cap and trade

Update on the States

by William Yeatman on February 28, 2011

in Blog, Politics

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Three weeks ago, a federal judge in Louisiana found the Department of the Interior in contempt for its moratorium on oil and gas drilling in the Gulf of Mexico enacted in the wake of last year’s BP spill. As a result of the ruling, the government will have to pay the plaintiff’s legal fees, but it didn’t impact the moratorium, which was lifted on October 22, 2010. Despite the end of the de jure moratorium, the Obama administration has kept in place a de facto moratorium through bureaucratic foot-dragging.

Two weeks ago, the same U.S. District Judge, Martin Feldman, lifted this de facto moratorium, by granting a preliminary injunction requiring that the Interior Department act within 30 days on five pending permit applications. According to Judge Martin’s ruling, “Delays of four months and more in the permitting process, however, are unreasonable, unacceptable and unjustified by the evidence before the court.”

New Hampshire

By a 246 to 104 vote, the New Hampshire House of Representatives last week passed HB 519, legislation that would withdraw New Hampshire from a regional energy-rationing scheme known as the Regional Greenhouse Gas Initiative. Governor John Lynch (D) promised to veto the bill before it was introduced, but this week’s vote is veto-proof. The State Senate is expected to pass HB 519 with enough votes to overturn the Governor’s promised veto.

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Update on the States

by William Yeatman on February 22, 2011

in Blog, Politics

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New Hampshire

Legislation that would withdraw New Hampshire from a regional energy-rationing scheme gained momentum last week. HB 519, which would pull New Hampshire out of the Regional Greenhouse Gas Initiative, a cap-and-trade for 10 northeastern States, was approved by the House Science Technology and Energy Committee and endorsed by House Speaker William O’Brien. Two weeks ago, Governor John Lynch (D) preemptively threatened to veto the bill, but Republicans have a veto-proof majority in the State Legislature, so if they stick together, they can end this energy tax.


Outrage at the EPA’s campaign against coal is bipartisan in Kentucky. Last month, a top Democratic lawmaker, Jim Gooch, called for “secession” from the green regulatory state. Last week, by an overwhelming bipartisan vote, the State Senate Natural Resources and Energy Committee passed a bill that would make Kentucky a “sanctuary state” out of reach of the EPA’s “overreaching regulatory power.” The symbolic legislation is expected to easily win passage in the full Senate.

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In an earlier post, I listed the top five worst governors on energy policy. Alas, four of the five were lame ducks, which means that my original list had a very limited shelf life. With that in mind, I made a new list. This one is limited to sitting governors and governors-elect, so it should remain relevant for the foreseeable future.

And so, without further ado, THE TOP FIVE WORST GOVERNORS ON ENERGY POLICY….[cue drum roll]…

5         Kansas Governor-elect Sam Brownback

Sam Brownback has yet to serve a day as Governor, but he earned a place on this list for a particularly egregious mistake he recently committed while representing Kansas in the U.S. Senate.  It happened late last July. At the time, with an election looming, Senate majority leader Harry Reid decided that to drop debate on a Soviet-style renewable energy production quota, known as a Renewable Electricity Standard. Cap-and-trade had already died in the Senate, and the Congressional calendar was nearing its end, so Reid’s decision to abandon a RES meant that the 111th Congress would avoid the worst ideas in energy policy. Then, Sen. Sam Brownback, in an apparent effort to snatch defeat from the jaws of victory, announced that he would introduce aRES. Thankfully, Brownback’s proposal was ignored.

4.       New Jersey Governor Chris Christie

Christie’s skepticism of global warming alarmism is great. What’s not so great is his continued participation in a regional cap-and-trade energy rationing scheme. For whatever reason, the climate skeptic sounding governor has yet to pull his state out of the Regional Greenhouse Gas Initiative, the aforementioned energy tax.

3.       Massachusetts Governor Deval Patrick

For Massachusetts Governor Deval Patrick, climate policy is all about style over substance. In one sense, that’s a good thing, because Patrick (like me) has no interest in expensive energy policies.  In 2008, for example, Gov. Patrick championed the Global Warming Solutions Act, which, according to the Governor’s press release, requires emissions reductions 25% below 1990 levels by 2020. That sounds like a big commitment, but when you read the fine print, it turns out that the legislation mandates emissions reductions of only 10% below 1990 levels. Moreover, the State’s business-as-usual future is projected to reduce emissions 3% below 1990 levels by 2020. And when you account for federal and state policies already in place, Massachusetts is on track to reduce emissions 18% below 1990 levels by 2020. The upshot is that the Governor’s climate plan is pointless, which is probably the reason why his website’s “key priorities” page makes no mention of global warming. While I appreciate the Massachusetts Governor’s aversion to expensive energy climate policies, by enacting  long term, legally binding emissions reductions targets, he created a powerful tool with which environmentalist lawyers can gum up economic activity.

