Myron Ebell

Big Oil is coming out of the closet.  Exxon Mobil confirmed earlier this month in a Bloomberg Businessweek article that they support a carbon tax. Shell and BP have signed a Climate Price Communiqué that was distributed on 29th November at the eighteenth Conference of the Parties to the United Nations Framework Convention on Climate Change, which is meeting in Doha, Qatar, this week and next.

The most obvious reason why big oil and gas companies would support a huge new tax on their own products is that it would kill coal first.  Burning coal emits roughly twice as much carbon dioxide as producing the same amount of energy by burning natural gas.  A $20 a ton of CO2 tax would roughly double the current price of coal used for producing electricity.  That would provide a huge incentive for utilities to switch to natural gas.  Exxon Mobil owns the world’s largest privately-owned reserves of natural gas.  Shell and BP also own huge gas reserves.

The Climate Price Communiqué states that, “Putting a clear, transparent and unambiguous price on carbon emissions must be a core policy objective.”  They mean a global price, but a U. S. domestic carbon tax could fit comfortably into their plans.

The communiqué was organized by the Prince of Wales’s Corporate Leaders Group on Climate Change and is managed by the University of Cambridge’s Programme for Sustainability Leadership.  One-hundred forty companies have signed on, but Shell and BP are among just a handful of major corporations.

Amusingly, an article posted on the Center for American Progress’s ThinkProgress web site claimed that the signers were “leading global companies.”   Here’s the list of North American companies:  Actio, Aimia, Bullfrog Power, Business Council for Sustainable Energy, Climate Wedge, Delphi Group, Eco-kraft, EOS Climate, Horizon Capitol Holdings, Events Outside the Box, Mountain Equipment Co-Op, Offsetters, Pacific GPS, Westport, and Wildlife Works.

Post image for Sen. Inhofe Releases Report on EPA’s 2013 Regulatory Agenda

Senator James M. Inhofe (R-Okla.), ranking Republican on the Environment and Public Works Committee last week released a report that details all the EPA regulations that have been delayed until after the election or won’t take effect until after the election.  A Look Ahead to EPA Regulations for 2013 lists thirteen major regulations that “will strangle economic growth, destroy millions of jobs, and dramatically raise the price of goods, the cost of electricity, and the price of gas.”  Those are on top of the new regulations already implemented that are constricting energy supplies and raising energy prices.

“President Obama has spent the past year punting on a slew of job-killing EPA regulations that will destroy millions of American jobs and cause energy prices to skyrocket even more.  From greenhouse gas regulations to water guidance to the tightening of the ozone standard, the Obama-EPA has delayed the implementation of rule after rule because they don’t want all those pink slips and price spikes to hit until after the election. But President Obama’s former climate czar Carol Browner was very clear about what’s in store for next year: she told several green groups not to worry because President Obama has a big green ‘to-do’ list for 2013….” Inhofe said in introducing the report.

Senator Inhofe told Caroline May of the Daily Caller that, “In all these [presidential] debates, the thing they overlook and don’t talk about that is just as important as servicing another $5 trillion of indebtedness, is all these rules and regulations.”  Read more here.

Post image for House Conservatives Draw a Line on Wind Tax Credit

Forty-seven Republican Members of the House of Representatives sent a joint letter to Speaker John Boehner (R-Ohio) this week announcing that they oppose including a provision to renew the wind production tax credit for another year in any broader legislation.  The letter concludes, “We believe that the Solyndra scandal has demonstrated that it is time for the federal government to stop picking winners and losers in the energy marketplace.  Twenty years of subsidizing wind is more than enough.  Our nation can simply no longer afford to pick winners and losers in the energy marketplace.  The PTC should expire at the end of the year under current law.”

