The lead article in the summer issue of Regulation magazine, the Cato Institute’s flagship publication, is titled “What is the right price for carbon emissions?”  The author is Bob Litterman, a Ph. D. economist who is currently a partner in a NYC-based hedge fund.

Here is Litterman’s conclusion: “It would be best to get started immediately by pricing carbon emissions no lower, and perhaps well above, a reasonable estimate of the present value of expected future damages, and allow the price to respond appropriately to new information as it becomes known.”

Litterman’s article is followed by four comments by Robert Pindyck, Daniel Sutter, Shi-Ling Hsu, and David R. Henderson.  Pindyck and Hsu are for a carbon tax; Sutter and Henderson are opposed.

These articles were described by someone at Cato as “exploring the case for a carbon tax from a free market perspective.”  But I don’t see anything resembling a free market case for a carbon tax being made in Litterman’s article or in the pro-carbon tax comments of Pindyck and Hsu.

Nor can I find anything in Litterman’s background or in the references in his article to suggest that he is a free market economist.  He was at Goldman Sachs in high positions for twenty-some years and is a member of the board of the World Wildlife Fund.  Goldman Sachs is one of the leading practitioners of crony capitalism.  The World Wildlife Fund supports a variety of command-and-control environmental and energy-rationing policies that help keep poor people poor around the world.

It appears that some people at Cato are warming to the idea of rule by experts.  Manipulating the tax code in order to remake society and force people to conform to some authoritarian agenda is really just another variant of central planning.  Rule by experts was criticized insightfully in a 1945 essay, “The Use of Knowledge in Society,” by Friedrich A. Hayek, the Austrian economist for whom the Cato Institute’s auditorium is named.  Hayek argued that rule by experts threatens human freedom.  In my own view, the proper “free market perspective” on a carbon tax is: No way in hell.

Post image for Is BOEMRE Harrassing Polar Bear Biologist Charles Monnett?

Last month, the Bureau of Ocean Energy Management, Regulation, and Enforcement (BOEMRE) suspended wildlife biologist Charles Monnett, who is being investigated by the Department of Interior’s (DOI’s) inspector general (IG). Monnett is the lead author of a 2006 study (linking loss of Arctic sea ice to the first documented finding of drowned polar bears.  The paper helped galvanize support for DOI’s listing of the bear as a threatened species under the Endangered Species Act. Al Gore touted the study in An Inconvenient Truth.

Public Employees for Environmental Responsibility (PEER) condemned the IG investigation as a “witch hunt” (Greenwire, Aug. 10, 2011, subscription required). Last week, the Center for Biological Diversity (CBD) and Greenpeace sent a letter to DOI Secretary Ken Salazar accusing BOEMRE of trying to muzzle scientists whose research may impede the granting of permits to drill for oil and gas in the bear’s Arctic habitat.

The transcript of the IG’s February 23, 2011 interrogation of Monnett shows that the IG “sent agents with no scientific training to ask decidedly unscientific questions about bizarre allegations relating to the polar bear paper,” CBD and Greenpeace contend. I can’t help but agree. What’s going on? [click to continue…]

Post image for Congressional Update: Votes Likely for Energy Tax Prevention Act of 2011 [Updated 5:45 PM]

The House of Representatives is scheduled to debate and vote on final passage of H. R. 910, the Energy Tax Prevention Act.  The Rules Committee is allowing the Democrats to offer twelve amendments to weaken or gut the bill.  (It is worth recalling that on 26th June 2009, the Democrats allowed only one Republican amendment and couldn’t even provide an accurate copy of the bill, since 300 pages had been added in the middle of the night, but the new sections hadn’t been put in their proper places in the 1200 page bill that had been released four days before.)  No Republican amendments to strengthen to the bill will be allowed.  The rule can be found here.  It is quite possible that the vote on final passage will be delayed until tomorrow.

