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Post image for 400,000 Lost Jobs by 2016 — Heritage Study of Boxer-Sanders Carbon Tax Proposal

Heritage Foundation analysts David Kreutzer and Kevin Dayaratna yesterday released a study on the economic impact of carbon tax legislation (the Climate Security Act of 2013) sponsored by Sens. Barbara Boxer (D-Calif.) and Bernie Sanders (I-Vt.). The Boxer-Sanders legislation would establish a new tax that starts at $20 per ton of carbon dioxide (CO2) emitted and increases by 5.6% annually.

As Kreutzer and Dayaratna point out, hydrocarbon fuels supply 85% of all the energy Americans use, and “basic chemistry” dictates that CO2 will be emitted when those fuels are oxydized (burned) to release energy. The economic implications of those facts are significant and unavoidable:

Therefore, a tax on CO2 would be a tax on the 85 percent of energy derived from hydrocarbons and would increase energy costs broadly. The higher energy costs would ripple through the economy, driving up costs of production of virtually all goods and services. Faced with higher costs for energy and other goods, consumers would cut consumption, translating into a reduction in sales and a marked decline in employment. Though rebating the tax partially offsets these impacts, there would still be a net loss of income and jobs.

Using an energy model derived from the Energy Information Administration’s National Energy Model System (NEMS), the Heritage scholars calculate that, compared to a no-carbon tax baseline, the Boxer-Sanders proposal would:

  • Reduce the income of a family of four by more than $1,000 per year.
  • Reduce employment by more than 400,000 jobs in 2016.
  • Decrease coal production by 60% and coal employment by more than 40% by 2030.
  • Decrease employment 10.4% and 20.9% in the iron and steel and aluminum industries, respectively, by 2030.
  • Increase gasoline prices $0.20 by 2016 and $0.30 before 2030.
  • Increase electricity prices 20% by 2017 and more than 30% by 2030
  • Increase federal taxes by $3 trillion through 2030.
  • Reduce GDP by $92 billion in 2020 and $146 billion in 2030.
  • Decrease projected global warming by, at most, 0.11C by 2100 [probably too little to be reliably detected]. [click to continue…]
Post image for Diverse Coalition Calls for Ethanol Policy Reform

On Wednesday, Rep. Bob Goodlatte (R-Va.) introduced H.R. 1461, a bill to repeal the renewable fuel standard (RFS) program, and H.R. 1462, “The RFS Reform Act,” a bill to eliminate the corn ethanol component of the RFS program, cap the amount of ethanol that can be blended into conventional gasoline at 10%, and require the EPA to set cellulosic ethanol blending targets at commercial production levels.

A diverse coalition of agriculture, business, environment, hunger, taxpayer, and free-market groups joined Rep. Goodlatte and co-sponsors at a press conference announcing the introduction of H.R. 1462. Spokespersons for 15 of the groups each provided a paragraph explaining their particular reasons for supporting RFS reform in a joint letter. Here’s what I wrote on behalf of the Competitive Enterprise Institute:

If ethanol is such a great deal, why do we need a law to make us buy it? Although ethanol is cheaper than gasoline by volume, ethanol has about one-third less energy than gasoline and does not make up the difference in price. Consequently, the higher the ethanol blend, the worse mileage your car gets, and the more you have to spend for fuel. For example, at today’s prices, the average motorist would have to spend an extra $400 to $650 a year to switch from gasoline to E85 (the highest commercial ethanol blend). Congress should stop forcing Americans to make a “fuel choice” that increases our pain at the pump.

 

Post image for IMF Pushes Carbon Tax as Energy Subsidy “Reform”

The International Monetary Fund (IMF) recently published a report urging the world’s governments to “reform” energy subsidies estimated at $1.9 trillion in 2011. Eliminating government policies designed to rig markets in favor of particular energy companies or industries is a worthy goal. Unfortunately, that’s not the agenda the IMF is pushing.

The IMF seeks to shame U.S. policymakers into enacting carbon and coal taxes by redefining the absence of such taxes as energy subsidies. The IMF’s rationale goes like this. Market prices do not reflect the harms (“negative externalities”) fossil fuels do to public health and the environment. Consequently, fossil fuels are under-priced and society consumes too much of them. Policymakers should enact corrective (“Pigou”) taxes to “internalize the externalities” (make polluters pay) and reduce consumption to “efficient” levels.

