Amy Harder

Post image for Why Is Congress Lethargic about Energy?

This week National Journal’s Energy Experts Blog poses the question: “What’s holding back energy & climate policy.” So far 14 wonks have posted comments including yours truly. What I propose to do here is ‘revise and extend my remarks’ to provide a clearer, more complete explanation of Capitol Hill’s energy lethargy.

To summarize my conclusions in advance, there is no momentum building for the kind of comprehensive energy legislation Congress enacted in 2005 and 2007, or the major energy bills the House passed in 2011, because:

  • We are not in a presidential election year so Republicans have less to gain from passing pro-energy legislation just to frame issues and clarify policy differences for the electorate;
  • Divided government makes it virtually impossible either for congressional Republicans to halt and reverse the Obama administration’s regulatory war on fossil fuels or for Hill Democrats to pass cap-and-trade, carbon taxes, or a national clean energy standard;
  • Democrats paid a political price for cap-and-trade and won’t champion carbon taxes without Republicans agreeing to commit political suicide by granting them bipartisan cover;
  • The national security and climate change rationales for anti-fossil fuel policies were always weak but have become increasingly implausible thanks to North America’s resurgence as an oil and gas producing province, Climategate, and developments in climate science;
  • Multiple policy failures in Europe and the U.S. have eroded public and policymaker support for ’green’ energy schemes;
  • It has become increasingly evident that the Kyoto crusade was a foredoomed attempt to put policy carts before technology horses; and,
  • The EPA is ’enacting’ climate policy via administrative fiat, so environmental campaigners no longer need legislation to advance their agenda.

[click to continue…]

Post image for PTC: Costly Climate Policy Dud

The wind energy production tax credit (PTC) expires at the stroke of midnight, Dec. 31, unless Congress votes to renew the tax break. A one-year extension would add an estimated $12.1 billion to deficit spending over 10 years. A six-year extension, advocated by the wind industry, could add $50 billion.

The fiscal cliff looms and the national debt already exceeds GDP, but if Congress cared more about the general interest of taxpayers than about the special interests of campaign contributors, the nation would not be sliding towards insolvency.

Whether Congress should renew the PTC or let it expire is the topic of this week’s National Journal Energy Experts Blog. Twenty wonks weigh in, including your humble servant. I heartily recommend the contributions by Sen. Lamar Alexander (R.-Tenn.), Craig Rucker, Phil Kerpin, Benjamin Zycher, Thomas Pyle, James Valvo, and David Banks.

My contribution addresses the environmental side of the debate, in particular the claim that recent extreme weather events demonstrate “just how badly our nation needs to take advantage of our vast wind energy potential,” as one contributor put it.

Below is a lightly edited version of my comment.

* * *

Of all the lame arguments used to sell Americans on the proposition that wind power, an industry propped up by Soviet-style production quota in 29 states and numerous other policy privileges, deserves another renewal of the 20-year-old production tax credit (PTC), the lamest is the claim that the PTC helps protect us from extreme weather.

PTC advocates talk as if Hurricane Sandy and the Midwest drought were obvious consequences of anthropogenic global warming, and that subsidizing wind energy is a cost-effective way to mitigate climate change.

They are wrong on both counts.

Neither economic analyses nor meteorological investigations validate the asserted link between recent extreme weather events and global warming. When weather-related damages are adjusted (“normalized”) to account for changes in population, per capita income, and the consumer price index, there is no long-term trend such as might indicate an increase in the frequency or severity of extreme weather related to global climate change.

A 2012 study in the journal Climate Change  examined 370 years of tropical cyclone data from the Lesser Antilles, the eastern Caribbean island chain bisecting the main development region for landfalling U.S. hurricanes. The study found no long-term trend in either the power or frequency of tropical cyclones from 1638 to 2009. It did however find a 50- to 70-year wave pattern associated with the Atlantic Multidecadal Oscillation, a mode of natural climate variability. [click to continue…]

Post image for Carbon Taxes: Kick ‘Em While They’re Down

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…]

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

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…]

Post image for Will Markey’s Keystone Export Ban Come Back to Bite Him?

File this one under “be careful what you wish for.” Rep. Ed Markey (D-Mass.) must have thought he was being very clever. At a recent House Energy and Commerce Committee meeting on legislation to authorize construction of the Keystone XL Pipeline, Markey introduced an amendment banning U.S. exports of petroleum products made from Keystone crude.

For Markey, the amendment was never a serious legislative proposal. For one thing, as explained on this site and MasterResource.Org, an export ban would violate U.S. treaty obligations under both the General Agreement on Tariffs and Trade (GATT) and the North American Free Trade Agreement (NAFTA). In addition, Markey knew Republicans could not support the ban without jeopardizing the long-term supply contracts that pipeline builder-operator TransCanada Corp. had negotiated with Gulf Coast refiners — contracts on which the project’s commercial viability depends.

In fact, Markey was counting on Republicans to vote against the ban, as that allegedly would expose them as duplicitous shills who care only about oil industry profits, not about reducing dependence on OPEC or alleviating pain at the pump. As also explained in the previous columns, Markey’s exposé is itself bogus, because (1) Keystone crude would displace OPEC crude whether the associated refined products were sold domestically or overseas, and (2) much of the refined product would likely be sold in the USA.

This just in: What Markey introduced as a rhetorical prop may be sprouting legislative wings in the Democrat-controlled Senate, where it could win votes to overturn President Obama’s rejection of Keystone XL. [click to continue…]

Post image for Markey’s Ban on Petroleum Exports Not Legal under Trade Treaties (Updated Feb. 15, 2012)

Earlier this week, the House Energy and Commerce Committee marked up and approved the North America Energy Access Act (H.R. 3548), sponsored by Rep. Lee Terry (R-Neb.). The bill authorizes construction of the Keystone XL pipeline, the $7 billion shovel-ready project to deliver up to 830,000 barrels per day of Canadian crude oil to Midwest and Gulf Coast refineries.

Democrats offered five amendments to ‘improve’ (that is, sabotage) the bill. The GOP majority easily defeated the killer amendments, including Rep. Ed Markey’s (D-Mass.) amendment to ban exports of petroleum products made from Canadian oil shipped via the pipeline. Markey claims consumers would benefit because refiners would be forced to sell more gasoline in U.S. domestic markets, lowering prices.

Earlier on this site, National Journal’s energy blog, and MasterResource.Org, I opined that Markey’s proposal would violate U.S. treaty obligations under the General Agreement on Tariffs and Trade (GATT) and the North American Free Trade Agreement (NAFTA). I also argued that an export ban could backfire. It could drive refining-related investment, production, and jobs out of the USA, increasing pain at the pump by curbing production at home while making higher-priced foreign imports more competitive.

In “Proposed Keystone Export Ban Fraught With Pitfalls,” National Journal reporter Amy Harder quotes two independent experts who offer similar assessments of Markey’s proposal. [click to continue…]

Post image for What Should Drive Fuel Efficiency?

What should drive fuel efficiency? Select the answer you think is correct: 

(a) Government;

(b) Markets; or

(c) Please pass the sweet and sour shrimp.

If you chose (a), then go straight to www.allsp.com (Season 10) and watch my favorite South Park episode, “Smug Alert.”

If you chose (c), then you’re on your way to a promising career as a diplomat.

Today, on National Journal’s energy blog, I explain why the correct answer is (b).