2.       Maryland Governor Martin O Malley

Governor Martin O Malley wants his constituents to believe that they can have their cake and eat it, too, when it comes to climate change mitigation. In 2009, Governor O Malley sponsored the Greenhouse Gas Reductions Act, which requires emissions reductions 25% below 2006 levels by 2020. Yet the law requires that any emissions reductions strategy also, “produce a net economic benefit to the State’s economy and a net increase in jobs in the state.” Of course, these are mutually exclusive propositions. No matter how much politicians blather on about “green jobs,” the fact remains that the price of “doing something” about climate change is forsaken economic growth. To be sure, O Malley ensured that he wouldn’t be the one to square this circle. The law postpones any meaningful requirement until after the Governor is safely out of office.

1.       California Governor-elect Jerry Brown (the #1 worst by a landslide)

Californians will rue the day they elected Jerry Brown for a second stint in the Governor’s mansion. He is exactly the wrong person at the exact worst time. The start of Brown’s term coincides the implementation phase of the 2006 Global Warming Solutions Act, which grants the state executive virtually unlimited authority to reduce greenhouse gas emissions 20% below 1990 levels by 2020. Governor-elect Brown has given every indication he will use this unprecedented expansion of authority in an imprudent manner. In the 1970s, when he was last governor, Brown refused to allow new generation resources to be built in the State, claiming instead that energy efficiency regulations would so diminish energy demand that no new power plants would be needed. Of course, he was wrong, and the policies he put in place led directly to the California energy crisis in 2000/2001. During the Schwarzenegger Administration, Jerry Brown served as Attorney General, and in that capacity he sued California counties for failing to take climate change mitigation into account in their long term growth strategies. It is difficult to overstate what trouble lies ahead for California.

5.       New Jersey Governor Chris Christie
Christie’s skepticism of global warming alarmism is great. What’s not so great is his continued participation in a regional cap-and-trade energy rationing scheme. For whatever reason, the climate skeptic sounding governor has yet to pull his state out of the Regional Greenhouse Gas Initiative, the aforementioned energy tax.

4.       Florida Governor Charlie Crist (lame duck)
In 2007, Crist signed a series of environmentalist executive orders, which, thankfully, never came to fruition because they were spurned by the State Legislature. Crist earned his spot on this list for his invertebrate take on offshore drilling. When he campaigned for Governor, he opposed offshore drilling; when gas prices spiked in the summer of 2008, he supported drilling; and after the Gulf oil spill this past summer, he reverted back to opposing the practice.

3.       California Governor Arnold Schwarzenegger (lame-duck)
As I’ve explained here, here, and here, the Governator’s environmentalist pandering is empty blathering. For all the talk about California going green, the fact of the matter is that California’s environmentalist energy policies have been ineffectual at achieving anything other than higher energy prices. Rather than environmentalist accomplishments, Schwarzenegger’s only lasting legacy will be the almost-unlimited power he has bequeathed to his successor, Governor-elect Jerry “Moonbeam” Brown. Starting in 2011, the law accords the Governor amorphous, yet absolute, authority to mitigate climate change.

2.       New Mexico Governor Bill Richardson (lame duck)
Using authority derived from 1978 state law, New Mexico Governor Bill Richardson (D) last month imposed a cap-and-trade energy rationing scheme. The lame-duck Governor enacted the energy-rationing scheme administratively on November 2, the same day that voters indicated their displeasure with expensive energy climate policies by electing Susana Martinez (R) to succeed Richardson. She had campaigned against cap-and-trade. To be sure, Richardson’s energy policy is largely toothless; nonetheless, the executive power grab is disconcerting.

1.       Colorado Governor Bill Ritter (lame duck)
It will take a generation for Coloradans to undo the harm inflicted by the Governor Bill Ritter’s much-ballyhooed “New Energy Economy.” At Ritter’s behest: the General Assembly changed the mission of state utilities from providing “least cost” electricity, to fighting climate change; the Public Utilities Commission allowed the nation’s first carbon tax; and Department of Public Health and Environment exaggerated the threat of federal air quality regulations in order to justify legislation that picks winners and losers in the electricity industry.

