[N.B. Ex-Vice President and massive carbon “polluter” Al Gore took to the pages of last week’s Rolling Stone in order to critique President Barack Obama’s supposedly timid response to global warming. This is Part 2 of a multipart series on the policy distortions peddled by Mr. Gore in the piece.]
Regarding the influence of special interests on climate policy, Mr. Gore wrote,
…a badly broken Senate that is almost completely paralyzed by the threat of filibuster and is controlled lock, stock and barrel by the oil and coal industries; a contingent of nominal supporters in Congress who are indentured servants of the same special interests that control most of the Republican Party…
… don’t give up on the political system. Even though it is rigged by special interests…
Mr. Gore would have you believe that his preferred climate policy, a cap-and-trade energy-rationing scheme, failed due to opposition from hydrocarbon special interests. This is not true. In fact, cap-and-trade bills in the 110th and 111th Congresses were voted down by bi-partisan majorities of lawmakers, for a very simple reason: These politicians didn’t want to lose their jobs by enacting an energy tax and thereby angering their constituents, the preponderance of whom had (and continue to have) bigger concerns (read: jobs) than global warming, no matter how much Mr. Gore tried (and continues to try) to alarm them by blaming every disaster in the news—Floods! Droughts! Heat waves! Snow storms!—on climate change. That is, the failure of cap-and-trade in the Congress has little to do with hydrocarbon energy lobbies, and everything to do with the fact that Americans don’t want energy-rationing because they aren’t alarmed. Rightfully so.
This is not to say that special interests haven’t played a huge role in Congressional climate policy. They have, just not the way that Mr. Gore identified. In the Rolling Stone article, Mr. Gore praised Democratic leadership in the House of Representatives during the 111th Congress for passing the American Clean Energy and Security Act. (The sordid tale of how this legislation was purchased is the subject of the first part in this series, “Bribes and Climate Policy”.) When the first discussion draft of the American Clean Energy and Security Act was introduced in the House Energy and Commerce Committee in May 2009, it was remarkably similar to the Blueprint for Legislative Action, a cap-and-trade policy produced by the United States Climate Action Partnership, a group of industry titans including Duke Energy, Alstom, and Alcoa.
Perhaps you are thinking: Why would these industrial suppliers and users of energy lobby for a policy that makes energy more expensive? The answer has nothing to do with genuine concern about global warming. These companies could care less about that. Rather, these special interests wanted a cap-and-trade because it would make them rich.
Remember, a federal cap-and-trade would create a gigantic, economy-wide system in order to parcel out billions of energy-rationing coupons. It would be impossibly complex, affecting all industry, and it would entail the exchange of hundreds of billions of dollars on a centralized carbon market. Such a scheme is a lobbyist’s dream. It would be vast, arcane, and chock full of cash, so there would be a virtually unlimited number of nooks and crannies into which special interests could cram favors to themselves. That’s precisely why the Climate Action Partnership formed: to write a climate policy that fattens their bottom lines. For an in-depth explanation of exactly which members of US Climate Action Partnership stood to gain what, see this February 2007 testimony before the Senate Environment and Public Works Committee, by Competitive Enterprise Institute President Fred L. Smith Jr.
A year after the American Clean Energy and Security Act passed the House of Representatives, Sen. John Kerry tried to push a companion bill, the American Power Act, through the Senate. (He failed spectacularly, though not as bad as did Sen. Barbara Boxer.) When he introduced the legislation at a press conference, Sen. Kerry was flanked by a number of big-business CEOs who supported his bill. Regarding these industry proponents of Kerry’s cap-and-trade, my colleague Jeremy Lott and I wrote in the American Spectator,
To help sell the act, Kerry has lined up several industrial strength energy suppliers and users. Their support forms the basis of Kerry’s claim that the American Power Act is good for the economy. But why do big businesses support a bill that will increase the costs of doing business in this country? Kerry and his new Barbara Boxer, Senator Joseph Lieberman, would have you believe that these companies are motivated by the need for “regulatory certainty.” The truth is simpler and cruder than that. These businesses stand to make a killing if the bill passes. Consider:
- General Electric helped write portions of the bill to tilt the market in its favor. If Congress puts a price on carbon, coal will lose market share to nuclear power and natural gas. GE is a global leader in these two industries. This is par for the course for GE. In 2007, it spent millions lobbying for an energy bill that bans incandescent light bulbs. The company just happens to be a world leader in the production of compact fluorescent bulbs.
- Goldman Sachs, Morgan Stanley, and other Wall Street firms long have lobbied for climate legislation because they would reap huge fees in brokering the trade of energy-rationing coupons (a.k.a. carbon credits) under a cap-and-trade scheme. By 2020, the global carbon market could be worth $3 trillion, according to London-based New Energy Finance.
- Exelon, America’s most valuable utility, is such a staunch supporter of climate legislation that it split from the U.S. Chamber of Commerce over the Chamber’s opposition to cap-and-trade. Exelon relies on nuclear power, and the American Power Act fulfills every aspect of the nuclear industry’s wish-list. The Huffington Post unearthed an internal Exelon memo estimating that climate legislation would add $700 to $750 million to the company’s annual revenues for every $10 per metric ton increase in the price of CO2 allowances.
- British Petroleum and Conoco Phillips opposed cap-and-trade legislation enacted by the House of Representatives because they thought it was insufficiently generous. In the Senate, they got a better deal. Senator Kerry said that he’s “been working very closely” with BP and C-P, and the lobbying has paid dividends. The refining industry receives twice as many free carbon credits under Kerry’s cap-and-trade scheme as the one established by the House. C-P CEO Jim Mulva even bragged in a statement that his company “is pleased with the attention that has been given our key issues.”
- Chemical manufacturer Dupont, for business reasons, phased out the use of HFC-23, a chemical gas that happens to be thousands of times more potent a greenhouse gas than carbon dioxide. The American Power Act allocates 1 percent of the carbon credits from 2013-2015 to companies that performed “early action” policies to mitigate climate change. The company could reap hundreds of millions of dollars, just for doing business as usual.
On special interests and climate policy, Mr. Gore has it backwards, again. Special interests didn’t scuttle cap-and-trade; American voters did. Rather, special interests created cap-and-trade, in order to enrich themselves.