Marlo Lewis

Where Does ExxonMobil Stand on Carbon Taxes?

by Marlo Lewis on December 11, 2012

in Features

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Yesterday on NPR’s radio program To the Point, I said it was dishonorable for ExxonMobil to support a carbon tax. I compared ExxonMobil’s reported embrace of carbon taxes to Enron’s lobbying for the Kyoto Protocol.

Enron was a a major natural gas distributor and saw in Kyoto a means to suppress demand for coal, natural gas’s chief competitor in the electricity fuel market. ExxonMobil is a major natural gas producer. So I took this to be another case of political capitalism – corporate lobbying to replace a competitive market with a rigged market to enrich a particular firm or industry at the expense of competitors and consumers.

The NPR program host said something like “even oil companies like ExxonMobil now support a carbon tax,” alluding to a Nov. 16 Bloomberg Businessweek article titled ”Carbon Fee From Obama Seen Viable With Backing From Exxon.” I too had read the article, and ExxonMobil’s reported behavior struck me as imprudent as well as unkosher. A carbon tax could come back to bite natural gas producers big time if the EPA decides, along the lines of Cornell University research, that fugitive methane emissions from hydraulic fracturing make natural gas as carbon-intensive as coal.

The Bloomberg article quoted an email from ExxonMobil spokesperson Kimberly Brasington:

Combined with further advances in energy efficiency and new technologies spurred by market innovation, a well-designed carbon tax could play a significant role in addressing the challenge of rising emissions. A carbon tax should be made revenue neutral via tax offsets in other areas.

As explained previously on this site, a revenue-neutral carbon tax is a political pipedream, as is a carbon tax that preempts EPA and State-level greenhouse gas regulations. ExxonMobil is too savvy not to know this. So I interpreted Brasington’s caveats (“combined,” “well-designed,” “revenue-neutral”) to be the typical K Street evasiveness of those wishing to signal rather than declare their support for a controversial policy.

But articles published today in FuelFix and The Hill contend that ExxonMobil “does not support” a carbon tax and is “not encouraging policymakers” to impose such a tax. Both articles quote ExxonMobil VP for public affairs and government relations Ken Cohen:

If policymakers are going to adopt a measure, a regime to affect or put in place a cost on the use of carbon across the economy, then as we look at the range of options, our economists and most economists would support a revenue-neutral, economy-wide carbon tax as the most transparent and efficient way of putting in place a cost on the use of carbon.

Not supporting and not encouraging is not the same as opposing. Indeed, not opposing while saying But if you’re gonna do it, do it like this! can be a low-profile way to support and encourage! Also, why say anything favorable about carbon taxes when cap-and-trade is dead and there’s no longer even a weak prudential case for supporting carbon taxes as the lesser evil? [click to continue…]

Sen. Whitehouse Fumes at ‘Climate Deniers’

by Marlo Lewis on December 6, 2012

in Blog, Features

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In a fiery speech yesterday, Sen. Sheldon Whitehouse (D-R.I.) ”calls out” “climate deniers.” In the first half of the speech he goes ad hominem, attacking opponents as “front groups” who take payola from “polluters” to “confuse” the public by selling “doubt” as their product.

First a bit of free advice for the good Senator:

Your team has been playing nasty from day one. It didn’t get you cap-and-trade, it didn’t get you Senate ratification of the Kyoto Protocol, and it’s not going to get you a carbon tax.  

Vilification doesn’t work because biomass, wind turbines, and solar panels are not up to the challenge of powering a modern economy, and most Americans are too practical to believe otherwise.

So by all means, keep talking trash about your opponents. The shriller your rhetoric, the more skeptical the public will become about your bona fides as an honest broker of “the science.”

Okay, let’s examine Sen. Whitehouse’s argument. He accuses skeptics of peddling “straw man arguments,” such as that “the earth’s climate always changes; it’s been warmer in the past.” Well, it does, and it has! Many studies indicate the Medieval Warm Period (MWP) was warmer than the current warm period (CWP). A study published in July in Nature Climate Change concludes the Roman Warm Period (RWP) was warmer than both the MWP and CWP. The Northern Hemisphere was substantially warmer than the present for thousands of years during the Holocene Climate Optimum (~5,000-9,000 years ago). Arctic summer air temperatures were 4-5°C above present temperatures for millennia during the previous interglacial period.