The IMF estimates that, by not imposing corrective taxes, the U.S. subsidizes fossil fuels to the tune of $502 billion annually, making America the world’s biggest energy subsdizer!

This is blackboard economics (the pretense of perfect information and flawless policy design and implementation) in the service of a partisan agenda.

Carbon taxers disclaim any intent to pick energy-market winners and losers, but that is in fact the core function of a carbon tax. As with cap-and-trade, the policy objective is to handicap fossil energy and, thereby, “finally make renewable energy the profitable kind of energy in America,” as President Obama put it.

Predictably, the IMF says not a word about the policy privileges widely bestowed on renewable energy (renewable electricity mandates, renewable fuel mandates, targeted tax breaks, feed-in tariffs, preferential loans, direct cash grants) or about the negative externalities associated with such subsidies (avian mortality, air and water pollution, food price inflation). 

This week at MasterResource.Org, I offer skeptical commentary on the “IMF’s Carbon Tax Shenanigans.” Here is a summary of key points (including two shrewd comments posted by Heritage Foundation economist David Kreutzer). [click to continue…]

Post image for An Even Later Peak Cherry Blossom Date – How Unnatural is That?

Back in early March, we wrote about how this year’s cherry blossom peak was predicted to occur a bit later than in 2012—March 26-30 instead of March 20-23. While recognizing that later peak blooms in a single year don’t prove anything either way about global warming, we still raised the question of press reaction—or rather the lack of it. Since the early peak dates in the last three years caused quite a bit of climate alarmism, the same should, theoretically, happen when the peak date is overdue.

As it turns out, the National Park Service’s newest prediction shows that this year’s peak blossom will occur even later—April 3-6—making 2013 the year with the latest cherry blossom peak bloom since 2005. But there were no headlines that screamed “Peak Blossom Delay is Worst In Eight Years!”

Washington Post reporter Jason Samenow reported about the later peak bloom on March 15. He failed to mention, however, his climate change musings in a similar article published one year ago: “D.C.’s cherry blossoms have shifted 5 days earlier: what about global warming and the future?”

In that article, Samenow wrote:

“Based on the build-up of … greenhouse gases in the atmosphere and the high likelihood for additional warming in the future … there is no reason to think the shift towards earlier bloom dates will not continue.”

And in another piece that he wrote on cherry blossoms this Monday, Samenow didn’t mention his 2012 predictions either. In the most recent piece, he did call the weather “unseasonably chilly”; I wonder if zipping up his jacket made him forget about his past articles.

This year’s cold March, and the later peak bloom prediction, doesn’t necessarily mean that Samenow should now warn readers about global cooling. But shouldn’t he at least admit to readers that this season is running counter to his predictions? After all, that is the cold (or at least unseasonably chilly) truth.

Post image for Wall Street Journal’s Crony Capitalist Conference Turns Sour

Times have changed since the Wall Street Journal held its first “ECO:nomics—Creating Environmental Capital” conference at the super-swanky Bacara Resort in Santa Barbara.  I was there in 2008 (but, alas, stayed at the Best Western in downtown Santa Barbara) when several hundred investors and corporate CEOs listened to leading crony capitalists, including Jeff Immelt of GE, James Rogers of Duke Energy, Andrew Liveris of Dow Chemical, and John Doerr of Kleiner, Perkins, Caulfield and Byers (where Al Gore was also a partner), smugly explain how they were going to strike it rich off the backs of consumers and taxpayers with green energy subsidies and mandates, federal loan guarantees, and the higher energy prices that would make renewable energy competitive with coal, oil, and natural gas once cap-and-trade was enacted.

This year’s sixth annual conference, which I didn’t attend, was also held at the Bacara Resort, but the mood was apparently different.  Yesterday, the Journal ran a six-page supplement that summarized the conference’s highlights.  The lead article by John Bussey was headlined: “Green Investing: So Much Promise, So Little Return: At The Wall Street Journal’s ECO:nomics conference, the talk was about all the innovations taking place in renewable energy—and about all the investors who are losing interest.”

Bussey writes: “Given all the interest in protecting the environment from mankind’s rapid advance, you’d think this might be the best time ever to invest in renewable energy and the Next Big Green Thing.  Guess again.  Large parts of green-tech investment look like the torched and salted fields left behind by Roman conquerors: barren, lifeless—and bereft of a return on capital. Put another way: In some areas, if you aren’t already investor road kill, you’re likely the hedgehog in the headlights about to join your maker.”

