The Competitive Enterprise Institute announced today that it is acting as co-counsel in a recently filed lawsuit in the state of New York against the state’s participation in the Regional Greenhouse Gas Initiative (a state cap and trade program). The lawsuit has been filed on behalf of small business owners in New York State who have faced increased electricity costs, and can be read here (.pdf). The American Spectator has a short write up here. The basis for the suit relies on the fact that elected officials in New York enrolled in the RGGI without approval by the state legislature. New York is the only state involved with RGGI who entered the initiative without approval from its legislature. As RGGI has forced electricity generators to purchase annual carbon allowances, it has raised the price of electricity for New York residents, effectively acting as a tax on electricity producers (those who produce more than 25 megawatts annually) in New York.

As far as its success or failure, the RGGI has faced many of the same problems similar programs have faced around the world. A very low allowance price for carbon will result in very little actual emissions reductions. Much of the ‘on paper’ emissions reductions will be made up by increased emissions in bordering states, as energy intensive industries relocate and electricity producers import energy from out of state. State legislators have raided the funds raised by RGGI and used them for unrelated purposes (the stated goals of RGGI are to use the funds to spur development in energy efficiency measures and increased production of non carbon emitting energy sources). In New York alone,$90 million of the ~$320 million raised by RGGI has been redirected towards budget shortfalls.

New Jersey recently signaled its intention to end its participation. Similar efforts are underway in New Hampshire (though they face a threatened veto by the Governor).

Let’s acknowledge the irony here. From a copy of Obama’s prepared remarks today at Georgetown University discussing his administration’s energy plan:

But here’s the thing – we’ve been down this road before.  Remember, it was just three years ago that gas prices topped $4 a gallon.  Working folks haven’t forgotten that.  It hit a lot of people pretty hard.  But it was also the height of political season, so you had a lot of slogans and gimmicks and outraged politicians waving three-point-plans for two-dollar gas – when none of it would really do anything to solve the problem.  Imagine that in Washington.

The truth is, of course, was that all these gimmicks didn’t make a bit of difference.  When gas prices finally fell, it was mostly because the global recession led to less demand for oil.  Now that the economy is recovering, demand is back up.  Add the turmoil in the Middle East, and it’s not surprising oil prices are higher.  And every time the price of a barrel of oil on the world market rises by $10, a gallon of gas goes up by about 25 cents.

President Obama is decrying gimmicks and slogans (as he should be), noting their inability to achieve anything, with his newest slogan “Win the Future” in the background.

“WTF” indeed.

Mark Hertsgaard and Christian Parenti, two reporters from The Nation, a far-left periodical, have an oped in syndication about how the federal government’s huge buying power can alter the economics of green energy.

Here’s how it works, in the authors’ own words:

Federal spending is responsible for roughly 25% of the gross national product, giving Washington enormous power to influence marketplace behavior even if annual spending levels are trimmed…If the Pentagon, the Postal Service and other agencies shifted their buying wherever possible from dirty technologies to clean ones, it would give manufacturers…a huge influx of orders. These orders would yield economies of scale that would enable green manufacturers to substantially reduce prices.

As the prices of green technologies fall to near that of dirty technologies, consumers and private companies will begin buying green of their own accord. Their purchases will yield additional economies of scale, enabling green manufacturers to lower prices further and entice more buyers, thus hastening the displacement of dirty technologies.

Hertsgaard and Parenti call their plan the “Big Green Buy.” I call it a “Very Dumb Idea.”

Recent history supports my description over theirs. Evidently unbeknownst to these authors, the federal government already has attempted The Big Green Buy, and it was a disaster.

From 1999 to 2006, the Post Office became the world’s #1 buyer of “flex-fuel” cars capable of running on E-85, a fuel blend containing 85% ethanol, a then-voguish green fuel distilled from the starch in corn. The Post-Office’s 30,000 car buying spree was meant to achieve markets of scale for ethanol production and use.

Unfortunately for the feds, the flex fuel plan backfired. The problem was that E-85 fueling stations were only available in a handful of states; everywhere else, the new Post Office vehicles had to use regular unleaded. And because “flex-fuel” vehicles tended to be SUVs, and were therefore larger and less fuel-efficient than the vehicles they replaced, gasoline consumption increased by almost 1.5 million gallons.

Such are the unintended consequences of Best Laid Plans.

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.

Sen. James Inhofe (R-Okla.), Ranking Member of the Senate Committee on Environment and Public Works, last week released a new minority report, titled, “The Real Story Behind China’s Energy Policy-And What American Can Learn From It.” The report shows that, regardless of its wind and solar production, China is predominantly relying on coal, oil, and natural gas, along with hydro and nuclear power, to fuel its economy.

In a story today about the surging profits of Peabody Energy (a major American coal producer), Climatewire (subscription required) quoted Peabody Chairman and CEO Gregory Boyce as saying that coal is entering a “demand super cycle” due to exploding Chinese growth. According to Mr. Boyce, “China now forecasts that 290 gigawatts of coal-fueled generation will come online from 2011 to 2015.” He calls the demographic trends in China “overwhelming.”

Two quick snap responses:

1. There’s a silly meme being bandied about by the mainstream media that China is winning some sort of green energy great game with America. In fact, China is building two coal fired power plants every three weeks, while in the U.S., environmentalist lawyers recently celebrated the scuttling of 100 coal fired plants. We are losing an energy game with China, but the prize isn’t green energy. Rather, it’s affordable, reliable energy. They are building it. We aren’t.
2. Peabody is looking for a west coast port to increase the export of low cost coal from Wyoming to China. That is, China is welcoming the coal our country is spurning. As a result, we are heading towards a future where the U.S. buys expensive green energy from China (because it is cheaper to manufacture there), while China buys cheap coal from the U.S. Guess whose energy future is more promising?

