaposed the LAO analysis with a report from the California Air Resources Board asserting that AB 32 would create 120,000 jobs. The LA Times asked, “Which is right?”

As if the answer is in doubt!

There’s a more important question: Why is the LA Times citing a discredited report? CARB’s rosy economic analysis of AB 32 was eviscerated by a non-partisan peer review panel of scholars.

Then again, I read about the peer review rebuke of CARB’s analysis in the Sacramento Bee, because the LA Times ignored it. How convenient.

For many years, the climate alarmist movement pushed the development of corn ethanol as the “fuel of the future” on the grounds that it would decrease fossil fuel emissions. As I detail in my book, The Really Inconvenient Truths, massive efforts were devoted to promoting this technology, with a textbook baptist-bootlegger alliance between green groups and Big Corn (most notably Archer Daniels Midland).  Politicians joined in happily, with Al Gore stumping for Minnesota Senator Amy Klobuchar because of her support for ethanol and countless Presidential candidates in Iowa talking up the fuel.

The result of that push has, it seems, been an increase in fossil fuels.  For the latest on this, see Corned grief: biofuels may increase CO2 at Watts Up With That?

The indirect effects of increasing production of maize ethanol were first addressed in 2008 by Timothy Searchinger and his coauthors, who presented a simpler calculation in Science. Searchinger concluded that burning maize ethanol led to greenhouse gas emissions twice as large as if gasoline had been burned instead. The question assumed global importance because the 2007 Energy Independence and Security Act mandates a steep increase in US production of biofuels over the next dozen years, and certifications about life-cycle greenhouse gas emissions are needed for some of this increase. In addition, the California Air Resources Board’s Low Carbon Fuel Standard requires including estimates of the effects of indirect land-use change on greenhouse gas emissions. The board’s approach is based on the work reported in BioScience.

Hertel and colleagues’ analysis incorporates some effects that could lessen the impact of land-use conversion, but their bottom line, though only one-quarter as large as the earlier estimate of Searchinger and his coauthors, still indicates that the maize ethanol now being produced in the United States will not significantly reduce total greenhouse gas emissions, compared with burning gasoline. The authors acknowledge that some game-changing technical or economic development could render their estimates moot, but sensitivity analyses undertaken in their study suggest that the findings are quite robust.

Promotion of technologies based on theory rather than practice has been a hallmark of the green movement. Every indication seems to be that their foolish promotion of ethanol has been written out of their history, rather than being treated as a cautionary tale to learn from.

For many years, the climate alarmist movement pushed the development of corn ethanol as the “fuel of the future” on the grounds that it would decrease fossil fuel emissions. As I detail in my book, The Really Inconvenient Truths, massive efforts were devoted to promoting this technology, with a textbook baptist-bootlegger alliance between green groups and Big Corn (most notably Archer Daniels Midland).  Politicians joined in happily, with Al Gore stumping for Minnesota Senator Amy Klobuchar because of her support for ethanol and countless Presidential candidates in Iowa talking up the fuel.

The result of that push has, it seems, been an increase in fossil fuels.  For the latest on this, see Corned grief: biofuels may increase CO2 at Watts Up With That?

The indirect effects of increasing production of maize ethanol were first addressed in 2008 by Timothy Searchinger and his coauthors, who presented a simpler calculation in Science. Searchinger concluded that burning maize ethanol led to greenhouse gas emissions twice as large as if gasoline had been burned instead. The question assumed global importance because the 2007 Energy Independence and Security Act mandates a steep increase in US production of biofuels over the next dozen years, and certifications about life-cycle greenhouse gas emissions are needed for some of this increase. In addition, the California Air Resources Board’s Low Carbon Fuel Standard requires including estimates of the effects of indirect land-use change on greenhouse gas emissions. The board’s approach is based on the work reported in BioScience.

Hertel and colleagues’ analysis incorporates some effects that could lessen the impact of land-use conversion, but their bottom line, though only one-quarter as large as the earlier estimate of Searchinger and his coauthors, still indicates that the maize ethanol now being produced in the United States will not significantly reduce total greenhouse gas emissions, compared with burning gasoline. The authors acknowledge that some game-changing technical or economic development could render their estimates moot, but sensitivity analyses undertaken in their study suggest that the findings are quite robust.

Promotion of technologies based on theory rather than practice has been a hallmark of the green movement. Every indication seems to be that their foolish promotion of ethanol has been written out of their history, rather than being treated as a cautionary tale to learn from.

CEI Weekly is a compilation of articles and blog posts from CEI’s fellows and associates sent out via e-mail every Friday. Also included in the Weekly newsletter is a brief description of CEI’s weekly podcast and a feature on a major CEI breakthrough made during the week. To sign up for CEI Weekly, go to http://cei.org/newsletters.


CEI Weekly
March 12, 2010


>>CEI Against Climate Change Policy
>>On Tuesday, the two articles on the front page of the Washington Times’ Commentary section were written by CEI analysts William Yeatman and Chris Horner, both criticizing proposed funding of green jobs by the Obama administration.

