Not entirely unexpectedly, two California initiatives that would have substantially expanded the state’s clean-energy profile — but which opponents argued were ill conceived — foundered at the polls on Tuesday.
Energy issues have figured in the presidential campaign, but global warming has seldom been mentioned. That shouldn’t be surprising: sky high gasoline prices this summer made Americans angry, while global warming remains a yawner for most people outside the bi-coastal elite and the chattering class. Yet, global warming is almost certain to be a much bigger issue for the next President and Congress than addressing high energy prices no matter who wins the elections. Both Senator Barack Obama (D-Ill.) and Senator John McCain (R-Az.) are committed to enacting cap-and-trade legislation to reduce greenhouse gas emissions.
There has been a flurry of activity by conservative activists the past few days to publicize Senator Obama’s comments about bankrupting the coal industry, which were made some time ago but have only attracted attention now. What he said in an interview with the San Francisco Chronicle in January was:
“So if somebody wants to build a coal-powered plant, they can; it's just that it will bankrupt them because they're going to be charged a huge sum for all that greenhouse gas that's being emitted.
This comment is an indication that Senator Obama has a realistic view of the direct effects of his proposal. Cap-and-trade is energy rationing. Since coal produces more carbon dioxide than oil or natural gas, it will be hit first. The consequence is that people in coal States are going to have to pay a lot more for electricity.
Higher electricity prices will lower spending on other things, thereby putting people out of jobs, and drive energy intensive industries to other countries, again thereby putting people out of jobs. Since utilities were having a hard time keeping up with increasing demand until the economy started to slow down, it is also almost certain that discouraging new coal plants will lead to regional blackouts if the economy does pick up again.
It is not clear whether Senator Obama has enough basic economics to understand this. Or maybe he believes what he’s been told by environmental pressure groups, namely that there are plenty of cost-competitive alternatives to replace the coal that provides over half of our country’s electricity. Or maybe he doesn’t care or indeed thinks it’s a good thing to reduce economic growth.
Senator McCain also supports cap-and-trade legislation, but has been much less realistic about its direct effects. He has talked about how making energy more expensive and requiring clean coal technology (that is, equipment to sequester and store carbon dioxide emissions) will create jobs and boost economic growth. That cannot possibly happen. His economic ignorance appears to be almost total.
But the key point is that both presidential candidates strongly support a major policy that will not lower energy prices, but raise energy prices significantly. Too bad it wasn’t discussed in the campaign. It will be interesting to see how the American people react to this surprising news in a few months.
Give Barack Obama credit for one thing. When it comes to global warming and coal, he exhibited extraordinary candor about the economic pain his proposals would cause. Unfortunately for John McCain’s prospects, Obama’s candor was kept hidden for the better part of the year. It wasn’t until late Sunday evening that word surfaced of Obama’s extremely impolitic comments to the San Francisco Chronicle editorial board last January. Had they been well known before the last, dying gasps of a seemingly interminable campaign, the McCain team might have been able to gain real traction in key battleground states like Pennsylvania and Ohio. Lucky for Obama, the Chronicle editors inexplicably failed to publicize Obama’s revelations.
The European Union’s climate agenda further disintegrated this week after member states watered down a major renewable energy law. In 2007, EU countries agreed to ambitious greenhouse gas emissions cuts of 20% below 1990 levels by 2020. In early 2008, the EU Commission developed a comprehensive strategy to achieve the emissions targets, which must be accepted by member states before it is implemented. Like all policies that call for significant greenhouse gas emissions reductions, the EU Commission’s climate plan is economically harmful—Open Europe, an independent think tank, estimates that the Commission’s policies would cost the EU $93 billion a year by 2020. With that much at stake, member states have spent all of 2008 protecting their economic interests by weakening the Commission’s strategy with exceptions and exemptions.
First, Germany and France agreed to weaken the fuel efficiency standards in order to protect Germany’s powerful auto industry. Next, Germany unilaterally declared that it would exempt its energy-intensive industries from the most onerous provisions of a continent wide cap-and-trade scheme. Last month, Poland led a group of coal-dependent states including Greece, Hungary, Slovakia, Romania and Bulgaria, opposing the Commission’s proposal to price coal out of the electricity generation market by 2013. These rebellious states have since been joined by Italy, which fears that the EU’s climate plan would harm the competitiveness of Italian industry on the international market. Together, these states won the right to amend the Commission’s plan to make it more “cost-effective.”