Today’s exhibit about Spain’s economic miracle — you could call it a sector-specific collapse — comes from Bloomberg, a heartbreaking tale of the gravy inevitably running out. It is a tale that, pre-collapse, President Obama expressly sought to emulate and California is still actively pursuing, as is typical for the equally bankrupt California. Obama is now silent about Spain as his model and California claims its law is, er…the “world’s first!”

As happened in Spain, California’s bill is certain to come due long before the preening political class expected. The U.K.’s Global Warming Policy Foundation has a roundup with the top six stories in today’s update being relevant, as well.

So, yes, dear, these “green economy” schemes grow the economy. Of course, then so did Mr. Ponzi’s scheme. And, naturally, the plaintiff’s bar grows the economy, too, because we need a bigger court system and people to craft the instructions on shampoo bottles. Except upon slightly more scrutiny than the statists would like, they actually kill jobs. But if you only focus on this part I’m waving my hands at over here…

And upon such scrutiny, their approach of name-calling and fabrication instead of arguing the merits begins to look pretty good.

[originally published at the Independence Institute's Energy Center]

When it comes to renewable energy, Colorado politicians are trying to have their cake and eat it, too. In February, the General Assembly passed HB 1001, a law requiring that Xcel use 30% renewable energy by 2020. To be sure, renewable energy is more expensive than conventional energy, but lawmakers promised that the costs would be held in check by a 2 % rate cap codified in the legislation. You see, Colorado politicians believed they could establish a Soviet-style renewable energy production quota AND Soviet-style price controls.

In early September, the Independence Institute‘s Amy Oliver Cooke and I took this silliness to task in a Denver Post oped. Specifically, we explained the regulatory machinations employed by the Ritter Administration to get around the rate cap.

Nearly a month later, Rep. Max Tyler, the lead sponsor of HB 1001, replied to our oped with a letter in the Post. Rep. Tyler’s missive ignored our arguments, and instead boasted of the ancillary benefits of government picking which energy sources Coloradans must use. Along these lines, he noted that wind power in Colorado:

• Creates more than $2.5 million for farmers and ranchers who lease land for wind generation
• Supports 1,700 construction jobs and 300 permanent jobs in rural areas;
• Generates $4.6 million in annual property tax revenue for local schools, roads, etc.

Of course, Rep. Tyler missed the point: These “benefits” aren’t a net positive for the State. Rather, they are paid for by Xcel consumers, in the form of higher energy bills, which means that Xcel ratepayers (primarily in Denver, Grand Junction, and Boulder) are subsidizing the rural development showcased by Rep. Tyler. This is a classic case of robbing Peter to pay Paul.

In his letter, Rep. Max Tyler stated that, “Colorado currently generates 1,244 megawatts of wind power.” That sounds like a lot, but it’s not. Because the wind doesn’t always blow, Xcel can rely on only a fraction of its wind generation’s nameplate capacity. In practice, 1,244 MW of wind is only 124 MW of real power. That’s about half of the coal power capacity that Xcel agreed to shutter in its most recent electric resource plan.

The problem for Colorado is that this small amount of wind power costs a large amount of money. According to the Public Utilities Staff, Xcel “identified wind energy costs for 2009 of $147,431,000 and 2010 of $155,462,000.”[1] That’s about 5% of Xcel’s 2009 and 2010 sales-or more than double the 2 % rate cap that Rep. Tyler trumpets in his letter (he wrote, “Another important fact: When developing new energy resources, utilities have a 2 percent increase rate-cap on retail customer bills”).

By highlighting localized gains, Rep. Max Tyler missed the big picture. Forcing Xcel customers to pay more for less energy hurts the State’s economy. Period.

In the Politico today, there’s a story about how the Natural Resources Defense Council is advising the White House Correspondents’ Association on how to “go green” with their annual dinner. They seem to be taking this very seriously:

Every two weeks, the greening team — including [NRDC senior scientist Allen] Hershkowitz and representatives from the Hilton — held a conference call to make sure every procurement decision and operation at the event would be as green as possible.

The story goes on to explain that they will be offsetting all of the energy use associated with the dinner – including the private jet to fly host Jay Leno out from L.A. and back. With advice from the Portland-based nonprofit the Bonneville Environmental Foundation, they’ve purchased an undisclosed amount of carbon credits. According to Politico‘s Lisa Lerer, “Credits purchased for the dinner will help fund the Tatanka Wind Farm on the North Dakota-South Dakota border.”

So far, so good. Except that the Tatanka Wind Farm is already up and running – it went online in July of 2008. The project’s $381 million budget was financed by GE Energy Financial Services and Wachovia. And it’s operated by Acciona Energy, a multi-billion dollar Spanish conglomerate with 40,000 employees and operations in 30 countries.

So, my question is, who is getting the White House Correspondents’ Association’s money? The shareholders of Acciona? GE and Wachovia (now Wells Fargo)? It’s one thing for carbon offset money to, for example, fund a nonprofit organization in the developing world to manage a reforestation project, but how does it make any sense to pay money to a Spanish corporation for operating a wind farm that’s already been privately financed and has been producing energy for almost two years? Am I missing something here?