September 2012

Another Skewed Poll ‘Finds’ Voters Support Green Agenda

by Marlo Lewis on September 13, 2012

in Features

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An opinion survey commissioned by the Sierra Club supposedly shows that Oklahoma voters overwhelmingly favor the expansion of wind and solar power and the phase out of coal-fired power plants. An obvious implication is that Oklahoma Sen. James Inhofe, the Senate’s leading critic of the Obama administration’s anti-coal policies, is out of step with his constituents.

This is an old trick (see my post on a similar, NRDC-sponsored poll of Michigan voters in House Energy and Commerce Chairman Fred Upton’s district). When a pollster asks leading questions, he can usually elicit the answers his client is paying for.

In the Sierra Club-sponsored survey of 500 registered Oklahoma voters, 78% of those polled said they generally support expanded use of renewable energies like wind and solar power, and 62% said they would support phasing out some of the State’s coal-fired power plants.

The Sierra Club’s polling strategist waxed enthusiastic about the results, Greenwire reports:

“The results of this poll are remarkable,” Sierra Club polling strategist Grace McRae said in a statement.

“Across the nation, support for clean energy is high, but in Oklahoma, nearly 8 out of 10 voters support expanding use of clean energy resources like wind and solar. Oklahoma’s leaders and utilities should take note: Oklahomans want clean energy.”

Okay, let’s look at how the survey reaches those “remarkable” results. [click to continue…]

EU Gropes — in Vain — for Carbon Price Sweet Spot

by Marlo Lewis on September 12, 2012

in Features

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Two stories reprinted in Climatewire today provide a funny reminder that politicians can’t set the ‘right’ price of a commodity even when the fate of the Earth supposedly hangs in the balance. 

On Tuesday, Norway decided to follow European Union (EU) policy and establish a carbon ‘compensation fund.’ The program will bribe pay some 80 energy-intensive firms $90 million not to move their operations overseas. The government contends that without such payments, the EU Emission Trading System (ETS), adopted to implement the Kyoto Protocol, will trigger (or accelerate) the flight of capital, jobs, and emissions abroad. Reuters reports:

“The purpose is to prevent the Norwegian manufacturing industry from moving their enterprises to countries with less strict climate regulations,” Prime Minister Jens Stoltenberg said.

Changes to the EU’s Emissions Trading Scheme (ETS) from next year allow member states to compensate big energy users, like aluminum or steel producers, for costs linked to carbon emissions. The plan is to prevent higher costs driving business out of Europe.

Although ETS carbon prices are high enough to make EU manufacturers uncompetitive, those prices are not high enough (according to critics) to spur technology innovation*:

“This shows some of the fundamental problems with emissions trading,” said Steffen Kalbekken, head of research at the Center for International Climate and Environmental Research in Oslo. “We are getting the worst of two worlds.

“The (carbon) prices are too low to produce the technological shift we need” to force big emitters to clean up, he said. “But they are still high enough to cause some problems for industry and international competition.”

EU carbon permit prices for December have fallen to 7.74 Euros ($9.98) per ton — lower than three of the U.S. Government’s four ‘social cost of carbon‘ estimates. The European Commission is now “pressing ahead with a plan to counter an oversupply of CO2 permits in the EU emissions trading market after a 37 percent drop in prices last year,” Bloomberg reports. The commission “is preparing a proposal to postpone sales of an as-yet unspecified number of allowances in 2013.”

Of course, if that plan goes through, and carbon permit prices rise, European countries may have to pony up even larger subsidies to keep manfacturers from moving to Asia and South America.

So are ETS carbon permit prices too low or too high? They’re high enough to spur innovative ways to get the heck out of Europe asap. [click to continue…]

Ethanol Mandate Waiver: Decks Stacked Against Petitioners

by Marlo Lewis on September 10, 2012

in Blog, Features

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The Governors of Georgia, Texas, Arkansas, Delaware, Maryland, New Mexico, and North Carolina have petitioned EPA Administrator Lisa Jackson to waive the mandatory ethanol blending requirements established by the Renewable Fuel Standard (RFS). The petitioners hope thereby to lower and stabilize corn prices, which recently hit record highs as the worst drought in 50 years destroyed one-sixth of the U.S. corn crop. Corn is the principal feedstock used in ethanol production.

Arkansas Gov. Mike Bebe’s letter to Administrator Jackson concisely makes the case for regulatory relief:

Virtually all of Arkansas is suffering from severe, extreme, or exceptional drought conditions. The declining outlook for this year’s corn crop and accelerating prices for corn and other grains are having a severe economic impact on the State, particularly on our poultry and cattle sectors. While the drought may have triggered the price spike in corn, an underlying cause is the federal policy mandating ever-increasing amounts corn for fuel. Because of this policy, ethanol production now consumes approximately 40 percent of the U.S. corn crop, and the cost of corn for use in food production has increased by 193 percent since 2005 [the year before the RFS took effect]. Put simply, ethanol policies have created significantly higher corn prices, tighter supplies, and increased volatility.

Agriculture is the backbone of Arkansas’s economy, accounting for nearly one-quarter of our economic activity. Broilers, turkeys, and cattle — sectors particularly vulnerable to this corn crisis — represent nearly half of Arkansas’s farm marketing receipts. Arkansas poultry operators are trying to cope with grain cost increases and cattle familes are struggling to feed their herds.