And this week, member states significantly weakened a directive to generate 20% of the EU’s energy from renewables by 2020 by allowing for a progress review in 2014. The review would allow member states to pull the plug on the directive if the directive proves too expensive because the technology is not yet there.
Whomever is elected tomorrow will face — and probably support — the next enviro-whacko catastrophe, the Dingell-Boucher bill. If you liked McCain’s global warming bill, you’ll just love this.
For more than three years, a number of politicians and media observers have prophesied about the fracturing of the coveted “Evangelical Vote” over the issue of environmental stewardship. And during the same period, a handful of evangelicals have toiled to persuade the faithful that manmade global warming is such a serious threat that it deserves top priority in their social witness.
In a January 17, 2008 interview with the San Francisco Chronicle, Senator Obamasaidthat “electricity rates would necessarily skyrocket” under his plan to fight global warming. He also said that under his plan, “if somebody wants to build a coal-powered plant, they can; it’s just that it will bankrupt them.” “An Obama spokesperson said that Obama’s remarks were taken out of context.”
Is there something in the water in San Francisco that makes officials utter explosive disclosures? Earlier, Obama attracted controversy for saying at a San Francisco fundraiser that people in “small towns in Pennsylvania” and Ohio “cling to guns or religion or antipathy to people who aren’t like them.”
T Boone Pickens has a simple business plan: convince the government to force Americans to buy his wind power and natural gas, so he can get rich.
Already in Texas, he benefits from a law that requires that Texans get 20% of the electricity from wind power—T Boone’s wind power. He even convinced the State to spend $5 billion in taxpayer money on transmission lines to deliver his wind power to consumers.
In California, he is spending millions on Prop 10, which would mandate that the Golden State use natural gas—T Boone’s natural gas—in public vehicles. If Prop 10 passes, the real windfall for T Boone would be the scores of millions that the State spends on a compressed natural gas (CNG) infrastructure (fuel trucks, fuel stations and the like), which could pave the way towards greater use of CNG—and greater profits for T Boone.
But T Boone’s biggest score is the “Pickens Plan,” his vision to have Congress force all of America to get a fifth of its electricity from wind energy—T Boone’s wind energy—and then forcing Americans to use natural gas—T Boone’s natural gas—to fuel their cars and trucks. T Boone is spending more than $50 million on a public relations campaign for his Plan, but that’s chump change compared to billions his Plan would make him if Congress heeded his wishes.
Obviously, I don’t care for T Boone’s business model. That’s why I derive no small amount of pleasure from an article in the Charlotte Observer that reports T Boone’s mega-wind project (which is being built only because it benefits from mega-mandates and mega-government subsidies) is in big trouble because of the economic crisis. The tough economic environment means that demand for energy is lower, so natural gas prices have dropped, thereby making wind energy even less economically viable that it is already. Financing is also more difficult to obtain, which is bad news for T Boone’s capital intensive wind farms.
As a result, T Boone has scaled back plans significantly.
Washington remains quiet as everyone awaits the election returns. Environmentalists are talking about making any second stimulus bill that may be taken up by Congress in its lame duck session (scheduled for the week of November 17th) into a “green stimulus” package. Lots of new money for make-work “green jobs,” new and higher subsidies for “green energy,” and so on. It should be fun to watch the pushing and shoving at the trough, but the outcomes of these spending sprees are always depressing. It’s hard to see how wasting money and replacing lower-cost energy with higher-cost energy can revive the economy.
T. Boone Pickens will probably be back in Washington rattling his tin cup. The Charlotte Observer reports that Pickens is scaling back his plans to build a wind farm in Texas because of a lack of financing.
The other way of looking at a “green stimulus” is that it indicates that the air has been sucked out of the climate issue by the credit crunch and looming recession. Cap-and-trade legislation now looks less likely to be a front-burner issue in the next Congress. So the environmental pressure groups are left to scramble for anything they can get. They should take comfort in the fact that global greenhouse gas emissions are certain to decline for as long as the recession lasts.
Snow fell on London this last week, a beautiful blanket of snow — the first to fall in the month of October since the year of grace 1922 — while the Mother of Parliaments gave third reading to an extraordinary piece of legislation, which will put a huge new bureaucracy in place to monitor and fight global warming, sucking taxes from a shrinking British economy.
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