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Electric Vehicles: Worst Business Model Ever?

by William Yeatman on April 22, 2013

in Blog

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Fisker Automotive, an electric car manufacturer that received $211 million in stimulus subsidies, last week filed for bankruptcy. A Fisker electric car cost $103,000, but the company spent $660,000 for each one it sold, according to Bloomberg. Chrysler CEO Sergei Marchionne told the Detroit Free Press that losing $557,000 on every case it sold would be “masochism to the extreme.” He then said that his company is only losing $10,000 on every battery powered Fiat 500 it sells. Presumably, Chrysler makes it up on volume.

EPW Republicans Set Five Markers for McCarthy Confirmation as EPA Administrator

by Myron Ebell on April 20, 2013

in Blog

Senator David Vitter (R-La.), ranking Republican on the Environment and Public Works Committee, sent a letter on 16th April to Gina McCarthy, Assistant Administrator for Air and Radiation at the Environmental Protection Agency, that re-iterates five requests for information that the agency has withheld from the committee or commitments to increase transparency in the future. The letter, which was signed by all eight Republican members of the committee, in effect sets down a marker for McCarthy’s confirmation as EPA Administrator by the Senate.  If McCarthy fails to satisfy the five requests, then the Republicans on the committee will have good reason to vote against her confirmation.

Committee Chairman Barbara Boxer (D-Calif.) said this week that the committee could vote as early next week on McCarthy’s nomination.  That now seems unlikely.  It’s more likely that the committee will vote soon after the Senate returns from a week-long recess on 6th May.

The letter states, “…[W]hile you acknowledged serious problems with EPA’s transparency record, acknowledgement does not equal action.  We want to hold you to your word and ensure that EPA will be fully transparent on the science, economics, and negotiations related to EPA decisions and rulemaking.  For too long, EPA has failed to deliver on the promises of transparency espoused by President Barack Obama, former Administrator Lisa Jackson, and by you.”

The first request is that McCarthy commits the EPA to issue new guidance requiring that all official business be conducted through official e-mail accounts.  The second is that McCarthy turn over to the committee unredacted private e-mails that were used to conduct official business.  These two requests arise out of the “Richard Windsor” scandal.

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Reps. Upton and Waxman Issue 2nd White Paper on Renewable Fuel Standard

by Marlo Lewis on April 19, 2013

in Features

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Reps. Fred Upton (R-Mich.) and Henry Waxman (D-Calif.) yesterday issued their second white paper in a series intended as a first step to reviewing the Renewable Fuel Standard (RFS). The first white paper, released March 20, 2013, addresses Blend Wall/Fuel Compatibility Issues. The second white paper, released April 18, 2013, addresses Agricultural Sector Issues. Both white papers are clearly written, carefully documented, and provide excellent overviews of their respective topics.

The second white paper poses nine questions for public comment, and requests that responses be sent to rfs@mail.house.gov by April 29.

Two of the questions deal with the EPA’s denial in 2012 of petitions from ten governors who, seeking to reduce corn prices and alleviate harm to their states’ livestock industries, asked the agency to waive (suspend) RFS blending requirements. I comment on those questions, which are enumerated in the white paper as follows:

3. Was EPA correct to deny the 2012 waiver request? Are there any lessons that can be drawn from the waiver denial?
4. Does the Clean Air Act provide EPA sufficient flexibility to adequately address any effects that the RFS may have on corn price spikes?

My comments develop the following points:

  • The EPA should have granted the waiver but the agency’s strained reading of the Clean Air Act virtually guarantees that petitions will be denied regardless of the RFS’s contribution to severe economic harm.
  • Congress should revise the statute to preclude the EPA’s deck-stacking interpretation and clarify that the threshold issue is whether, in the context of actual market conditions, the RFS makes a non-negligible contribution to severe harm. [click to continue…]

Can Wind ‘Compete’ without Subsidy?

by Marlo Lewis on April 18, 2013

in Blog, Features

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The House Science, Space, and Technology Committee this week held a hearing on the efficiency and effectiveness of federal wind energy incentives.

The first witness, Frank Rusco, director of energy and natural resources for the Government Accountability Office, summarized his March 2013 GAO report on federal financial support for wind energy. Rusco testified that nine agencies administer 82 programs providing $4 billion in financial support to the wind industry in 2011 in the form of grants, loans, loan guarantees, and tax expenditures (targeted tax breaks). Some wind projects received support from seven initiatives, Rusco found.

Rob Gramlich, Interim CEO of the American Wind Energy Association (AWEA), disputed those numbers, arguing that of the 82 initiatives only two are wind-specific, dozens are defunct, and fewer than 1% of wind projects built in recent years took both a tax credit and a Department of Energy loan.

Gramlich, however, did not dispute Rusco’s finding that 99% of federal support went for deployment of wind energy rather than R&D (pp. 17-18), nor his assessment that ”it is unclear whether the incremental support some initiatives provided was always necessary for wind projects to be built” (p. 43).

Citing Rusco’s testimony in his opening statement, Oversight Subcommittee Chairman Paul Broun (R-Ga.) suggested that instead of subsidizing firms that would install wind turbines anyway, Congress should fund R&D to make wind energy more competitive.

A fair point but one that indicates a more fundamental problem. When government subsidizes activities that would happen anyway, the money goes to free riders. The subsidy is a clear case of government waste. When government subsidizes activities that would otherwise be unprofitable to undertake, the money may simply prop up investments that consume more wealth than they create. If so, the subsidy is a waste of economic resources.

As three MIT scholars wrote in their assessment of President Carter’s energy programs:

The experience of the 1970s and 1980s taught us that if a technology is commercially viable, then government support is not needed and if a technology is not commercially viable, no amount of government support will make it so.

