July 2012

Post image for George Shultz Endorses Carbon Tax – You Were Surprised?

Yes, that George Shultz, President Ronald Reagan’s Secretary of State. But not everyone who served with Reagan was a Reaganite. Reagan’s VP, G.H.W. Bush, famously campaigned on a platform of “Read my lips: No New Taxes.” Not two years later he raised taxes in a 1990 budget deal that torpedoed the economy and sank his presidency.

Yesterday, in an interview puff piece penned by two associates, Shultz, a distinguished fellow at Stanford University’s Hoover Institution, called for a ‘revenue-neutral’ carbon tax. This is unsurprising. As the article reminds us, in 2010, Shulz, partnering with Tom Steyer, a Democrat, “led the successful campaign to defeat Proposition 23, a California ballot initiative to suspend the state’s ambitious law to curb greenhouse gases.”

Nothing in the article indicates that Shultz thinks a carbon tax should replace California’s cap-and-trade regime established by AB 32. Nor is there any hint that Shultz would condition the enactment of carbon taxes on repeal of the EPA’s court-awarded power to regulate greenhouse gases via the Clean Air Act.

This pattern is becoming boringly familiar. [click to continue…]

Supporters of a carbon tax were very visible in Washington this week.  Ben Geman of the Hill newspaper reported that former Representative Bob Inglis (R-SC) has launched an “Energy and Enterprise Initiative” to promote global warming alarmism and a carbon tax among political conservatives.  His operations are being sponsored by George Mason University, a Virginia state university in Fairfax, an outer suburb of Washington, DC.

Inglis has taken on an odd project.  He was defeated for re-election in 2010 in the Republican primary by a Tea Party-backed candidate, Trey Gowdy.  One of the main issues that contributed to Gowdy’s 71 to 29% margin of victory was Inglis’s continual attacks on fellow House Republicans for not getting on board the global warming bandwagon.  Inglis was never a conservative while serving as a Republican Member of the House and has no credibility within the conservative movement.

The American Enterprise Institute, on the other hand, has earned a lot of credibility over many decades within the conservative movement for its principled and intellectual defense of free enterprise and business.  Thus it came as a surprise when Greenwire reported on 11th July that AEI was that day hosting the fifth meeting of a group plotting to enact a carbon tax.

I was sent a copy of the group’s agenda the same morning that Greenwire reporter Jean Chemnick was sent a copy.  The one-page agenda is headlined “Price Carbon Campaign / Lame Duck Initiative: A Carbon Pollution Tax in Fiscal and Tax Reform.”  The 12:45-6:00 meeting included presentations and discussions on “Congressional Republicans, Romney, and Business Leaders: Detoxifying climate policy for conservatives,” “Framing and selling a carbon pollution tax,” and “Building bipartisan support and navigating Ways and Means.”  The full agenda was attached to an article by Sean Higgins for the Washington Examiner.

A list of attendees at the AEI meeting has not been released, but the discussants include leading environmental and leftwing political operatives.  For example, Alden Meyer, strategy and policy director of the Union of Concerned Scientists (a far-left pressure group) who previously served as executive director of the League of Conservation Voters; Kevin Curtis, program director of Al Gore’s Climate Reality Project; and Tom Downey, prominent DC lobbyist, former Member of the House (D-NY), and since 2007 husband of Carol Browner, who served as EPA administrator for eight years in the Clinton Administration and for two years as President Obama’s White House global warming and energy czar.

AEI’s participant in this ongoing effort to enact a carbon tax is Dr. Kevin Hassett, director of economic studies at AEI.  An indication that his position is not popular at AEI was provided by Dr. Kenneth Green, an environmental scientist at AEI who specializes in climate policy and energy issues.  Energy Wire (a sister publication of Greenwire) published an article on 13th July on another senior establishment Republican coming forward to support a carbon tax—George Shultz, secretary of State in the Reagan Administration.  Here are Green’s comments to Energy Wire:

“There seems to be an eruption of conservatives—very moderate-seeming conservatives, non-tea party, old country club-style conservatives—who are suddenly enamored of carbon tax,” said Kenneth Green, a resident scholar at the American Enterprise Institute.