Section 211(o)(7) of the Clean Air Act (CAA) authorizes the EPA to waive all or part of the RFS blending targets for one year if the Administrator determines, after public notice and an opportunity for public comment, that implementation of those requirements would “severely harm” the economy of a State, a region, or the United States. Only once before has a governor requested an RFS waiver. When corn prices soared in 2008, Gov. Rick Perry of Texas requested that the EPA waive 50% of the mandate for the production of corn ethanol. Perry, writing in April 2008, noted that corn prices were up 138% globally since 2005. He estimated that rising corn prices had imposed a net loss on the State’s economy of $1.17 billion in 2007 and potentially could impose a net loss of $3.59 billion in 2008. At particular risk were the family ranches that made up two-thirds of State’s 149,000 cattle producers. Bush EPA Administrator Stephen Johnson rejected Perry’s petition in August 2008.

In the EPA’s Request for Comment on the 2012 waiver petitions, the agency indicates it will use the same “analytical approach” and “legal interpretation” on the basis of which Johnson denied Perry’s request in 2008. This means the regulatory decks are stacked against the petitioners. As the EPA reads the statute, CAA Section 211(o)(7) establishes a burden of proof that is nearly impossible for petitioners to meet. No matter how high corn prices get, or how serious the associated economic harm, the EPA will have ready-made excuses not to waive the corn-ethanol blending requirements. [click to continue…]

64 Free Market Groups Announce Opposition to Wind PTC

by Myron Ebell on September 7, 2012

in Blog

Sixty-four non-profit groups sent a joint letter to the Hill this week that urges Representatives and Senators “to let the wasteful wind PTC expire as planned at the end of the year.”  The battle lines are now fully drawn between Big Wind and supporters of free markets and affordable energy. The letter was organized by Americans for Prosperity.

On the side of continuing massive tax subsidies to crony capitalist investors in wind farms are President Barack Obama, nearly all Democratic members of Congress, and a sizable number of Republican members from States that have enacted renewable portfolio standards for electric utilities.

The opponents of renewing the wind production tax credit include Republican presidential nominee Mitt Romney, Speaker of the House John Boehner (R-Ohio), and the leadership (but not all the members) of the conservative House Republican Study Committee.

The Senate Finance Committee voted 9 to 15 in early August against an amendment that would reduce by 20% the 2.2 cents per kilowatt hour subsidy that wind farms currently receive for ten years.  The Senate’s business tax extenders bill would renew (and actually expand and make more generous) the current credit for one year until 31st December 2013.  The CBO estimated that the cost of the extension would be approximately $12 billion over ten years.

It is unlikely that the business tax extenders bill or any other bill that includes extending the wind production tax credit will see any floor action in either the House or Senate before the election.  On the other hand, it is almost certain that there will be a big push in a lame duck session in November.

Stern Review Not Fit to Guide U.K. Climate Policy, Report Finds

by Marlo Lewis on September 4, 2012

in Features

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The Global Warming Policy Foundation (GWPF) has just published The Failings of the Stern Review of the Economics of Climate Change. The  2006 Stern Review — named for Sir Nicholas Stern, head of the UK Government’s Economic Service under Prime Minister Tony Blair — is arguably the most pessimistic official assessment ever of the economic damages of global warming. The Stern Review famously argued that the “costs of inaction” on climate change hugely outweigh the costs of greenhouse gas mitigation, claiming that, “If we don’t act, the overall costs and risks of climate change will be equivalent to losing at least 5% of global GDP each year now and forever.”

Influenced by the Stern Review, the UK Government adopted a set of climate policies that cost £17,000 per household, according to the GWPF report, prepared by the Rt. Hon. Peter Lilley MP. Since the UK’s total annual carbon dioxide (CO2) emissions are less than the increase in China’s CO2 emissions in a single year, the UK Government’s climate program is all pain for no gain. It is time for the UK Government to review the Stern Review, Lilley contends.

The GWPF report is 100 pages long, but there is a helpful executive summary and a hard-hitting foreword by leading climate economist Richard Toll. The following excerpts from Toll’s contribution should be sufficient to entice even the most jaded climate wonk to read the report:

The publication of the Stern Review of the Economics of Climate Change was a PR exercise that was unprecedented in economics. Sir Nicholas, now Lord Stern, was portrayed as an expert even though he had never published before on the economics of energy, environment or climate.

Honest policy analysts show results for a range of alternative discount rates. The Stern Review uses a single discount rate. It corresponds to an extreme position in the literature and it deviates from the official discount rate of HM Treasury. Nick Stern is, of course, free to use whatever discount rate he wants in his private life. Professor Sir Partha Dasgupta of Cambridge University has found that Stern should save 97.5% of his income, were Stern to follow the advice in the Stern Review. Taking such an extreme position in public policy is odd.

Most economic studies conclude that it is best to start with modest emission reduction, and accelerate the stringency of climate policy over time. For that, public policy will need to pull into the same direction over 20 or more electoral cycles. If the case for climate policy is exaggerated, the backlash will come, sooner or later. The Stern Review was a tactical masterstroke, but it will likely prove to be a strategic blunder. Its academic value is zero.

In a related post, Lilley provides a condensed summary of his report. “Stern,” he writes, “reaches conclusions far removed from those of most environmental economists by combining statistical sophistry and verbal virtuosity. For example:” [click to continue…]

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