Senate Majority Leader Harry Reid (D-NV) has scheduled votes on amendments offered by Sens. Mitch McConnell (R-KY), Jay Rockefeller (D-WV), Max Baucus (D-MT), and Debbie Stabenow (D-MI) amendments to S. 493, a re-authorization bill for small business subsidies, for some time after 4 PM today.  The McConnell amendment is the Senate version of the Energy Tax Prevention Act, S. 482.  The other amendments are attempts to give some ground without blocking EPA regulation of greenhouse gas emissions permanently (that is, until Congress authorizes such regulations).  This shows how far the debate has shifted.  It appears that the three straddling amendments may each get fifteen to thirty votes.  It appears that the McConnell amendment (#183) will get 51 or perhaps even 52 votes, but will not be adopted because it is not a germane amendment and therefore requires 60 votes to survive a point of order.  All 47 Republicans are expected to vote for it plus Sens. Joe Manchin (D-WV), Mary Landrieu (D-LA), Ben Nelson (D-NE), and Mark Pryor (D-AR).  Maybe one more Democrat, such as Sen. Claire McCaskill (D-MO).  Senate Majority Leader Harry Reid could of course still change his mind.

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Post image for Update on CEI’s Lawsuit against the EPA over Climate Regulations

This post was written by Competitive Enterprise Institute General Counsel Sam Kazman

EPA’s global warming regs are being challenged in a complex set of cases pending in the U.S. Court of Appeals for the D.C. Circuit.  At issue are rules ranging from EPA’s underlying endangerment ruling to its decrees on stationary and vehicle greenhouse gas emissions.  A number of petitions for reconsideration were filed with the agency as well, several of them based on the Climategate materials.  EPA denied those petitions last summer in a voluminous document which is also part of the litigation.

Among those suing EPA are states, trade associations, public interest groups (including CEI) and individual companies. If you count each separate action brought by each petitioner (including CEI) against each rule, there are 85 cases.

The petitioners tried to have the regulations put on hold until the court decides the cases, but their motion was denied back in December.  Both sides have filed suggestions on how the briefing of the cases should proceed, since the court will require almost everyone to file joint briefs.  Once the court issues its schedule and format for the briefs, the cases will start moving forward again.

Inside the Beltway

by Myron Ebell on March 12, 2011

in Blog, Features

Post image for Inside the Beltway

The House of Representatives took the first step on Thursday toward reclaiming its authority to regulate greenhouse gas emissions.  The Energy and Power (yes, that really is its name) Subcommittee of the Energy and Commerce Committee marked up and passed H. R. 910, the Energy Tax Prevention Act, which is sponsored by Committee Chairman Fred Upton (R-Mich.) and Subcommittee Chairman Ed Whitfield (R-Ky.).  H. R. 910 would pre-empt EPA from regulating greenhouse gas emissions using the Clean Air Act unless and until explicitly authorized to do so by Congress.

Actually, there was no marking up.  The Democrats opposed to the bill offered no amendments, and the bill was passed on a voice vote.  The full Committee has scheduled a mark-up of the bill next Monday and Tuesday. That means H. R. 910 could come to the House floor by early April.  There is no doubt that it will pass the House by a wide margin.  The only question is how many Democrats will end up voting for it.  My guess is that quite a few Democrats are worried about getting re-elected and will therefore vote for it.

The subcommittee meeting was one long whine by minority Democrats.  Rep. Henry Waxman (D-Beverly Hills), the ranking Democrat on the full committee and chief sponsor of the Waxman-Markey cap-and-trade bill that failed in the last Congress, said that H. R. 910 would codify science denial.  Rep. Ed Markey (D-Mass.) chimed in that he was worried the Republicans would try to repeal the law of gravity.  Rep. Jay Inslee (D-Wash.) instead thought that Republicans were trying to repeal the first law of thermodynamics and cause children all over the world to get asthma.

Preventing asthma is now the principal reason brought forward by the global warming alarmists in Congress to cripple the U. S. economy with energy-rationing regulations.  Here is what I learned from a ninety-second internet search: “The majority of people with asthma notice that cold, dry air causes more symptoms than mild-temperature or hot, humid air.” Of course, some of the world’s most eminent climate scientists have recently found that global warming is causing a lot of cold weather.

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Over the weekend, Atlantic/MSNBC pundit Ronald Brownstein wrote an atrocious column on energy policy for National Journal. It was so bad that he usurped Thomas Friedman at the top of my shit list for awful commentary on energy.

In instances such as Brownstein’s A Mayday Manifesto for Clean Energy, wherein every sentence is either dross or wrong, there is only one way to set the record straight: Brownstein must be Fisked*.