Too bad the Constitution does not mandate a recitation of those words prior to every congressional debate on energy policy!

My main reason for writing this post, however, is twofold. First, if Matt Damon or anyone else in Hollywood ever wants to make a reality-based movie about a conflict between community activists and greedy energy developers, he should look no further than the testimony of Audra Parker, CEO of the Alliance to Protect Nantucket Sound. Second, anyone seeking a clear overview of the economics of wind energy, should read the testimony of Cal State Fullerton professor Robert Michaels, who testified on behalf of the Institute for Energy Research.

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EU’s Empty Climate Policy Reflects the Impossibility of a Global Climate Treaty (which is great for humankind)

by William Yeatman on April 17, 2013

in Blog

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I’ve long argued that the European Union’s climate policy is full of sound and fury, but signifies nothing. During the last 20 years, EU officials have been quick to blather about their supposed leadership on climate, based on a putative “success” reducing greenhouse gas emissions. But this has always been a mirage. In fact, EU emissions reductions since its adoption of the Kyoto Protocol have been largely derivative of unintended consequences stemming from three events that have nothing to do with climate mitigation policy. They are: (1) the shutdown of Soviet-bloc heavy industry; (2) the United Kingdom’s “dash to gas”; and (3) the Great Recession.

Meanwhile, EU’s actual climate policies have been ongoing failures. Take the EU’s goal of improving energy efficiency 9% by 2016 and 20% by 2020. Ex-EU bureaucrat whistleblowers recently told EUractiv that EU member states have relied on “tricks and abuses” to create the appearance that they are on track to achieve the targets. In January, the European Court of Auditors published a scathing audit of how EU member states spent almost $6.6 billion in subsidies to achieve the energy efficiency targets. From the press release:

“None of the projects we looked at had a needs assessment or even an analysis of the energy savings potential in relation to investments”, said Harald Wögerbauer, the ECA member responsible for the report, “The Member States were essentially using this money to refurbish public buildings while energy efficiency was, at best, a secondary concern.”

In order to better control the earth’s thermostat, the EU also has implemented a Soviet-style, green energy production quota of 20% by 2020. While member states have spent billions of dollars of taxpayer subsidies in order to support the EU’s green energy goals, the EU Commission in late March warned that, “There are reasons for concern about future progress; the transposition of the directive [the green energy production quota] has been slower than wished, also due to the current economic crisis in Europe.” In layman’s terms, this means that a lot of European countries spent a lot of money on expensive, green energy during the boom-time 2000s. But the boom has since gone bust, and these countries are now reducing unsustainable green energy subsidies. Because the green energy industry cannot compete without ever-more generous taxpayer give-aways, EU bureaucrats are justifiably concerned that their green energy production quota won’t be met.

But the EU’s biggest joke of a climate policy—by far—has been the Emissions Trading Scheme, a cap-and-trade. It’s actually failed twice. During its first phase, the over allocation of carbon rationing coupons led to windfall profits for utilities, but no actual emissions reductions, as the carbon price plummeted. This week, during its phase three, the Emissions Trading Scheme collapsed again, and this time, it appears to be down for good. According to an article from yesterday’s EUractiv,

The EU’s flagship scheme for cutting carbon emissions suffered one of the most serious setbacks in its chequered history on Tuesday (16 April), when MEPs voted against a proposal to shore up the price of carbon in the Emissions Trading System (ETS).

The proposed reform – known as “backloading” – aimed to reverse the plummeting price of carbon that has resulted from a surplus of permits in the ETS market. If successful, the reform would have resulted in the postponement of a series of auctions of carbon permits.

But MEPs in Strasbourg voted 334 against the reform, with 315 in favour, leading green campaigners to condemn the defeat as a “monumental failure” to mend the carbon trading market, which is Europe’s flagship climate policy and the biggest in the world. “They have lost all credibility on climate leadership,” said Doug Parr, Greenpeace UK’s chief scientist.

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Peak Bloom Is Here – DC’s Global Warming Canary Lands with Frost on its Feet

by Adam Sandberg on April 15, 2013

in Blog, Features

As we have previously noted, the peak bloom date of DC’s cherry blossom trees has been delayed this year. While it was originally predicted to take place during March 23-26, it wasn’t until last Tuesday—April 9th—that it actually started, checking in 20 days later than last year.

Earlier peak blooms in past years have triggered a variety of global warming-related news articles. The Huffington Post characterized the cherry blossom trees as humanity-serving “global warming canaries” and the Washington Post suggested that the trees could one day be blooming in winter. However, this year’s late peak bloom date has not received the same treatment. As a matter of fact, we can’t find any examples of GW being discussed in connection with this year’s late peak bloom. (Are we the only exception?)

Well, today we can definitively announce that peak blooming actually began to plateau in 1998, much like what happened to global warming in general. After the unusually hot year of 1998 (which has been attributed to El Niño), temperatures have actually stopped rising.

Take a look at these cherry blossoms graphs below. The Y-axis measures how early peak bloom occurred; it’s constructed by subtracting the number of days between March 1 and peak bloom from 50, so a higher number on the Y-axis means an earlier peak bloom. These carefully developed graphs have been peer-reviewed by CEI general counsel Sam Kazman, but are hitherto unpublished.
cherry graph

Now compare the graphs to these statistics on global temperatures. If that isn’t conclusive evidence, then I don’t know what is.

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

by Marlo Lewis on April 12, 2013

in Blog, Features

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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…]

Diverse Coalition Calls for Ethanol Policy Reform

by Marlo Lewis on April 12, 2013

in Features

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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.

 

IMF Pushes Carbon Tax as Energy Subsidy “Reform”

by Marlo Lewis on April 11, 2013

in Blog, Features

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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…]

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

by Adam Sandberg on March 28, 2013

in Blog, Features

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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.

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