>>Additionally, CEI’s Chris Horner also appeared on Fox’s America’s Newsroom, to debate the US’ role in the IMF’s Climate Fund which would pay for climate programs.


>>Shaping the Debate
Real Competition Among Health Plans
John Berlau and Jonathan Moore’s article in the Politico

Avoid Land Grabs while Downsizing Detroit
Marc Scribner’s article in the Detroit News

FCC Summit Pushes Broadband for all, Spending Unused Stimulus
Wayne Crews and Ryan Radia’s citation in the Washington Examiner

DOE E-Mails To Wind Energy Lobbyists Cast Cloud Over Green Jobs Proposals
Chris Horner’s citation in the Investor’s Business Daily


>>Best of the Blogs
Climate Alarm Declining – Gallup
by Marlo Lewis
Gallup’s annual update of Americans’ attitudes on things environmental found that 48% of Americans believe the seriousness of global warming is generally exaggerated, up from 41% in 2009, and 31% in 1997, when Gallup first posed the question.

The Hidden Costs of Health Care Reform: “Obamacare Is A Budgetary Disaster”
by Hans Bader
The health care bills backed by President Obama will cost $2.3 trillion, not the $900 billion Obama claims, and will be a “budgetary disaster” that drives up the national debt, explains health care expert James C. Capretta.  The Obama administration managed to hide $1.4 trillion in costs generated by the health care reform bill though a series of budgetary “gimmicks” that the Congressional Budget Office (CBO) is required to treat as valid in scoring the bill’s enormous cost.

Lagerfeld, Chanel – Jumping the Shark with Global Warming Fashion?
by Christine Hall
Did Karl Lagerfeld jump the shark with his fall-winter 2010-11 ready-to-wear collection for Chanel? The collection was described by the AP as global warming in theme, and subsequently scorned on Newsbusters.  The show featured icebergs reportedly flown in from Sweden (whoa! with the carbon footprint!) and some extreme costume elements – like an antler-and-ear headdress – that would only appeal as street-wear to a Lady Gaga or Bjork.  Ridiculous and unwearable?  Certainly.


>>LibertyWeek Podcast
Episode 83: What Would Reagan Do?
Richard Morrison, Jeremy Lott and Marc Scribner collaborate to bring you episode 82. We cover the ever-growing deficit, the Reagan legacy, Cablevision v. ABC, the RNC’s fundraising strategy and David Paterson on scandal watch.


>>Support CEI

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Imagine lobbyists for the Environmental Defense Fund, Natural Resources Defense Council, and the Nature Conservancy controlled an EPA rulemaking panel that would decide whether a petition to cap greenhouse gas emissions sponsored by the U.S. Climate Action Partnership — an alliance that includes all three aforementioned environoia groups — would become law. Wouldn’t every activist with a cause love to have such an arrangement?

The equivalent of that is what’s transpiring in New Mexico, where the state Environmental Improvement Board is considering a rule that would cap CO2 emissions at 25 percent of 1990 levels. As New Mexico Watchdog reporter Jim Scarantino has written in a series of articles, the majority of EIB members — including (and especially) its chairman, Gregory Green — have conflicts of interest because they represent (and are paid by) activist groups who jointly brought the petition before the EIB.

Last week the Rio Grande Foundation’s Paul Gessing (NM Watchdog is a project of the Albuquerque-based conservative think tank) testified before the EIB and challenged members Green, Gay Dillingham and James Gollin to recuse themselves from hearing the petition:

Gessing told the EIB he that the very integrity of the process, aside from the merits of the issue, was undermined because “there was more than a reasonable basis to question the impartiality and fairness” of these members of the EIB in considering this petition. Those questions arise from financial and employment ties between Green and the petitioner New Energy Economy and his representation as a lobbyist on energy and environmental issues for four parties to the NEE peitition who have hired him through the Coalition for Clean Affordable Energy. Gollin and Dillingham are, respectively, an officer and director of organizations that are allied with NEE in promoting the very same emissions cap they are being asked to impose upon New Mexico  as members of the EIB.

And just look at the faces (video)of Green, Dillingham and Gollin as Gessing criticizes their oversight of this dog-and-pony show.

Adding insult to injury, Green’s group stacked their literature at a table where members of the public were required to sign in for the hearing. The literature promoted a lunch for petition supporters paid for by Green’s New Energy Economy. Afterward, in the comments section of Scarantino’s report, Green made a feeble effort to show fairness by offering to let Rio Grande put materials out for public consumption.

Gallup’s annual update of Americans’ attitudes on things environmental found that 48% of Americans believe the seriousness of global warming is generally exaggerated, up from 41% in 2009, and 31% in 1997, when Gallup first posed the question.

Similarly, the percentage of those who believe global warming is going to affect them or their way of life in their lifetimes has dropped from 40% in 2008 to 32% today.

Among the causes for these changes in opinion, Gallup mentions, “publicity surrounding allegations of scientific fraud relating to global warming evidence.” I’d like to propose another, related factor: humor.