* Fisk [fisk]

an Internet argument tactic involving a reprinting of an article or blog post, interlarded with rebuttals and refutations, often intended to show the original is a sandpile of flawed facts, unfounded assertions, and logical fallacies. Named for English journalist Robert Fisk (b.1946), Middle East correspondent for the “Independent,” whose writing often criticizes America and Israel and is somewhat noted for looseness with details. Related: Fisked ; fisking .

Online Etymology Dictionary, © 2010 Douglas Harper

Mr. Brownstein is Fisked in the footnotes to each paragraph of his piece.

Ronald Brownstein, A Mayday Manifesto for Clean Energy
National Journal, 12 May 2010

The horrific oil spill staining the Gulf of Mexico is an especially grim monument to America’s failure to forge a sustainable energy strategy for the 21st century1.

1 By the same token, hospitals and schools are especially cheerful monuments to America’s conventional energy strategy of the 19th and 20th century. Yes, the Gulf spill is horrific, but so is a life of immobility. Let us remember, oil is good.

But it is not the only one.

Another telling marker came in a jarring juxtaposition this week. On June 10, a group of technology-focused business leaders — including Microsoft co-founder Bill Gates, prominent Silicon Valley venture capitalist John Doerr1, and the current or former chief executives of General Electric2, DuPont3, Lockheed Martin, and Xerox — issued a mayday manifesto urging a massive public-private effort to accelerate research into clean-energy innovations. Without such a commitment, they warned, the United States will remain vulnerable to energy price shocks4; continue to “enrich hostile regimes” that supply much of the United States’ oil5; and cede to other nations dominance of “vast new markets for clean-energy technologies6.” At precisely the moment these executives were scheduled to unveil their American Energy Innovation Council report, the Senate was to begin debating a resolution from Sen. Lisa Murkowski, R-Alaska, to block the Environmental Protection Agency’s plans to regulate the carbon dioxide emissions linked to global climate change.

1 According to USA Today, Doerr’s firm placed “big bets” on green technology, so it’s not terribly shocking that he would endorse public policies that force consumers to use green energy.
2GE is a world leader in the manufacture of green energy technology, and spends millions of dollars every year lobbying for government policies to force consumers to use green energy.
3Due to business as usual decisions on manufacturing processes, DuPont stands to make hundreds of millions of dollars in “early action” carbon credits under a cap-and-trade energy rationing system.
4Green energy is more expensive than conventional energy! By forcing consumers to use expensive energy, government imposes a green energy price shock.
5I hate this jingoistic blather, but if Brownstein wants to play this game, then the obvious solution to “energy dependence” is “drill, baby, drill.
6Of all the pseudo-facts proffered by green energy advocates, the idea that we are losing a global, mercantilist race for green energy supremacy is the stupidest. There is only one source of demand for green energy technologies–first world governments–and inefficient, statist markets are never the subject of global great games.

However the Senate vote turned out (after this column went to press)1, the disapproval resolution has virtually no chance of becoming law because it is unlikely to pass the House2 and would be vetoed by President Obama if it ever reached him. But the substantial support that Murkowski’s proposal attracted highlights the political obstacles looming in front of any policy that aims to seriously advance alternatives to the carbon-intensive fossil fuels that now dominate the United States’ energy mix. Her resolution collided with the Innovation Council report like a Hummer rear-ending a hybrid.

1The resolution failed, 47 to 53, with 6 Democrats joining the entire Senate Republican Caucus in support.
2Not true; a companion disapproval resolution offered in the House by powerful Reps. Colin Peterson (MN) and Ike Skelton (MO) already has been cosponsored by 23 other Democratic Representatives. If the Senate had passed the Murkowski Resolution, all the tea leaves point (Blue Dog support, an upcoming election year, the need for many Reps. To atone for last summer’s “aye” vote on cap-and-tax) to a close House vote.

It’s reasonable to argue that Congress, not EPA, should decide how to regulate carbon1. But most of those senators who endorsed Murkowski’s resolution also oppose the most plausible remaining vehicle for legislating carbon limits: the comprehensive energy plan that Sens. John Kerry, D-Mass., and Joe Lieberman, ID-Conn., recently released2. Together, those twin positions effectively amount to a vote for the energy status quo in which the United States moves only modestly to unshackle itself from oil, coal, and other fossil fuels.