On page two, an article on a talk by John Dears, chief investment officer of the California Public Employees’ Retirement System (or Calpers), reveals that their “fund devoted to clean energy and technology which started in 2007 with $460 million has an annualized return of minus 9.7% to date.”  Dears is quoted as telling the conference: “We have almost $900 million in investment expressly aimed at clean tech.  We’re all familiar with the J-curve in private equity.  Well, for Calpers, clean-tech investing has got an L-curve for “lose.”  Our experience is that this has been a noble way to lose money.”

Yes, con artists gaming the system to raise energy prices, impoverish consumers, destroy jobs, and fleece taxpayers can still take comfort that theirs is “a noble way to lose money.”  Long may it remain so.  The entire 2013 ECO:nomics program may be found here. Read it and gloat now—it may be the last one.

Editor’s note: For more on CalPERS history of gross financial mismanagement, see this excellent post by my colleague Ivan Osorio.

 

Post image for Ethanol Mandate: Proud Milestone in the Glorious History of Central Planning

Today on National Journal’s Energy Experts Blog, I post a comment celebrating the Renewable Fuel Standard (RFS) as a triumph of centralized economic planning. You think I’m joking? Far from it. The RFS is working at least as well as other central planning schemes!

Well, okay, the RFS would be funny if it weren’t so destructive. A new report by NERA Economic Consulting warns that the RFS is heading for a “death spiral” — a vicious circle in which rising fuel costs, declining sales, and dwindling biofuel credits make compliance increasingly “infeasible.”

In one scenario analyzed by NERA, the death spiral produces a 30% increase in gasoline prices and a 300% increase in the cost of diesel fuel in 2015. Potential adverse macroeconomic impacts include a “$770 billion decline in GDP and a corresponding reduction in consumption per household of $2,700.” Ludwig von Mises coined a term for such debacles: “Planned Chaos.” [click to continue…]

Post image for Eco-Anxiety Takes a Toll on Global Warming Alarmists

Most global warming alarmists focus on changes  supposedly occurring to the world we live in, but GW is also having an effect on another world—the world inside our heads. For instance, a recent study by the World Wildlife Foundation (WWF) showed that 80 percent of Sweden’s young people (ages 15-25) worry about how climate change will affect their future. Moreover, half of the respondents think about climate change once a week or more often, and no less than 25 percent experience stomach pains or unhappiness when they do so.

This is actually not a new phenomenon. In the 1990s, something known as “eco-anxiety” came into existence. It involved feelings of helplessness, despair or of not being able to do enough about climate change. Margaret Anderson, who holds a master’s degree in eco-psychology, calls it “that underlying feeling of fear and anger about the state of the Earth”. One person explained her melancholic feelings this way:

“The sight of an idling car, heat-trapping carbon dioxide spewing from the tailpipe, would send me into an hours-long panic, complete with shaking, the sweats, and staring off into space while others conversed around me.”

Another anxious reporter explained it as follows:

“Whatever steps I take to counter global warming, however well-intentioned my brief bursts of zeal, they invariably end up feeling like too little, too late. The mismatch between the extremely dangerous state of the earth and my own feeble endeavuors seems mockingly large.”

While eco-anxiety might be an unknown concept for most, that hasn’t stopped it from becoming quite a lucrative business for some. One website has compiled a database of people who identify themselves as providing therapeutic or educational services related to ecopsychology. In the U.S. alone, there are over one hundred people listed–charging up to $250 per hour–ranging from ecotherapists and ecologists to shamans.

Climate change/eco-anxiety has an eerie resemblance to another condition that popped up back in 2009: “Avatar blues”. The movie Avatar, which basically showed dirty mankind exploiting beautiful Na’vi people on the beautiful planet Pandora, caused people to experience depression–and in some instances—contemplating suicide. As one viewer said to CNN back in 2010:

“When I woke up this morning after watching Avatar for the first time yesterday, the world seemed … gray. It was like my whole life, everything I’ve done and worked for, lost its meaning … It just seems so … meaningless. I still don’t really see any reason to keep … doing things at all. I live in a dying world.”

The common denominator between eco-anxiety and Avatar blues seems to be the notion that earth is a unclean place, soon-to-be inhospitable to polar bears and on the brink of overall destruction. On its face this is similar to the “nuclear anxiety” that was widespread in the later half of the 20th century; the difference, however, is that fear of nuclear war was rather well-founded, while the alleged mega-catastrophes of GW have yet to appear.