“I think this is mostly vanity and egotism on the part of these people who are coming forward, to try and reassert the Republican establishment over the tea party revolution,” he added.

Post image for More on the Carbon Tax Cabal

Concerning the “Price Carbon Campaign/Lame Duck Initiative” meeting of center-right and ‘progressive’ pols, wonks, and activists yesterday at the American Enterprise Institute (AEI), herewith a few additional thoughts.

Today’s Greenwire quotes AEI economic policy director Kevin Hassett saying that AEI was just playing host and the meeting was just information sharing. Well, okay, let’s assume he experienced it that way, but what about the ‘progressives’ who set the agenda? They must really be into sharing, because this was their fifth meeting. Whatever the AEI folks thought the event was about, the agenda clearly outlines a strategy meeting to develop the PR/legislative campaign to promote and enact carbon taxes.

During the cap-and-trade debate in the last Congress, there was something of a consensus among economists that EPA regulation of greenhouse gases (GHGs) is the worst option, a ‘comprehensive legislative solution’ (i.e. cap-and-trade) has less economic risk, and a carbon tax is the most efficient option. But the ‘progressives’ in the “Price Carbon Campaign” are pushing for carbon taxes on top of EPA regulation.

Because the meeting was non-public and hush-hush, we may never know who said what. Here are some points the ‘conservative’ economists  should have made: [click to continue…]

Post image for AEI Hosts Fifth Secret Meeting to Promote Carbon Tax

Today, the American Enterprise Institute (AEI), a prominent conservative think tank, hosted a secret, four-and-a-half hour meeting of pols, wonks, and activists, including several self-identified ‘progressives,’ to develop a PR/legislative strategy to promote and enact a carbon tax. This was the fifth such meeting to advance the “Price Carbon Campaign/Lame Duck Initiative: A Carbon Pollution Tax in Fiscal and Tax Reform.” An annoted copy of the meeting agenda appears at the bottom of this post.

Perhaps not coincidentally, earlier this week former GOP Congressman Bob Inglis of South Carolina launched the Energy and Enterprise Initiative, an organization promoting carbon taxes. Inglis obtained funding for the project from the Rockefeller Family Fund and the Energy Foundation, both left-leaning foundations.

Left-right coalitions can be principled and desirable. For example, I worked with environmental groups to help end the ethanol tax credit, and I work with them now to develop the case for eliminating the ethanol mandate. We collaborate because we share the same policy objective, even if not always for the same reasons. The free marketers want to end political meddling in the motor fuel market and the environmentalists want to end federal support for a fuel they regard as more polluting than gasoline. The common objective is consistent with each partner’s core principles.

But such cases are the exception rather than the rule. In general, when left and right join forces, the appropriate question is: Who is duping whom?

My colleague Myron Ebell sent out an alert about the AEI-hosted carbon tax cabal earlier today. It appears immediately below: [click to continue…]

Post image for Sen. Lamar Alexander’s Payoff

In mid-June, Sen. Lamar Alexander (R-Tenn.) led the opposition against S. J. Res. 37, legislation that would have blocked EPA’s all pain, no gain Utility Maximum Achievable Control Technology (MACT) regulation. On the floor of the Senate, he explained that the Utility MACT would prevent out-of-state pollution from hurting business in Tennessee, but this claim is false. According to EPA data, Tennessee’s compliance with Clean Air Act regulations is not adversely affected by air pollution from neighboring States. In light of the evident falsity of his avowed rationale for protecting the Utility MACT, Sen. Alexander’s true motivations for opposing S. J. Res. 37 were inexplicable.

Last week, however, the mystery of Sen. Alexander’s support for the Utility MACT appears to have been solved. The Environmental Defense Action Fund announced on Tuesday that it will spend $200,000 on television advertisements in Tennessee thanking Senator Lamar Alexander for “protecting the children.”

Post image for Stop Whining about Pepco (because it’s your fault)

Pepco has been getting a bum rap for its supposedly poor response to recent power outages. To be sure, I sympathize with anyone bereft of climate control for prolonged periods during a Mid-Atlantic summer, but this sticky situation is not the utility’s fault. If Pepco customers seek someone to blame, they should look in the mirror.