1 Yes, it is. After the Supreme Court ruled in Massachusetts v EPA (2007) that greenhouse gases could be regulated under the Clean Air Act, Michigan Rep. John Dingell, who authored the Act, said that, “This [regulating greenhouse gases] is not what was intended by the Congress.” Moreover, the Congress considered but ultimately removed emissions requirements from a 1990 Clean Air Act update. Despite the absence of a Congressional mandate, Obama’s EPA is pressing ahead with greenhouse gas regulations. For many Senators-including 6 Democrats-this is an unacceptable power grab by the executive branch.
2Doesn’t this stand to reason? Cap-and-trade repeatedly has failed to pass through the Congress-why would legislators vote down a policy and then stand pat while unelected bureaucrats enact that policy?

The Innovation Council proposes a more ambitious course. (The Bipartisan Policy Center, the centrist think tank where my wife works, provided staff support for the group.) The council frames the need for a new energy direction as being as much of an economic imperative as an environmental one. It calls for a national energy strategy centered on a $16 billion annual federal investment in energy research — as much, the group pointedly notes, as the United States spends on imported oil every 16 days1.

1Blah-we’ve already wasted billions of dollars on government-funded energy research. Sad to say, but $16 billion is but a drop in the bucket.

Equally important, the group urges that government catalyze the development of energy alternatives by sending “a strong market signal” through such mechanisms as mandates on utilities to produce more renewable energy or “a price or a cap” on carbon emissions1. Such a cap is precisely what the Senate resolution sought to block. But the business leaders said that it is one of the policies that could “create a large, sustained market for new energy technology.”

1ARE YOU KIDDING ME!!!?? Renewable energy mandates (a.k.a. soviet style productions quotas) and “a cap” on carbon emissions (a.k.a. Soviet style energy rationing) ARE NOT “market signals”!!!! They are tools with which the government picks and chooses winners in the enrgy industry.

One of the council’s key insights was to recognize that expanded energy research and limits on carbon (or other mandates to promote renewable power) are not alternative but complementary policies: One increases the supply of new energy sources; the other increases demand for them1. Earlier this month, the nonpartisan Information Technology & Innovation Foundation echoed this conclusion in a report warning that the United States is already faltering in the race for new markets. With the world readying to spend $600 billion annually on clean-energy technology by 20202, the group noted, the United States is now running a trade deficit in these products and facing “declining export market shares” virtually everywhere.

1Indeed, all statist market machinations are complimentary.
2 Again, this supposed $600 billion demand is wholly derivative of first world governments. Absent government supports and mandates, the renewable energy industry is not viable.

Other nations are seizing these opportunities faster. In China, stiff mandates to deploy renewable sources domestically are nurturing local companies capable of capturing international markets1. It’s revealing that even as venerable an American firm as California-based Applied Materials, which produces the sophisticated machinery used to manufacture solar panels, opened a research center last fall in Xian, China. “If the U.S. becomes a bigger market for us, definitely we’d have to readjust our strategy,” general manager Gang Zou recently told visiting journalists. “But today, our customer market is in Asia.” Like the devastation in the Gulf, that stark assessment underscores the price that the United States is paying for the debilitating energy stalemate symbolized by this week’s Senate showdown2.

1 This is hogwash. China is building 3 coal fired power plants every two weeks, and the government is aggressively locking up oil and gas reserves in other countries.
Brownstein finally gets it right-Americans will pay a steep price for last week’s Senate vote. The EPA is trying to dictate its own regulatory pace, but it doesn’t have a choice. According to the text of the Clean Air Act, the feds must regulate all sources larger than a mansion. That would include YOUR small business, YOUR apartment, or YOUR office. Naturally, the EPA wants to avoid such an onerous regulatory regime, and it has devised a legal strategy to that end. The courts, however, have little leeway when it comes to interpreting the statutory text of the law. As a result, the EPA will be forced to regulate virtually the entire economy. The Senate could have stopped a runaway regulatory nightmare by voting for the Murkowski resolution, but Senate leadership is beholden to environmentalists, so it engineered an 11th hour defeat of the legislation. Now there’s nothing standing between you and the green police.

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