Wind installations completed before the credit expires at the end of this year will still receive the 2.2 cents per kilowatt hour subsidy for ten years.  The one-year extension voted out by the Senate Finance Committee in early August would actually expand the program by allowing wind investors to claim an immediate 30% investment credit instead of having to wait ten years for a full payout and by allowing projects started (but not finished) next year to qualify.  The Congressional Budget Office estimates that the Senate version will cost $12 billion over ten years.

The joint letter was organized by freshman Representative Mike Pompeo (R-Ks.), who has led the effort against all energy subsidies and mandates in this Congress, including the T. Boone Pickens Payoff Plan to subsidize natural gas trucks and filling stations.  Crony capitalists have hit back with numerous ads attacking him in his Wichita-centered district.

Support for the wind and solar tax credits is pretty uniform among Democratic Members of Congress.  Among Republicans, it tends to split along State lines.  Republican Members representing the 29 States with renewable portfolio standards (RPS) for electric utilities tend to support the tax credits because the subsidies lower the cost of renewable electricity.  Republican Members representing States without renewable requirements generally oppose the credits because taxpayers from their States are subsidizing the use of renewable energy in other States.  Here’s a map that shows the various state renewable requirements.

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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.

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.

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.

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Post image for Inhofe Sets a Date for Senate Vote to Block All Pain and No Gain Utility MACT

Senator James M. Inhofe (R-Okla.) announced this week that he will bring his resolution to block the Utility MACT Rule to the Senate floor for a vote on Wednesday, 20th June. Senate Joint Resolution 37 is a privileged motion under the Congressional Review Act, which means that it requires only a majority of those voting to pass.

The Environmental Protection Agency’s Utility MACT (for Maximum Achievable Control Technology) Rule requires steep reductions in mercury emissions from coal-fired power plants. A new study by my CEI colleagues Marlo Lewis, William Yeatman, and David Bier shows that the rule will have miniscule health benefits and enormous costs. Electric utilities will be forced to close many coal-fired plants, which will raise electric rates for consumers and manufacturers and threaten electric reliability in major areas of the country. Op-eds by Lewis and Bier summarize key findings of their study.

Senators Lamar Alexander (R-Tenn.) and Mark Pryor (D-Ark.) have announced that they plan to introduce a bill to extend the time utilities have to comply with the rule from four years to six years. Their bill has no chance of passing because sixty votes would be required. It is meant to provide cover for several Democrats engaged in tight re-election races. They can vote against the resolution of disapproval (which could pass with fifty votes), but then explain to voters that they support another measure to make the rule less onerous.

Alexander and Pryor’s mischief means that Inhofe’s resolution is likely to be defeated. Note that Alexander, a Republican, is helping Democrats get re-elected.

Post image for Sen. Inhofe Seeks to Rein in EPA’s All Pain and No Gain Utility MACT

Senator James M. Inhofe (R-Okla.) has announced that he will bring a Congressional Review Act resolution of disapproval of the EPA’s Utility MACT (for Maximum Achievable Control Technology) Rule to the Senate floor for a vote on or before Monday, 18th May.  Since Senate Majority Leader Harry Reid (D-Nev.) is trying to hold as few votes on tough issues as possible before the November elections, this could be the most important vote on an energy or regulatory issue that the Senate takes this year.

Under the Congressional Review Act, the resolution of disapproval, S. J. Res. 37, is a privileged motion.  A vote cannot be blocked by the Majority Leader or filibustered and requires only a simple majority to pass.

The Utility MACT Rule would regulate mercury and some other emissions from coal-fired power plants.  The proposed limits are so stringent that utilities will be forced to close many coal-fired power plants.  This will raise electric rates and threaten electric reliability in many States.

CEI this week published a paper by Marlo Lewis, William Yeatman, and David Bier titled, All Pain and No Gain: the Illusory Benefits of the Utility MACT.  It shows that the health benefits claimed by the EPA are non-existent, while the costs to consumers and manufacturers are huge.