None of this is evidence man-made global warming is not occurring, but Sen. Whitehouse sets up his own straw man by making that the main issue in dispute. What the paleoclimate information does indicate is that the warmth of the past 50 years is not outside the range of natural variability and is no cause for alarm. The greater-than-present warmth of the Holocene Optimum, RWP, and MWP contributed to improvements in human health and welfare.  [click to continue…]

Renewable Fuel Standard Costs Chain Restaurants $0.5 billion to $3.2 billion annually – Price Waterhouse Cooper

by Marlo Lewis on December 4, 2012

in Features

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A new study conducted by Price Waterhouse Cooper (PwC) for the National Council of Chain Restaurants (NCCR) estimates the impact of the federal Renewable Fuel Standard (RFS) on the chain restaurant industry.

PwC used the following research strategy. First, PwC examined 11 public and private sector studies estimating the extent to which the RFS increases ethanol utilization beyond what would occur in a free market. Estimates range from an additional 1.0 billion gallons per year at the low end to an additional 6.0 billion gallons per year at the high end. Next, PwC estimated the impacts of these RFS-driven increases in ethanol consumption on the demand for and price of corn and other agricultural commodities. Then, PwC combined these price impact estimates with survey information on chain restaurant food commodity purchases.

Here are the results.

If the RFS in 2015 increases annual ethanol consumption by 6 billion gallons (“Scenario I”), quick service restaurants are projected to spend an additional $2.5 billion (10% of major food commodity spending) and full service restaurants an additional $691 million (8.9%). Costs at a typical restaurant increase by $18,190 in quick service restaurants and $17,195 in full service restaurants.

If the RFS in 2015 increases annual ethanol consumption by 1 billion gallons (“Scenario II”), quick service restaurants are projected to spend an additional $393 million per year (1.6% of major food commodity spending) and full service restaurants an additional $110 million (1.4%). Costs at a typical restaurant increase by $2,894 in quick service restaurants and $2,736 in full service restaurants.

Of course, it’s not just the restaurants that will bear those costs. Their customers will pay higher prices too.

Below are some charts and graphs from the study that provide more detail. [click to continue…]

Lung Association Poll: Another Attempt to Influence Public Opinion in the Guise of Reporting It

by Marlo Lewis on December 3, 2012

in Blog, Features

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The American Lung Association (ALA) is hawking the results of an opinion poll that supposedly shows “American voters support the U.S. Environmental Protection Agency (EPA) setting stronger fine particle (soot) standards to protect public health.” ALA spokesperson Peter Iwanowicz says the poll ”affirms that the public is sick of soot and wants EPA to set more protective standards.” Missy Egelsky of pollster Greenberg Quinlan Rosner says the survey “clearly indicates that Americans strongly back the EPA taking action now to limit the amount of soot released by oil refineries, power plants and other industrial facilities” (Greenwire, Nov. 29, 2012). This is all spin.

Most Americans probably have opinions about President Obama’s overall record and many have opinions about the Stimulus, Obamacare, the Keystone XL Pipeline, the wars in Iraq and Afghanistan, the auto industry bailout, and whether Congress should cut spending and/or raise taxes. But how many even know the EPA is revising the national ambient air quality standard (NAAQS) for fine particles (PM2.5)?

So the first thing I notice in the Greenberg Quinlan Rosner poll is the absence of an appropriate first question: Please name or describe any major air quality rules the U.S. EPA is expected to complete in the near future? Starting with that question would likely show most people are unaware of the pending NAAQS revision. From which it follows they don’t have an opinion about it (though of course anyone can have an off-the-cuff reaction to anything).

The survey asks a bunch of demographic questions about respondents’ party affiliation, age, gender, and the like, but only two substantive questions. The first is as follows:

As you may know, the EPA is proposing to update air pollution standards by placing stricter limits on the amount of fine particles, also called “soot,” that power plants, oil refineries and other industrial facilities can release. Do you favor or oppose the EPA setting stricter limits on fine particles, also called “soot?”