The cause of the controversial power outages was a rare “land hurricane” storm, which felled trees into power lines. Pepco’s critics claim that those trees shouldn’t have been there to begin with. In particular, they allege that Pepco for years has neglected its responsibilities to manage tree growth adjacent to its electricity distribution system. Pepco’s motive, according to the scapegoat-seekers, was to minimize costs, and thereby fatten its bottom line.

There are two big problems with this tidy narrative.

First, while it’s true that Pepco had every incentive to suppress expenditures on tree clearing, this is precisely what Maryland’s elected officials intended.

Allow me to explain. About 100 years ago, Progressive Party local politicians convinced themselves that electric utilities invariably consolidate into predatory “natural” monopolies. These progressives came to this conclusion despite the fact that electric utilities were competing furiously at the time in many municipalities. The ironic progressive solution to natural monopolies was…(wait for it)….a government-granted monopoly. In exchange for a state-certified monopoly “franchise” over a given service territory, utilities allowed state officials to set electricity rates. Thus, the electric industry for a century has operated under the thumb of the state. Not coincidentally, the electric industry hasn’t advanced technologically since the Progressive Era.

All 50 States eventually adopted this progressive arrangement. Moreover, they all adopted identical rate-setting mechanisms. Here’s how it works: For capital expenditures, like power plants or electric transformers, utilities are awarded a rate of return (i.e., a state-dictated profit), in addition to reimbursement of the original investment. For operations and maintenance (O&M) costs, however, state officials have taken a more jaundiced eye. Invariably, rate-setting for O&M costs are contentious—much more so than rate-setting procedures for capital costs. This is because O&M costs are much more ambiguous than large capital outlays, so there is more grey area over which to dispute. It’s easier for state regulators to object to O&M costs, and thereby “save” ratepayers money (and appease political masters), then it is for them to dispute capital costs.

So what does any rational utility do? It skimps on O&M costs, like tree clearing. Pepco shouldn’t be blamed for acting rationally in the face of Maryland’s backwards compensation system. To put it another way, don’t hate the player, hate the game. Or, better yet, change the game, by freeing the electricity market from the chains of socialism.

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Eighteen freshmen Members of the House of Representatives sent a letter last week to House Republican leaders urging them to “take up an extension of the Production Tax Credit (PTC) for wind energy as soon as possible.”  Sixteen of the eighteen signers are Republicans. House Majority Whip Kevin McCarthy (R-Calif.) also recently announced his support for extending the wind PTC, which is set to expire at the end of the year.

The signers of the letter were: Representatives Kristi Noem (R-SD), Rick Berg (R-ND), Tim Griffin (R-Ark.), David Rivera (R-Fla.), Rick Crawford (R-Ark.), Steve Womack (R-Ark.), Chris Gibson (R-NY), Robert Dold (R- Ill.), Jim Renacci (R-Ohio), Michael Fitzpatrick (R-Penna.), Cory Gardner (R-Colo.), Charles Bass (R-NH), Scott Tipton (R-Colo.), Jon Runyan (R-NJ), John Carney (D-Del.), Ann Marie Buerkle (R-NY), David Ciciline (D-RI), and Mark Amodei (R-Nev.).

House Republicans have made a great show of voting to reduce federal spending and of attacking programs that benefit crony capitalists.  The letter, which Rep. Noem circulated for signatures, shows how quickly Members of Congress can park their avowed principles at the door when the pork-barrel spending benefits their districts or an industry that provides significant campaign contributions.

This is especially true of the eight Republican signers who are members of the Republican Study Committee, a caucus of conservative Republicans that focuses on reducing federal spending and balancing the budget.  The RSC members signing the letter are Noem, Berg, Buerkle, Crawford, Griffin, Gardner, Rivera, and Tipton.

[click to continue…]

Post image for When Scientists Talk Like Lawyers . . .We Should Be Skeptical

“I’m not saying it is global warming, but it’s what global warming would look like. It’s consistent with the kind of weather climate scientists predict will become more frequent and severe as greenhouse gas concentrations in the atmosphere increase.”