President Barack Obama left on Friday for a ten-day trip to Asia beginning in India.  Before he left, he held a press conference on the election results and gave an interview to Sixty Minutes, which has been released by CBS ahead of its broadcast on Sunday night.  In reply to two questions at his press conference, the President spoke at length about alternatives to cap-and-trade.  He said, “Cap-and-trade was just one way of skinning the cat; it was not the only way.  It was a means, not an end.  And I’m going to be looking for other means to address this problem.”

The President said that there were several areas where he might be able to find common ground with the Republicans in Congress.  These included natural gas, nuclear power, and electric vehicles.  He also said that, “The EPA is under a court order that says greenhouse gases are a pollutant that fall under their jurisdiction.”  This is a misunderstanding, but he then also seemed to express some openness to congressional intervention in EPA regulation of greenhouse gas emissions: “And I think EPA wants help from the legislature on this.  I don’t think that the desire is to somehow be protective of their powers here.”

Greens Desperate to Avoid Blame” was the headline on Darren Samuelsohn and Robin Bravender’s story in Politico on Wednesday. Environmental pressure groups moved quickly to spin the election results as having nothing to do with them.  In particular, they claimed that passage in the House of the Waxman-Markey cap-and-trade bill did not cause Democrats to lose.  On the contrary, the reality is that Waxman-Markey did contribute to the defeat of a number of Democrats, as I argue in Politico’s Energy Arena.

More significant is the fact that the new Republican majority in the House is largely skeptical of the claim that global warming is a potential crisis and is close to unanimously opposed to cap-and-trade and other energy-rationing measures.  Not only is cap-and-trade dead, but there is a good chance that the House next year will move legislation to block or delay the EPA from using the Clean Air Act to regulate greenhouse gas emissions.

The question is, can such a measure pass the Democratic-controlled Senate?  There is certainly a majority in the Senate for blocking EPA, but sixty votes will be needed.  My guess is that there will be more than sixty votes.  As EPA regulations start to bite next year, Senators will start to hear complaints from their constituents.  And a number of Democratic Senators are up for re-election in 2012 and will want to avoid the fate of so many of their colleagues this year.

House Democrats who voted for the Waxman-Markey cap-and-trade bill were big losers in the congressional elections. Approximately thirty Democrats who voted for Waxman-Markey were defeated. This does not include Democratic losses in open seats in which the incumbent chose not to run for-re-election.

Representative Rick Boucher, a senior fourteen-term Democrat from Virginia’s coal district (the 9th), negotiated the deal that led to passage of Waxman-Markey by a 219-212 vote on June 26, 2009. Boucher lost and took many coal-state Democrats with him.

“One of the clearest messages voters sent last night was a repudiation of cap-and-trade and other policies to raise energy prices,” said Myron Ebell, Director of CEI’s Center for Energy and Environment.

Other House Democrats who voted for Waxman-Markey and lost include: Betsy Markey in Colorado; Alan Grayson, Allen Boyd, Suzanne Kosmas, and Ron Klein in Florida; Debbie Halvorson and Phil Hare in Illinois; Baron Hill in Indiana; Frank Kratovil in Maryland; Mark Schauer in Michigan; James Oberstar in Minnesota; Ike Skelton in Missouri; Dina Titus in Nevada; Carol Shea-Porter in New Hampshire; John Adler in New Jersey; Harry Teague in New Mexico; John Hall, Michael McMahon, and Scott Murphy in New York; Bob Etheridge in North Carolina; Zack Space, John Boccieri, Steve Driehaus, and Mary Jo Kilroy in Ohio; Patrick Murphy in Pennsylvania; John Spratt in South Carolina; Tom Perriello in Virginia; and Steve Kagen in Wisconsin.

Reconciling the various, final pre-election surveys of voter sentiment indicates a that “it’s the spending, stupid.” It is remarkable how quickly public consciousness has developed to know that debt equals taxes.

Cap-and-trade is now dead, having proven, as we predicted serially, to be the 1993 BTU tax, redux. Members in the House voted on both measures on the assurance the Senate would not leave them hanging out to dry, isolated with that difficult vote, only to see their trust misplaced. As opposition grew more intense from the people-who were not at the table when their wealth was redistributed to various interests-the senators realized that they wanted to save jobs. Theirs.

We also see that cap-and-trade’s ugly Plan B cousin, “green jobs,” is not only sure to be an obsession very soon. The public will equally soon come to understand the bankrupting expense of “green jobs” programs: in President Obama’s erstwhile model, Spain, it cost them $750,000 per (temporary) “green job,” placing the nation’s energy infrastructure and economy in peril leading to an ongoing political crisis.