Of total respondents, 63% were in favor, 30% were opposed. So according to the ALA, the public supports tougher standards by 2 to 1. But since most respondents have probably never heard or thought about the issue until that moment, the results simply confirm what everybody already knows: Most people think air pollution is a bad thing and would prefer to have less of it.

Since what the question elicits from most respondents is their general attitude about air pollution, it is remarkable that 30% answered in the negative. Note too that most of what the public hears about air pollution comes from organizations like the EPA and the ALA, which relentlessly exaggerate  air pollution levels and the associated health risks. [click to continue…]

Scientists Find No Trend in 370 Years of Tropical Cyclone Data

by Marlo Lewis on November 29, 2012

in Features

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With Senators Barbara Boxer (D-Calif.) and Frank Lautenberg (D-N.J.) citing Hurricane Sandy as a reason to have another go at climate legislation, to say nothing of the media spin depicting Sandy as punishment for our fuelish ways, it’s useful to look at some actual science.

In a study published in the journal Climatic Change, scientists Michael Chenoweth and Dmitry Divine analyze the history of tropical cyclone activity in the Lesser Antilles from 1638 to 2009. The Lesser Antilles are the string of islands lying along the eastern Caribbean Sea.

The Lesser Antilles intersect the “main development region” for Atlantic hurricane formation, making storm data there “our best source for historical variability of tropical cyclones in the tropical Atlantic in the past three centuries,” the researchers explain.

Using instrumental data on wind speeds going back to 1900 plus wind-force and wind-induced damage reports for earlier periods, Chenoweth and Divine estimate the Lesser Antilles Accumulated Cyclone Energy (LACE) for each year along the 61.5°W meridian from 18 to 25° N latitude.

Storms forming in this area include most that do or could make landfall in the U.S. In the researchers’ words: “About 60% of all tropical cyclones moving from waters off of Africa pass through 61.5°W south of 25.0°N, the remaining 40% either moving north of 25.0°N, dying out or re-curving to the east of 61.5°W.” Chenoweth and Divine note that LACE is “highly correlated” with Carribbean basin-wide Accumulated Cyclone Energy (ACE) since 1899.

So what did they find? In their words: “Our record of tropical cyclone activity reveals no trends in LACE in the best-sampled regions for the past 320 years. Likewise, even in the incompletely sampled region north of the Lesser Antilles there is no trend in either numbers or LACE.” [click to continue…]

Carbon Taxes: Kick ‘Em While They’re Down

by Marlo Lewis on November 28, 2012

in Features

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House Speaker John Boehner, Majority Leader Eric Cantor, and Majority Whip Kevin McCarthy have signed a No Climate Tax Pledge. Bad news for those pushing carbon taxes as part of a budget deal. 

Friends of affordable energy can ill-afford complacency, however. The Dumb Party has been known to snatch defeat from the jaws of victory, and carbon tax advocates are nothing if not tenacious. So when it comes to carbon taxes, I say kick ‘em while they’re down.

To that end, I excerpt below some insightful comments by several contributors to last week’s National Journal Energy Blog discussion, “Is Washington Ready for a Carbon Tax?”

David Kreutzer (Heritage Foundation) notes the chutzpah of those who, having failed to sell the public on the stealth energy tax called cap-and-trade, now expect the public to buy an open, avowed, unvarnished energy tax:

Once the electorate was made to realize that cap and trade bills (Lieberman-Warner, Waxman-Markey, etc.) were actually taxes on fossil energy, cap and trade became political poison. So it is surprising that an explicit tax on fossil energy is now being pushed in Washington.

Kreutzer then debunks the argument that conservatives should support a “revenue neutral” carbon tax that displaces EPA regulation of greenhouse gases:

The hope among carbon-tax proponents is that they can sugar coat the tax and make it palatable to conservatives, or at least to enough conservatives. This proposed confection has two ingredients. First, the carbon tax is to be a revenue-neutral swap for some even more harmful tax. Second, a carbon tax would obviate the need for regulation of carbon dioxide and for subsidies to low-carbon energy.