Fortunately, there are ways of overcoming eco-anxiety, such as realizing that earth isn’t such a dull place. Our friends the ecotherapists have constructed more ingenious methods, such as advice on becoming more in tune with nature by always carrying around a small rock or twig. According to Carolyn Baker, a psychotherapist who offers eco-anxiety coaching, it helps to realize that “it’s OK to give yourselves a break for a few weeks or months,” and “focus on positive things, go see a comedy, [or] read a trashy novel”. Thanks, Carolyn. [click to continue…]

Post image for Bipartisan Senate Majority Votes To Oppose a Carbon Tax

Senate Majority Leader Harry Reid (D-Nev.) seldom lets Senators vote on amendments to bills, but last week he agreed to a “vote-a-rama” on the budget bill.  Hundreds of amendments on all sorts of issues were offered and many of them are being voted on.  Senator Roy Blunt (R-Mo.) offered an amendment (#261) to put the Senate on record against any tax or fees on carbon dioxide emissions.  The Senate voted on this anti-carbon tax amendment on Friday, 22nd March.  Fifty-three Senators voted in favor, with 46 opposed. Sixty votes were required for passage under Senate rules.

All the no votes were from Democratic members.  The 45 Republican Senators were joined by eight Democrats in voting for Blunt’s amendment.  The Democrats were: Max Baucus of Montana, Joe Donnelly of Indiana, Heidi Heitkamp of North Dakota, Mary Landrieu of Louisiana, Joe Manchin of West Virginia, Claire McCaskill of Missouri, Mark Pryor of Arkansas, and Jay Rockefeller of West Virginia.

Post image for False Alarms: Dow Chemical’s Campaign against Natural Gas Exports

Last week on this blog, I explained how Dow Chemical’s chief rationale for restricting exports of liquefied natural gas (LNG) — the claim that gas used as a feed stock in domestic manufacturing adds more value to the economy than gas exported overseas – would also justify:

  • Curbing Dow’s exports of chemicals, plastics, and electronic components to help domestic manufacturers of paints, cosmetics, pharmaceuticals, cell phones, laptops, and other finished goods become more competitive in the global marketplace.
  • Empowering bureaucratic agencies to commandeer private property whenever they think the resource would add more value in the hands of some other firm or industry.

Dow CEO Andrew Liveris would no doubt cry bloody murder if Congress proposed to give Dow a dose of its own medicine and restrict the company’s exports in the “public interest.” Presumably, Mr. Liveris would also disavow any sympathy for confiscatory centralized economic planning, although that is in effect what he is advocating.

Other rationales Dow and its allies invoke to oppose “unfettered” gas exports include:

  1. “Unlimited” gas exports could dramatically reduce the domestic supply of the natural gas liquids (NGLs) on which manufacturers depend as key feed stocks.
  2. Long-term contracts to export liquefied natural gas (LNG) will “lock in” deliveries to foreign buyers, subjecting U.S. manufacturers to high risks of price shocks and supply disruptions.
  3. Approving all LNG export applications that have been submitted to the Department of Energy (DOE) could result in ”half” of all U.S. gas produced being burned for the Btus in overseas power plants, pushing U.S. gas prices to Asian levels.

These are all false alarms. Let’s take them one at a time. [click to continue…]

Post image for Obama Administration Casts a Shadow on Sunshine Week

The newspaper industry has named this week Sunshine Week to focus attention on the importance of open government and public access to information.  The Obama Administration has gotten into the spirit of Sunshine Week with daily posts on the White House blog and the Department of Justice blog, which talk about the importance of transparency and trumpet the Administration’s achievements.  President Obama after all promised in the 2008 presidential campaign that his administration would be the most transparent in history.

It hasn’t quite worked out that way.  For example, CEI’s Chris Horner has filed multiple ongoing lawsuits to try to force the Administration to comply with Freedom of Information Act requests.  The Republican minority staff of the Senate Environment and Public Works Committee have been having fun with daily posts that chronicle example after example of Obama Administration stonewalling and failures to comply with federal open government laws.

But it’s no longer just a partisan complaint.  Glenn Greenwald published a column in London’s Guardian this week headlined, “Obama’s secrecy fixation causing Sunshine Week implosion.”  The sub-headline reads, “Even the most loyal establishment Democrats are now harshly denouncing the president for his war on transparency.”