All over Europe Obama’s previously touted model states are struggling to rein in the subsidy schemes which threatened to expand the Greek contagion. These are economic black holes paying small fortunes for each job created, crowding out private sector growth, displacing real jobs responding to market forces with temporary jobs that disappear when the subsidy does, as it must (see: “census jobs”). All the while they necessitate higher energy costs as part of the plan. That makes them much worse than other make-work programs like ditch-digging-and-filling.

Still, just last week Obama’s Energy Department claimed in the Washington Post that its own stimulus version of the scheme was an “unqualified success”-at a half a million dollars per temporary job created! Moreover, all parties acknowledged in the article that the bubble has to be renewed annually or it bursts. Somehow this disastrous failure proved to the Obama administration that “clean-energy investments [sic] are ready for prime time.” Oh, dear.

The coming, attempted ‘green jobs’ binge is no more than WPA-style spending, which FDR confidantes admitted as a flop, and the debt to underwrite which delays the recovery further, just as the public seems to recognize the Obama agenda has already done.

There is the coming “energy” debate in a nutshell, and how, in a rational world, it will play out. Fortunately, ‘green shoots’ of rationality do seem to be popping up. The public realize “it’s the spending, stupid” and grasp the illusory nature of economic activity predicated on such “stimulus”-style debt-spending.

Inside the Beltway

by Myron Ebell on November 1, 2010

in Blog

Elections: Running from Cap-and-Trade

Campaigns often become annoying as election day approaches, but they do have the benefit of sucking all the energy out of Washington.  Congress has been out for a month to allow Members to campaign, and even the agencies tend to go silent just before an election for fear that announcing some new rule or policy could become a damaging campaign issue.

But when Washington springs alive again after next Tuesday, it will be a city transformed by the election results.  Even if the rout of House and Senate Democrats occurs precisely as predicted (minus 50 House seats and 7 Senate seats is the average guess; here is a typical forecast), it will all look and feel different after it has happened than in anticipating it.

While the reactions to big election swings are often surprising, one thing that is absolutely clear already is that cap-and-trade has been a significant issue in the campaign and that cap-and-trade will be totally dead after November 2nd.  Every Republican incumbent and challenger is running against cap-and-trade.  Most are running against global warming alarmism.  House Democrats who voted against the Waxman-Markey bill are featuring that vote in their campaigns.  Only a handful of the more than 200 Democrats who voted to pass Waxman-Markey in 2009 are even mentioning it in their campaigns.

Cap-and-trade is especially potent as an issue in coal country.  In West Virginia, it has become so toxic that Governor Joe Manchin (D) revived his Senate campaign against John Raese by running a television ad in which he shoots a copy of one of the Senate cap-and-trade bills.   Rep. Nick Joe Rahall (D-WV)), the Chairman of the House Natural Resources Committee, voted against Waxman-Markey, but is now in the race of his life against a challenger, Elliott Maynard, who is scoring points with voters by arguing that Rahall’s opposition was weak and that he in effect supports cap-and-trade because he voted for Rep. Nancy Pelosi (D-Calif.) for Speaker.

Rep. Rick Boucher (D-Va.) is in even worse shape in his nearby district in Virginia.  Boucher put the interests of his party ahead of the interests of his coal-mining district when he made a deal and rounded up the votes necessary to pass Waxman-Markey on June 26, 2009.  In 2008, Boucher didn’t have a Republican opponent.  This year Morgan Griffith appears to be running a very close race. Boucher’s loss would send an unmistakable signal to congressional candidates in energy-producing and energy-using manufacturing districts for many elections to come.

Green activists and allied rent seekers like to portray themselves as the underdogs against big business in their environmental causes.  The battle over Proposition 23 – the California ballot measure to suspend the state’s global warming law until unemployment is under control – is certainly no exception.    But they have David and Goliath backwards here; those spending to defeat the measure and keep California cap and tax in place have outgunned supporters of reform by at least 3 to 1.

Compared to the $9 million or so in favor of Prop 23, including most from oil companies, the $28 million to kill this measure has gotten relatively little attention.   Only a minor percentage of this amount has come in the form of small contributions from regular Californians – little wonder since it is defending a global warming policy that would drive up fossil fuel costs and kill jobs just as a similar policy has done in Spain. In fact, most of the money has come in the form of six and seven figure contributions from big environmental groups, Hollywood bigshots, and, most disturbingly, opportunists like venture capitalists John Doerr and Vinod Khosla, who hope to secure a guaranteed market selling alternative energy and vehicles far too expensive to compete otherwise.