“Revenue neutral” is supposed to mean that each dollar raised will cut another tax by a dollar. But with neutrality there is no gravy to spread around to all the special interests—and we are talking about $100s of billions in gravy every year. So revenue neutrality will never happen. . . .

[As for a tax-for-regulation swap:] That logic may work in PowerPoint-filled rooms at think tanks, but not in the proverbial smoke-filled rooms in Congress. If this logic did carry over, then cap and trade also would have eliminated the need for carbon regulation. Instead of reducing regulations, the cap and trade bills added them. For instance, the Waxman-Markey bill went on for nearly 700 pages before it even got to cap and trade.

Just in case there might be some confusion as to whether the left is willing to trade off regulation for a carbon tax, Representative Waxman recently cleared things up: “A carbon tax or a price on carbon would be a strong incentive for the development of new technologies. But because it’s so complicated, I would not support preempting EPA. EPA can assure us that we can actually get the reductions we need.” [click to continue…]

Why the GOP Will not Support Carbon Taxes (if it wants to survive)

by Marlo Lewis on November 26, 2012

in Blog, Features

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Last week on National Journal’s Energy Experts Blog, 16 wonks addressed the question: ”Is Washington Ready for a Carbon Tax?” Your humble servant argued that Washington is not ready — unless Republicans are willing to commit political suicide. That’s no reason for complacency, because spendaholics have on occasion gulled the Dumb Party into providing bi-partisan cover for unpopular tax hikes. President G.H.W. Bush’s disastrous repudiation of his ‘read-my-lips, no-new-taxes’ campaign pledge is the best known example.

To help avoid such debacles in the future, I will recap the main points of my National Journal blog commentary. Later this week, I’ll excerpt insightful comments by other contributors.

Nearly all Republicans in Congress have signed the Taxpayer Protection Pledge, a promise not to increase the net tax burden on their constituents. Although a “revenue neutral” carbon tax is theoretically possible, the sudden interest in carbon taxes is due to their obvious potential to feed Washington’s spending addiction. If even one dollar of the revenues from a carbon tax is used for anything except cutting other taxes, the scheme is a net tax increase and a Pledge violation. Wholesale promise-breaking by GOP leaders would outrage party’s activist base. 

Even if the Taxpayer Protection Pledge did not exist, the GOP is currently the anti-tax, pro-energy alternative to a Democratic leadership that is aggressively anti-energy and pro-tax. Endorsing a massive new energy tax would damage the product differentiation that gives people a reason to vote Republican. Recognizing these realities, House GOP leaders recently signed a ‘no climate tax’ pledge.

That’s good news. But this is a season of fiscal panic and I was there (in 1990) when the strength of Republicans failed. Perhaps the best time to kick carbon taxes is when they are down. So let’s review additional reasons to oppose a carbon tax. [click to continue…]

Why Courts Should Repeal EPA’s ‘Carbon Pollution’ Standard (and why you should care)

by Marlo Lewis on November 19, 2012

in Features

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Note: A nearly identical version of this column appeared last week in Forbes Online. I am reposting it here with many additional hyperlinks so that readers may more easily access the evidence supporting my conclusions.

The November 2012 elections ensure that President Obama’s war on coal will continue for at least two more years. The administration’s preferred M.O. has been for the EPA to ‘enact’ anti-coal policies that Congress would reject if such measures were introduced as legislation and put to a vote. Had Gov. Romney won the presidential race and the GOP gained control of the Senate, affordable energy advocates could now go on offense and pursue a legislative strategy to roll back various EPA global warming regulations, air pollution regulations, and restrictions on mountaintop mining. But Romney lost and Democrats gained two Senate seats.

Consequently, defenders of free-market energy are stuck playing defense and their main weapon now is litigation. This is a hard slog because courts usually defer to agency interpretations of the statutes they administer. But sometimes petitioners win. In August, the U.S. Court of Appeals struck down the EPA’s Cross State Air Pollution Rule (CSAPR), a regulation chiefly targeting coal-fired power plants. The Court found that the CSAPR exceeded the agency’s statutory authority. Similarly, in March, the Court ruled that the EPA exceeded its authority when it revoked a Clean Water Act permit for Arch Coal’s Spruce Mine No. 1 in Logan County, West Virginia.