“It,” in the preceding, refers to the persistent heat wave affecting the Mid-Atlantic region and the derecho that uprooted trees, downed power lines, and deprived nearly a million households in the D.C. metro area of electricity and air conditioning. Warmists, or most of them, know they cannot actually link a particular weather event to global warming, but they’d like you to make the connection anyway.

This is standard rhetorical fare whenever extreme weather strikes somebody, somewhere on the planet. A commenter on Georgia Institute of Technology Prof. Judith Curry’s blog notes the resemblance to an old court-room trick:

Kind of like a lawyer asking a improper question and then withdrawing it, because all s/he really wanted was to put the idea in the jury’s mind.   [click to continue…]

This blog leads the league in posts about EPA’s Regional Haze power grab. In a nutshell, the Agency is usurping the States’ rightful authority to set visibility improvement policy pursuant to a Clean Air Act provision known as Regional Haze.

EPA’s actions are out-of-bounds for two reasons: (1) The legal and regulatory history of the Regional Haze rule unequivocally demonstrates that the States—and not federal regulators—are the lead decision-makers; and (2) EPA’s preferred controls cost billions more than the States’ controls, in order to achieve a visibility “improvement” that is invisible to the naked eye.

To date, EPA’s has imposed nearly $400 million annually in unjustified costs on New Mexico, Oklahoma, and North Dakota. The Agency has proposed to impose almost $120 million per year in costs beyond what Wyoming and Nebraska officials had deemed to be appropriate. Arkansas, Utah, Arizona and Minnesota are next.

I’ve written regulatory filings, studies, opeds, and blogs about EPA’s Regional Haze program, and last week I was invited to testify about it before the Subcommittee on Technology, Information Policy, Intergovernmental Relations and Procurement Reform of the House Oversight and Government Reform Committee. My written testimony can be found here or here. Below, I’ve pasted video of my opening statement.

As Professor Glenn Reynolds notes, if you want to cut carbon emissions, you should eliminate regulatory obstacles to fracking, since fracking cuts carbon emissions far more than costly cap-and-trade regulations do.  By expanding access to clean natural gas, fracking is helping reduce both greenhouse gas emissions and air pollution. As Walter Russell Mead notes at The American Interest, “fracking is doing more to control carbon emissions than all the efforts of all the greens in the world. And by promoting American (and Chinese!) domestic energy production, it is doing more to lay the foundations of world peace than all the peace activists and disarmament campaigners in the world.” Fracking has “driven a natural gas boom in this country and dramatically cut the cost of the cleanest hydrocarbon energy source of them all,” contributing to cleaner air, not just lower greenhouse gas emissions.  It is also expected to greatly reduce our dependence on foreign energy.

As CNN notes, “U.S. carbon dioxide emissions are falling” thanks to things like fracking. “Europe, by contrast, has seen its energy-sector carbon emissions remain basically flat,” even though Europe operates under a costly “cap-and-trade scheme where emissions are capped at a certain level,” and “Europe has significantly higher taxes on energy.”  Countries like Germany have blocked fracking to produce clean energy, even as they cling to a failed cap-and-trade scheme that imposes huge costs while failing to substantially reduce greenhouse gas emissions.

Unfortunately, the Obama Administration has tightened restrictions on fracking, which is permitted under state law in many states.  But it has not been nearly as hostile to fracking as many liberal state governors and legislators, like North Carolina’s Bev Perdue.  By contrast, conservative governors and legislators have supported fracking, which has the potential to greatly reduce greenhouse gas emissions and air pollution.

Environmental Luddites oppose fracking, preferring draconian and utopian energy rationing schemes instead.  They hype non-existent or exaggerated risks associated with it, ignoring the complete lack of any evidence to date that it would harm the environment.

Environmental groups like the NRDC prefer rigid government restrictions on carbon emissions by factories, farms, and vehicles, even though such restrictions could cripple the economy.  If they can’t obtain that (through EPA regulations), then they’ll take a cap-and-trade limit on emissions.

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