The vote on the resolution is likely to be very close.  Right now, it looks like it will lose narrowly.  Senator Inhofe appears to have the support of forty fellow Republicans and four Democrats.  The Democrats are Senators Joe Manchin of West Virginia, Ben Nelson of Nebraska, Mark Pryor of Arkansas, and Mary Landrieu of Louisiana.

Five Republicans oppose the resolution or are leaning no.  They are Lamar Alexander of Tennessee (whose opposition has been outspoken), Scott Brown of Massachusetts, Olympia Snowe of Maine, Susan Collins of Maine, and Kelly Ayotte of New Hampshire.  A number of Democrats are not publicly committed.  They include: Jon Tester of Montana, Max Baucus of Montana, Claire McCaskill of Missouri, Bob Casey of Pennsylvania, Jim Webb of Virginia, Mark Warner of Virginia, Kent Conrad of North Dakota, and Debbie Stabenow of Michigan.

Senator Mark Kirk (R-Ill.) is still recovering from a stroke, so is not expected to vote.  That means that if all other Senators vote, the resolution will need fifty votes to pass.  As I see it, Senator Inhofe needs to gain the support of at least two more Republicans and then focus on getting three Democrats who are in tough re-election races in States that mine or use a lot of coal.

Post image for This Week in the Congress

Senate Committee Checks Obama’s Push To Green the Military

The Senate Armed Services Committee voted in favor of two amendments this week to block key parts of the Obama Administration’s program to green the military.  Politico Pro reported that all Republican members of the committee were joined by two Democrats to pass the amendments by one-vote margins, 13-12.

An amendment offered by Senator John McCain (R-Az.) would prohibit the Department of Defense from building biofuel refineries unless authorized by Congress.  If enacted, this would halt the Navy’s plan to build a $170 million biofuel facility.  Democratic Senators Joe Manchin of West Virginia and James Webb of Virginia joined the committee’s eleven Republicans in voting for the amendment.

Another amendment offered by Senator James M. Inhofe (R-Okla.) would prohibit expenditures for alternative fuels “…if the cost of producing or purchasing the alternative fuel exceeds the cost of producing or purchasing a traditional fossil fuel that would be used for the same purpose….” Democratic Senators Manchin and Claire McCaskill of Missouri joined the Republicans to pass this amendment.  A similar provision was passed in the House of Representatives last week.

Post image for Buffett’s Support Signals Movement on Keystone Pipeline

The House and Senate conference committee on re-authorizing the highway bill met for the first time on Tuesday, 8th May.  One of the most contentious issues is House language that would require permitting of the 1700-mile Keystone XL pipeline from Alberta’s oil sands to Gulf refineries. Initial reactions were that the Keystone provision has little chance of being included in the final conference report.  However, there are signs that the ground is shifting.

Representative John Mica (R-Fla.), Chairman of the House Transportation and Infrastructure Committee, said last Thursday that he thought the Keystone provision was making great progress toward being included in the final bill. Mica noted that eleven Democratic Senators and 69 Democratic House members (out of 190) have recently voted for permitting the pipeline.

Perhaps more importantly, billionaire investor Warren Buffett told Fox Business News last week that he supports building the Keystone XL Pipeline. Buffett is a close supporter of President Barack Obama.  It has been speculated that Buffett was one of those advising Obama to deny the Keystone permit last fall out of self interest.  Buffett’s Berkshire Hathaway owns the Burlington Northern Santa Fe Railroad, which because of the lack of pipeline capacity has become a major shipper of crude oil from the Bakken Formation in North Dakota and Montana to refineries.  The Keystone XL would transport oil from the Bakken Formation as well as from Alberta’s oil sands.

Buffett may well have been offering his own opinion without consulting the White House first.  On the other hand, his comments may be a sign that the White House is maneuvering to save face and let the Keystone permit go through.  President Obama’s political advisers clearly understand that the President is on the wrong side of public opinion on Keystone.  Letting the Congress overrule the President this summer would largely take away a campaign issue in the fall.