A key litigation target in 2013 is EPA’s proposal to establish greenhouse gas (GHG) “new source performance standards” (NSPS) for power plants. This so-called carbon pollution standard is not based on policy-neutral health or scientific criteria. Rather, the EPA contrived the standard so that commercially-viable coal plants cannot meet it. The rule effectively bans investment in new coal generation.

We Can Win This One

Prospects for overturning the rule are good for three main reasons. [click to continue…]

Hurricane Sandy and Global Warming

by Marlo Lewis on November 2, 2012

in Features

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Both the blogosphere and the mainstream media have been abuzz with commentary blaming global warming for Hurricane Sandy and the associated deaths and devastation. Bloomberg BusinessWeek epitomizes this brand of journalism. Its magazine cover proclaims the culpability of global warming as an obvious fact:

Part of the thinking here is simply that certain aspects of the storm (lowest barometric pressure for a winter cyclone in the Northeast) and its consequences (worst flooding of the New York City subway system) are “unprecedented,” so what more proof do we need that our fuelish ways have dangerously loaded the climate dice to produce ever more terrible extremes?

After all, argues Climate Progress blogger Brad Johnston, quoting hockey stick inventor Michael Mann, “climate change is present in every single meteorological event.” Here’s Mann’s explanation:

The fact remains that there is 4 percent more water vapor – and associated additional moist energy – available both to power individual storms and to produce intense rainfall from them. Climate change is present in every single meteorological event, in that these events are occurring within a baseline atmospheric environment that has shifted in favor of more intense weather events.

Well sure, climate is average weather over a period of time, so as climate changes, so does the weather. But that tautology tells us nothing about how much — or even how — global warming influences any particular event. Moreover, if “climate change is present in every single meteorological event,” then it is also present in ”good” weather (however defined) as well as “bad.”

Anthony Watts makes this criticism on his indispensable blog, noting that as carbon dioxide (CO2) concentrations have risen, the frequency of hurricanes making landfall in the U.S. has declined.

The US Has Had 285 Hurricane Strikes Since 1850: ‘The U.S. has always been vulnerable to hurricanes. 86% of U.S. hurricane strikes occurred with CO2 below [NASA scientist James] Hansen’s safe level of 350 PPM.’

If there’s anything in this data at all, it looks like CO2 is preventing more US landfalling hurricanes.

Data Source: NOAA; Figure Source: Steve Goddard [click to continue…]

Production Tax Credit: Remove Big Wind’s Training Wheels, Report Argues

by Marlo Lewis on November 1, 2012

in Features

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“Remove Big Wind’s training wheels” and let the production tax credit (PTC) expire, argues University of Lousiana State University Professor David Dismukes in a report published by the American Energy Alliance (AEA), a grassroots free-market research and advocacy group.

Wind energy lobbyists and their congressional allies are pushing for a one-year extension of the PTC, first enacted in 1992. The Joint Committee on Taxation estimates the one-year extension would increase the cumulative federal deficit by $12.2 billion over the next 10 years. Wind industry lobbyists warn that not renewing the PTC would kill jobs. One could reply that jobs dependent on market-rigging tax breaks impose a net loss on the economy and should not be created in the first place.

The AEA report, however, does not take this tack. Rather, the report argues that wind doesn’t need the PTC because it is already competitive and will become more so as efficiencies improve. For example, the report cites a Breakthrough Institute estimate that unsubsidized wind costs $60 to $90/MWh, which “compares favorably with new combined cycle natural gas generation, at around $52 to $72/MWh,” making wind generation “likely already competitive with natural gas in areas that have high wind speeds.”

I’m not persuaded because, as explained in other posts, a megawatt of unpredictable, unreliable wind capacity has less value than a megawatt of predictable, reliable natural gas or coal capacity. Nonetheless, the AEA report presents several criticisms of the PTC that strike me as spot on, three of which are discussed below. [click to continue…]

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